Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 20, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 0-21039 | |
Entity Registrant Name | Strategic Education, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 52-1975978 | |
Entity Address, Address Line One | 2303 Dulles Station Boulevard | |
Entity Address, City or Town | Herndon, | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20171 | |
City Area Code | 703 | |
Local Phone Number | 561-1600 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | STRA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,415,845 | |
Entity Central Index Key | 0001013934 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 167,707 | $ 213,667 |
Marketable securities | 28,960 | 9,156 |
Tuition receivable, net | 97,429 | 62,953 |
Income taxes receivable | 7,850 | 0 |
Other current assets | 48,689 | 43,285 |
Total current assets | 350,635 | 329,061 |
Property and equipment, net | 117,872 | 132,845 |
Right-of-use lease assets | 110,789 | 125,248 |
Marketable securities, non-current | 1,914 | 13,123 |
Intangible assets, net | 249,514 | 260,541 |
Goodwill | 1,228,431 | 1,251,277 |
Other assets | 54,945 | 49,652 |
Total assets | 2,114,100 | 2,161,747 |
Current liabilities: | ||
Accounts payable and accrued expenses | 102,122 | 90,588 |
Income taxes payable | 0 | 6,989 |
Contract liabilities | 140,248 | 88,488 |
Lease liabilities | 23,121 | 23,879 |
Total current liabilities | 265,491 | 209,944 |
Long-term debt | 61,247 | 101,396 |
Deferred income tax liabilities | 28,254 | 34,605 |
Lease liabilities, non-current | 121,395 | 134,006 |
Other long-term liabilities | 42,959 | 46,006 |
Total liabilities | 519,346 | 525,957 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, par value $0.01; 32,000,000 shares authorized; 24,402,891 and 24,419,092 shares issued and outstanding at December 31, 2022 and September 30, 2023, respectively | 244 | 244 |
Additional paid-in capital | 1,513,023 | 1,510,924 |
Accumulated other comprehensive loss | (62,878) | (35,068) |
Retained earnings | 144,365 | 159,690 |
Total stockholders’ equity | 1,594,754 | 1,635,790 |
Total liabilities and stockholders’ equity | $ 2,114,100 | $ 2,161,747 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 32,000,000 | 32,000,000 |
Common stock, shares issued (in shares) | 24,419,092 | 24,402,891 |
Common stock, shares outstanding (in shares) | 24,419,092 | 24,402,891 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 285,936 | $ 263,123 | $ 830,222 | $ 795,542 |
Costs and expenses: | ||||
Instructional and support costs | 155,735 | 153,162 | 470,152 | 445,154 |
General and administration | 97,598 | 97,753 | 292,066 | 289,259 |
Amortization of intangible assets | 3,382 | 3,522 | 10,364 | 10,954 |
Merger and integration costs | 330 | 269 | 1,335 | 933 |
Restructuring costs | 3,262 | 610 | 15,208 | 6,129 |
Total costs and expenses | 260,307 | 255,316 | 789,125 | 752,429 |
Income from operations | 25,629 | 7,807 | 41,097 | 43,113 |
Other income (expense) | 842 | (262) | 4,411 | (1,133) |
Income before income taxes | 26,471 | 7,545 | 45,508 | 41,980 |
Provision for income taxes | 8,012 | 1,453 | 14,846 | 13,639 |
Net income | $ 18,459 | $ 6,092 | $ 30,662 | $ 28,341 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.79 | $ 0.26 | $ 1.31 | $ 1.19 |
Diluted (in dollars per share) | $ 0.77 | $ 0.25 | $ 1.28 | $ 1.18 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 23,365 | 23,550 | 23,415 | 23,765 |
Diluted (in shares) | 23,870 | 23,902 | 23,952 | 24,026 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 18,459 | $ 6,092 | $ 30,662 | $ 28,341 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (11,891) | (38,171) | (28,053) | (74,677) |
Unrealized gains (losses) on marketable securities, net of tax | 97 | (189) | 243 | (895) |
Comprehensive income (loss) | $ 6,665 | $ (32,268) | $ 2,852 | $ (47,231) |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2021 | 24,592,098 | ||||
Beginning balance at Dec. 31, 2021 | $ 1,713,990 | $ 246 | $ 1,529,969 | $ 174,572 | $ 9,203 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 16,209 | 16,202 | 7 | ||
Issuance of restricted stock, net (in shares) | 434,068 | ||||
Issuance of restricted stock, net | (2,868) | $ 5 | (2,873) | ||
Repurchase of common stock (in shares) | (571,789) | ||||
Repurchase of common stock | (36,916) | $ (6) | (35,396) | (1,514) | |
Common stock dividends | (44,702) | (44,702) | |||
Foreign currency translation adjustment | (74,677) | (74,677) | |||
Unrealized (losses) gains on marketable securities, net of tax | (895) | (895) | |||
Net income | 28,341 | 28,341 | |||
Ending balance (in shares) at Sep. 30, 2022 | 24,454,377 | ||||
Ending balance at Sep. 30, 2022 | 1,598,482 | $ 245 | 1,507,902 | 156,704 | (66,369) |
Beginning balance (in shares) at Jun. 30, 2022 | 24,637,268 | ||||
Beginning balance at Jun. 30, 2022 | 1,651,921 | $ 246 | 1,513,509 | 166,175 | (28,009) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 5,612 | 5,605 | 7 | ||
Issuance of restricted stock, net (in shares) | (4,138) | ||||
Issuance of restricted stock, net | (90) | $ 1 | (91) | ||
Repurchase of common stock (in shares) | (178,753) | ||||
Repurchase of common stock | (11,944) | $ (2) | (11,121) | (821) | |
Common stock dividends | (14,749) | (14,749) | |||
Foreign currency translation adjustment | (38,171) | (38,171) | |||
Unrealized (losses) gains on marketable securities, net of tax | (189) | (189) | |||
Net income | 6,092 | 6,092 | |||
Ending balance (in shares) at Sep. 30, 2022 | 24,454,377 | ||||
Ending balance at Sep. 30, 2022 | $ 1,598,482 | $ 245 | 1,507,902 | 156,704 | (66,369) |
Beginning balance (in shares) at Dec. 31, 2022 | 24,402,891 | 24,402,891 | |||
Beginning balance at Dec. 31, 2022 | $ 1,635,790 | $ 244 | 1,510,924 | 159,690 | (35,068) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 15,202 | 15,030 | 172 | ||
Exercise of stock options, net (in shares) | 2,704 | ||||
Exercise of stock options, net | 126 | 126 | |||
Issuance of restricted stock, net (in shares) | 142,570 | ||||
Issuance of restricted stock, net | (5,050) | $ 1 | (5,051) | ||
Repurchase of common stock (in shares) | (129,073) | ||||
Repurchase of common stock | (10,013) | $ (1) | (8,006) | (2,006) | |
Common stock dividends | (44,153) | (44,153) | |||
Foreign currency translation adjustment | (28,053) | (28,053) | |||
Unrealized (losses) gains on marketable securities, net of tax | 243 | 243 | |||
Net income | $ 30,662 | 30,662 | |||
Ending balance (in shares) at Sep. 30, 2023 | 24,419,092 | 24,419,092 | |||
Ending balance at Sep. 30, 2023 | $ 1,594,754 | $ 244 | 1,513,023 | 144,365 | (62,878) |
Beginning balance (in shares) at Jun. 30, 2023 | 24,465,671 | ||||
Beginning balance at Jun. 30, 2023 | 1,598,606 | $ 245 | 1,509,077 | 140,368 | (51,084) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 4,077 | 3,905 | 172 | ||
Exercise of stock options, net (in shares) | 1,382 | ||||
Exercise of stock options, net | 71 | 71 | |||
Issuance of restricted stock, net (in shares) | (47,961) | ||||
Issuance of restricted stock, net | (31) | $ (1) | (30) | ||
Common stock dividends | (14,634) | (14,634) | |||
Foreign currency translation adjustment | (11,891) | (11,891) | |||
Unrealized (losses) gains on marketable securities, net of tax | 97 | 97 | |||
Net income | $ 18,459 | 18,459 | |||
Ending balance (in shares) at Sep. 30, 2023 | 24,419,092 | 24,419,092 | |||
Ending balance at Sep. 30, 2023 | $ 1,594,754 | $ 244 | $ 1,513,023 | $ 144,365 | $ (62,878) |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) - $ / shares | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | |||||
Common stock dividends (in dollars per share) | $ 0.60 | $ 0.60 | $ 0.60 | $ 1.80 | $ 1.80 |
UNAUDITED CONDENSED CONSOLIDA_7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 30,662 | $ 28,341 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Gain on sale of property and equipment | (2,136) | 0 |
Amortization of deferred financing costs | 416 | 414 |
Amortization of investment discount/premium | (40) | 29 |
Depreciation and amortization | 44,881 | 49,193 |
Deferred income taxes | (5,947) | (9,213) |
Stock-based compensation | 15,202 | 16,209 |
Impairment of right-of-use lease assets | 5,135 | 1,185 |
Changes in assets and liabilities: | ||
Tuition receivable, net | (35,113) | (33,320) |
Other assets | (12,456) | 417 |
Accounts payable and accrued expenses | 11,119 | 6,768 |
Income taxes payable and income taxes receivable | (14,669) | 4,498 |
Contract liabilities | 52,836 | 65,437 |
Other liabilities | (2,717) | (5,226) |
Net cash provided by operating activities | 87,173 | 124,732 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (27,318) | (32,508) |
Purchases of marketable securities | (16,904) | 0 |
Proceeds from marketable securities | 8,175 | 2,600 |
Proceeds from sale of property and equipment | 5,890 | 0 |
Proceeds from other investments | 457 | 0 |
Other investments | (314) | (223) |
Cash paid for acquisition, net of cash acquired | (448) | (193) |
Net cash used in investing activities | (30,462) | (30,324) |
Cash flows from financing activities: | ||
Common dividends paid | (44,139) | (44,600) |
Payments on long-term debt | (40,000) | 0 |
Net payments for stock awards | (4,925) | (2,973) |
Repurchase of common stock | (9,999) | (36,916) |
Net cash used in financing activities | (99,063) | (84,489) |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (3,657) | (10,729) |
Net decrease in cash, cash equivalents, and restricted cash | (46,009) | (810) |
Cash, cash equivalents, and restricted cash — beginning of period | 227,454 | 279,212 |
Cash, cash equivalents, and restricted cash — end of period | 181,445 | 278,402 |
Non-cash transactions: | ||
Non-cash additions to property and equipment | 2,110 | 1,910 |
Right-of-use lease assets obtained in exchange for operating lease liabilities | $ 8,329 | $ 4,278 |
Nature of Operations
Nature of Operations | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Strategic Education, Inc. (“Strategic Education” or the “Company”), a Maryland corporation, is an education services company that provides access to high-quality education through campus-based and online post-secondary education offerings, as well as through programs to develop job-ready skills for high-demand markets. Strategic Education’s portfolio of companies is dedicated to closing the skills gap by placing adults on the most direct path between learning and employment. The accompanying condensed consolidated financial statements and footnotes include the results of the Company’s three reportable segments: (1) U.S. Higher Education (“USHE”), which is primarily comprised of Strayer University and Capella University and is focused on providing flexible and affordable certificate and degree programs to working adults; (2) Education Technology Services, which is primarily focused on developing and maintaining relationships with employers to build employee education benefits programs; and (3) Australia/New Zealand, which through Torrens University and associated assets, provides certificate and degree programs in Australia and New Zealand. The Company’s reportable segments are discussed further in Note 15. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. All information as of September 30, 2022 and 2023, and for the three and nine months ended September 30, 2022 and 2023 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date. Certain year-to-date amounts have been reclassified to conform to the current period’s presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full fiscal year. Below is a description of the nature of the costs included in the Company’s operating expense categories. Instructional and support costs generally contain items of expense directly attributable to activities that support students. This expense category includes salaries and benefits of faculty and academic administrators, as well as admissions and administrative personnel who support and serve student interests. Instructional and support costs also include course development costs and costs associated with delivering course content, including educational supplies, facilities, and all other physical plant and occupancy costs, with the exception of costs attributable to the corporate offices. Bad debt expense incurred on delinquent student account balances is also included in instructional and support costs. General and administration expenses include salaries and benefits of management and employees engaged in finance, human resources, legal, regulatory compliance, marketing and other corporate functions. Also included are the costs of advertising and production of marketing materials. General and administration expense also includes the facilities occupancy and other related costs attributable to such functions. Amortization of intangible assets consists of amortization and depreciation expense related to intangible assets and software assets acquired through the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand (“ANZ”). Merger and integration costs include integration expenses associated with the Company’s merger with Capella Education Company and the Company’s acquisition of ANZ. Restructuring costs include severance and other personnel-related expenses from voluntary and involuntary employee terminations, right-of-use lease and fixed asset impairment charges, gains on sale of real estate and early termination of leased facilities, and other costs associated with the Company’s restructuring activities. See Note 4 for additional information. Foreign Currency Translation and Transaction Gains and Losses The United States Dollar (“USD”) is the functional currency of the Company and its subsidiaries operating in the United States. The financial statements of its foreign subsidiaries are maintained in their functional currencies. The functional currency of each of the foreign subsidiaries is the currency of the economic environment in which the subsidiary primarily does business. Financial statements of foreign subsidiaries are translated into USD using the exchange rates applicable to the dates of the financial statements. Assets and liabilities are translated into USD using the period-end spot foreign exchange rates. Income and expenses are translated at the weighted-average exchange rates in effect during the period. Equity accounts are translated at historical exchange rates. The effects of these translation adjustments are reported as a component of accumulated other comprehensive income (loss) within shareholders’ equity. For any transaction that is in a currency different from the entity’s functional currency, the Company records a net gain or loss based on the difference between the exchange rate at the transaction date and the exchange rate at the transaction settlement date (or rate at period end, if unsettled), in the unaudited condensed consolidated statements of income. Restricted Cash In the United States, a significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from a U.S. higher education institution during the academic term. The Company had approximately $1.4 million and $2.1 million of these unpaid obligations as of December 31, 2022 and September 30, 2023, respectively. In Australia and New Zealand, advance tuition payments from international students are required to be restricted until a student commences his or her course. In addition, a portion of tuition prepayments from students enrolled in a vocational education and training program are held in trust by a third party law firm to adhere to tuition protection requirements. As of December 31, 2022 and September 30, 2023, the Company had approximately $11.9 million and $11.2 million, respectively, of restricted cash related to these requirements in Australia and New Zealand. These balances are recorded as restricted cash and included in other current assets in the unaudited condensed consolidated balance sheets. As part of conducting operations in Pennsylvania, the Company is required to maintain a “minimum protective endowment” of at least $0.5 million in an interest-bearing account as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account, which is included in other assets. The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows as of September 30, 2022 and 2023 (in thousands): As of September 30, 2022 2023 Cash and cash equivalents $ 262,757 $ 167,707 Restricted cash included in other current assets 15,145 13,238 Restricted cash included in other assets 500 500 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 278,402 $ 181,445 Marketable Securities Investments in marketable securities are carried at either amortized cost or fair value. Investments in marketable securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in marketable securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Management determines the appropriate designation of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. All of the Company’s marketable securities are designated as either held-to-maturity or available-for-sale. The Company’s available-for-sale marketable securities consist of tax-exempt municipal securities and corporate debt securities, which are carried at fair value as determined by quoted market prices or other inputs either directly or indirectly observable in the marketplace for identical or similar assets, with unrealized gains and losses, net of tax, recognized as a component of accumulated other comprehensive income (loss) within shareholders’ equity. Management reviews the fair value of the portfolio at least quarterly, and evaluates individual securities with fair value below amortized cost at the balance sheet date for impairment. In order to determine whether there is an impairment, management evaluates whether the Company intends to sell the impaired security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. If management intends to sell an impaired debt security, or it is more likely than not the Company will be required to sell the security prior to recovering its amortized cost basis, an impairment is deemed to have occurred. The amount of an impairment related to a credit loss, or securities that management intends to sell before recovery, is recognized in earnings. The amount of an impairment on debt securities related to other factors is recorded consistent with changes in the fair value of all other available-for-sale securities as a component of accumulated other comprehensive income (loss) within shareholders’ equity. The cost of securities sold is based on the specific identification method. Amortization of premiums, accretion of discounts, interest, dividend income and realized gains and losses are included in other income. The contractual maturity date of available-for-sale securities is based on the days remaining to the effective maturity. The Company classifies marketable securities as either current or non-current assets based on management’s intent with regard to usage of those funds, which is dependent upon the security’s maturity date and liquidity considerations based on current market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. Tuition Receivable and Allowance for Credit Losses The Company records tuition receivable and contract liabilities for its students upon the start of the academic term or program. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the Company’s student bases and through the participation of the majority of the students in federally funded financial aid programs. An allowance for credit losses is established based upon historical collection rates by age of receivable and adjusted for reasonable expectations of future collection performance, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status, likelihood of future enrollment, degree mix trends and changes in the overall economic environment. In the event that current collection trends differ from historical trends, an adjustment is made to the allowance for credit losses and bad debt expense. The Company’s tuition receivable and allowance for credit losses were as follows as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Tuition receivable $ 110,066 $ 145,775 Allowance for credit losses (47,113) (48,346) Tuition receivable, net $ 62,953 $ 97,429 Approximately $2.7 million and $2.6 million of tuition receivable, net, are included in other assets as of December 31, 2022 and September 30, 2023, respectively, because these amounts are expected to be collected after 12 months. The following table illustrates changes in the Company’s allowance for credit losses for the three and nine months ended September 30, 2022 and 2023 (in thousands). For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Allowance for credit losses, beginning of period $ 43,507 $ 45,877 $ 48,783 $ 47,113 Additions charged to expense 11,895 14,880 27,899 37,138 Write-offs, net of recoveries (10,462) (12,411) (31,742) (35,905) Allowance for credit losses, end of period $ 44,940 $ 48,346 $ 44,940 $ 48,346 Assets Held for Sale The Company classifies assets and liabilities as held for sale (“disposal group”) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable to be completed within one year, and the disposal group is available for immediate sale in its present condition. The Company also considers whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Gains are not recognized until the date of sale. Assets are not depreciated or amortized while they are classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group as assets held for sale and liabilities held for sale in its unaudited condensed consolidated balance sheets. Over the last several years, the Company has been evaluating its owned and leased real estate portfolio to identify underutilized facilities to either downsize or exit. One facility identified to be marketed for sale was an owned U.S. Higher Education campus consisting of land, buildings, and building improvements. The Company determined that it met all of the criteria to classify these assets as held for sale as of March 31, 2023. No loss was recorded as the carrying amount of the net assets was less than the fair value less costs to sell. Fair value was determined based upon the anticipated sales price of these assets. During the second quarter of 2023, the Company sold the long-lived assets related to the owned U.S. Higher Education campus noted above and recognized a $2.1 million gain on sale, which is included in Restructuring costs on the unaudited condensed consolidated statements of income. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets, which include trade names, are recorded at fair value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets are assessed at least annually for impairment on the first day of the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible asset below its carrying amount. The Company identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available, and management regularly reviews the operating results of those components. Finite-lived intangible assets that are acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the asset. Finite-lived intangible assets consist of student relationships. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. Authorized Stock The Company has authorized 32,000,000 shares of common stock, par value $0.01, of which 24,402,891 and 24,419,092 shares were issued and outstanding as of December 31, 2022 and September 30, 2023, respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which is issued or outstanding. Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. In July 2023, the Company’s Board of Directors declared a regular, quarterly cash dividend of $0.60 per share of common stock. The dividend was paid on September 11, 2023. Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock, and restricted stock units (“stock awards”). The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, all of the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options, and (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company. Stock awards are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Weighted average shares outstanding used to compute basic earnings per share 23,550 23,365 23,765 23,415 Incremental shares issuable upon the assumed exercise of stock options 3 3 3 4 Unvested restricted stock and restricted stock units 349 502 258 533 Shares used to compute diluted earnings per share 23,902 23,870 24,026 23,952 Anti-dilutive shares excluded from the diluted earnings per share calculation 11 276 149 219 Comprehensive Income (Loss) Comprehensive income (loss) includes net income and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of unrealized gains and losses on available-for-sale marketable securities, net of tax, and foreign currency translation adjustments. As of December 31, 2022 and September 30, 2023, the balance of accumulated other comprehensive loss was $35.1 million, net of tax of $0.1 million, and $62.9 million, net of tax of $0.1 million, respectively. There were no reclassifications out of accumulated other comprehensive income (loss) to net income for the three and nine months ended September 30, 2022 and 2023. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates include allowances for credit losses, useful lives of property and equipment and intangible assets, incremental borrowing rates, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill and intangible assets, and the provision for income taxes. Actual results could differ from those estimates. Recently Issued Accounting Standards Not Yet Adopted Accounting Standards Updates recently issued by the FASB but not yet effective are not expected to have a material effect on the Company’s consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue RecognitionThe Company’s revenues primarily consist of tuition revenue arising from educational services provided in the form of classroom instruction and online courses. Tuition revenue is deferred and recognized ratably over the period of instruction, which varies depending on the course format and chosen program of study. Strayer University’s educational programs and Capella University’s GuidedPath classes typically are offered on a quarterly basis, and such periods coincide with the Company’s quarterly financial reporting periods, while Capella University’s FlexPath courses are delivered over a twelve-week subscription period. Torrens University offers the majority of its education programs on a trimester system having three primary academic terms, which all occur within the calendar year. The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 U.S. Higher Education Segment Tuition, net of discounts, grants and scholarships $ 177,678 $ 192,850 $ 546,407 $ 575,725 Other (1) 7,821 8,978 24,884 25,677 Total U.S. Higher Education Segment 185,499 201,828 571,291 601,402 Australia/New Zealand Segment Tuition, net of discounts, grants and scholarships 60,238 61,667 173,621 165,855 Other (1) 939 1,597 3,611 4,384 Total Australia/New Zealand Segment 61,177 63,264 177,232 170,239 Education Technology Services Segment (2) 16,447 20,844 47,019 58,581 Consolidated revenue $ 263,123 $ 285,936 $ 795,542 $ 830,222 _________________________________________ (1) Other revenue is primarily comprised of academic fees, sales of course materials, placement fees and other non-tuition revenue streams. (2) Education Technology Services revenue is primarily derived from tuition revenue. Revenues are recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods and services. The Company applies the five-step revenue model under ASC 606 to determine when revenue is earned and recognized. Arrangements with students may have multiple performance obligations. For such arrangements, the Company allocates net tuition revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers and observable market prices. The standalone selling price of material rights to receive free classes or scholarships in the future is estimated based on class tuition prices or amounts of scholarships, and likelihood of redemption based on historical student attendance and completion behavior. At the start of each academic term or program, a contract liability is recorded for academic services to be provided, and a tuition receivable is recorded for the portion of the tuition not paid in advance. Any cash received prior to the start of an academic term or program is recorded as a contract liability. Some students may be eligible for scholarship awards, the estimated value of which will be realized in the future and is deducted from revenue when earned, based on historical student attendance and completion behavior. Contract liabilities are recorded as a current or long-term liability in the unaudited condensed consolidated balance sheets based on when the benefit is expected to be realized. Course materials are available to enable students to access electronically all required materials for courses in which they enroll during the quarter. Revenue derived from course materials is recognized ratably over the duration of the course as the Company provides the student with continuous access to these materials during the term. For sales of certain other course materials, the Company is considered the agent in the transaction, and as such, the Company recognizes revenue net of amounts owed to the vendor at the time of sale. Revenues also include certain academic fees recognized within the quarter of instruction, and certificate revenue and licensing revenue, which are recognized as the services are provided. Contract Liabilities – Graduation Fund Strayer University offers the Graduation Fund, which allows undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program. Students registering in credit-bearing courses in any undergraduate degree program receive one free course for every three courses that the student successfully completes. To be eligible, students must meet all of Strayer University’s admission requirements and must be enrolled in a bachelor’s degree program. Students who have more than one consecutive term of non-attendance lose any Graduation Fund credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by Strayer University in the future. Revenue from students participating in the Graduation Fund is recorded in accordance with ASC 606. The Company defers the value of the related performance obligation associated with the credits estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student toward earning the benefit. The Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a course of study within this program and similar programs. Each quarter, the Company assesses its assumptions underlying these estimates, and to date, any adjustments to the estimates have not been material. The amount estimated to be redeemed in the next 12 months is $19.4 million and is included as a current contract liability in the unaudited condensed consolidated balance sheets. The remainder is expected to be redeemed within two The table below presents activity in the contract liability related to the Graduation Fund (in thousands): For the nine months ended September 30, 2022 2023 Balance at beginning of period $ 52,024 $ 46,842 Revenue deferred 12,647 14,543 Benefit redeemed (16,295) (16,931) Balance at end of period $ 48,376 $ 44,454 Unbilled Receivables – Student Tuition Academic materials may be shipped to certain new undergraduate students in advance of the term of enrollment. Under ASC 606, the materials represent a performance obligation to which the Company allocates revenue based on the fair value of the materials relative to the total fair value of all performance obligations in the arrangement with the student. When control of the materials passes to the student in advance of the term of enrollment, an unbilled receivable and related revenue are recorded. Costs to Obtain a Contract Certain commissions earned by third party international agents are considered incremental and recoverable costs of obtaining a contract with customers in the Australia/New Zealand segment. These costs are deferred and then amortized over the period of benefit which ranges from one year to two years. |
Restructuring and Related Charg
Restructuring and Related Charges | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Charges | Restructuring and Related Charges In the third quarter of 2020, the Company began implementing a restructuring plan in an effort to reduce the ongoing operating costs of the Company to align with changes in enrollment following the COVID-19 pandemic. Under this plan, the Company incurred severance and other employee separation costs related to voluntary and involuntary employee terminations. The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities related to the 2020 restructuring plan during the nine months ended September 30, 2022 (in thousands): 2020 Balance at December 31, 2021 $ 1,612 Restructuring and other charges 1,241 Payments (2,853) Balance at September 30, 2022 $ — The final severance payments under the 2020 restructuring plan were made in the third quarter of 2022. The Company also incurs severance and other employee separation costs related to voluntary and involuntary employee terminations that are not tied to a formal restructuring plan. During the three and nine months ended September 30, 2023, the Company incurred $2.9 million and $11.3 million of severance and other employee separation charges related to the elimination of certain positions. These severance and other employee separation charges are included in Restructuring costs on the unaudited condensed consolidated statements of income. The following details the changes in the Company's severance and other employee separation costs restructuring liabilities during the nine months ended September 30, 2023 (in thousands): Severance Restructuring Liability Balance at December 31, 2022 $ — Restructuring and other charges 11,256 Payments (8,731) Balance at September 30, 2023 (1) $ 2,525 ____________________________________ (1) Restructuring liabilities are included in accounts payable and accrued expenses. The Company has also been evaluating its owned and leased real estate portfolio, which has resulted in the consolidation and sale of underutilized facilities. The Company recorded approximately $0.1 million and $1.2 million of right-of-use lease asset charges during the three and nine months ended September 30, 2022, respectively, and approximately $5.1 million during the nine months ended September 30, 2023, related to facilities that were consolidated during the period. The Company also recorded fixed asset impairment charges of approximately $0.1 million and $2.5 million during the three and nine months ended September 30, 2022, respectively, and approximately $0.1 million and $0.4 million during the three and nine months ended September 30, 2023, respectively. During the nine months ended September 30, 2023, the Company recorded a $2.1 million gain from the sale of property and equipment of an owned campus that was previously closed. These right-of-use lease asset and fixed asset impairment charges and gains on the sale of property and equipment are included in Restructuring costs on the unaudited condensed consolidated statements of income. |
Marketable Securities
Marketable Securities | 9 Months Ended |
Sep. 30, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable Securities The following is a summary of available-for-sale and held-to-maturity securities as of September 30, 2023 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Available-for-sale securities: Tax-exempt municipal securities $ 11,654 $ 1 $ (263) $ 11,392 Corporate debt securities 3,204 — (122) 3,082 Total available-for sale securities $ 14,858 $ 1 $ (385) $ 14,474 Held-to-maturity securities: Term deposits $ 16,400 $ — $ — $ 16,400 The following is a summary of available-for-sale securities as of December 31, 2022 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Available-for-sale securities: Tax-exempt municipal securities $ 15,852 $ 2 $ (507) $ 15,347 Corporate debt securities 7,140 — (208) 6,932 Total $ 22,992 $ 2 $ (715) $ 22,279 The Company had no held-to-maturity securities as of December 31, 2022. The unrealized gains and losses on the Company’s investments in corporate debt and municipal securities as of December 31, 2022 and September 30, 2023 were caused by changes in market values primarily due to interest rate changes. As of September 30, 2023, the fair value of the Company’s securities which were in an unrealized loss position for a period longer than twelve months was $13.5 million. The Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell these securities prior to the recovery of their amortized cost basis, which may be at maturity. As such, no impairment charges were recorded during the three and nine months ended September 30, 2022 and 2023. The Company has no allowance for credit losses related to its available-for-sale or held-to-maturity securities as all investments are in investment grade securities. The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Available-for-sale securities Held-to-maturity securities Available-for-sale securities Held-to-maturity securities Due within one year $ 9,156 $ — $ 12,560 $ 16,400 Due after one year through three years 13,123 — 1,914 — Total $ 22,279 $ — $ 14,474 $ 16,400 The following table summarizes the proceeds from the maturities and sales of available-for-sale securities for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Maturities of marketable securities $ 500 $ 3,215 $ 2,600 $ 8,175 Sales of marketable securities — — — — Total $ 500 $ 3,215 $ 2,600 $ 8,175 The Company did not record any gross realized gains or losses in net income during the three and nine months ended September 30, 2022 and September 30, 2023. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Assets measured at fair value on a recurring basis consist of the following as of September 30, 2023 (in thousands): Fair Value Measurements at Reporting Date Using September 30, 2023 Quoted Prices in Significant Significant Assets: Money market funds $ 78,308 $ 78,308 $ — $ — U.S. treasury bills 14,915 14,915 — — Available-for-sale securities : Tax-exempt municipal securities 11,392 — 11,392 — Corporate debt securities 3,082 — 3,082 — Total assets at fair value on a recurring basis $ 107,697 $ 93,223 $ 14,474 $ — Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2022 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2022 Quoted Prices in Significant Significant Assets: Money market funds $ 217 $ 217 $ — $ — Available-for-sale securities : Tax-exempt municipal securities 15,347 — 15,347 — Corporate debt securities 6,932 — 6,932 — Total assets at fair value on a recurring basis $ 22,496 $ 217 $ 22,279 $ — The Company measures the above items on a recurring basis at fair value as follows: • Money market funds and U.S. treasury bills – Classified in Level 1 is excess cash the Company holds in money market funds and U.S. treasury bills, which are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets. The Company records any net unrealized gains and losses for changes in fair value as a component of accumulated other comprehensive income (loss) in stockholders’ equity. The Company’s cash and cash equivalents and held-to-maturity securities held at December 31, 2022 and September 30, 2023 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments. • Available-for-sale securities – Classified in Level 2 and valued using readily available pricing sources for comparable instruments utilizing observable inputs from active markets. The Company does not hold securities in inactive markets. The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods and did not transfer assets or liabilities between levels of the fair value hierarchy during the nine months ended September 30, 2022 and 2023. The Company acquired certain assets and entered into deferred payment arrangements with the sellers in transactions that occurred in 2011. The deferred payments were classified within Level 3 as there was no liquid market for similarly priced instruments and were valued using discounted cash flow models that encompassed significant unobservable inputs. The assumptions used to prepare the discounted cash flows included estimates for interest rates, enrollment growth, retention rates, and pricing strategies. The final payment related to the deferred payment arrangements was made in the first quarter of 2022. Changes in the fair value of the Company’s Level 3 liabilities during the nine months ended September 30, 2022 are as follows (in thousands): As of September 30, 2022 Balance as of the beginning of period $ 658 Amounts paid (658) Other adjustments to fair value — Balance at end of period $ — |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The following table presents changes in the carrying value of goodwill by segment for the nine months ended September 30, 2023 (in thousands): U.S. Higher Education Australia / Education Technology Services Total Balance as of December 31, 2022 $ 632,075 $ 519,202 $ 100,000 $ 1,251,277 Additions — — — — Impairments — — — — Currency translation adjustments — (22,846) — (22,846) Adjustments to prior acquisitions — — — — Balance as of September 30, 2023 $ 632,075 $ 496,356 $ 100,000 $ 1,228,431 The Company assesses goodwill at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount. No events or circumstances occurred in the three and nine months ended September 30, 2023 to indicate an impairment to goodwill at any of its segments. There were no impairment charges related to goodwill recorded during the three and nine months ended September 30, 2022 and 2023. Intangible Assets The following table represents the balance of the Company’s intangible assets as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Subject to amortization Student relationships $ 200,185 $ (191,125) $ 9,060 $ 200,095 $ (199,155) $ 940 Not subject to amortization Trade names 251,481 — 251,481 248,574 — 248,574 Total $ 451,666 $ (191,125) $ 260,541 $ 448,669 $ (199,155) $ 249,514 The Company’s finite-lived intangible assets are comprised of student relationships, which are being amortized on a straight-line basis over a three-year useful life. Straight-line amortization expense for finite-lived intangible assets reflects the pattern in which the economic benefits of the assets are consumed over their estimated useful lives. Amortization expense related to finite-lived intangible assets was $8.5 million and $8.0 million for the nine months ended September 30, 2022 and 2023, respectively. Indefinite-lived intangible assets not subject to amortization consist of trade names. The Company assigned an indefinite useful life to its trade name intangible assets, as it is believed these assets have the ability to generate cash flows indefinitely. In addition, there are no legal, regulatory, contractual, economic, or other factors to limit the useful life of the trade name intangibles. The Company assesses indefinite-lived intangible assets at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective indefinite-lived intangible asset below its carrying amount. No events or circumstances occurred in the three and nine months ended September 30, 2023 to indicate an impairment to indefinite-lived intangible assets. There were no impairment charges related to indefinite-lived intangible assets recorded during the three and nine months ended September 30, 2022 and 2023. |
Other Current Assets
Other Current Assets | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | Other Current Assets Other current assets consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Prepaid expenses $ 19,073 $ 23,685 Restricted cash 13,287 13,238 Cloud computing arrangements 7,859 7,231 Other 3,066 4,535 Other current assets $ 43,285 $ 48,689 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Other assets consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Prepaid expenses, net of current portion $ 18,192 $ 17,321 Equity method investments 13,879 16,175 Cloud computing arrangements, net of current portion 7,507 12,021 Other investments 3,396 2,806 Tuition receivable, net, non-current 2,673 2,559 Other 4,005 4,063 Other assets $ 49,652 $ 54,945 Prepaid Expenses Long-term prepaid expenses primarily relate to payments that have been made for future services to be provided after one year. In 2020, pursuant to the terms of the perpetual license agreement associated with the Jack Welch Management Institute, the Company made a final one-time cash payment of approximately $25.3 million for the right to continue to use the Jack Welch name and likeness. As of December 31, 2022 and September 30, 2023, $17.7 million and $16.5 million, respectively, of this payment is included in the prepaid expenses, net of current portion balance, as the payment is being amortized over an estimated useful life of 15 years. Equity Method Investments The Company holds investments in certain limited partnerships that invest in various innovative companies in the health care and education-related technology fields. The Company has commitments to invest up to an additional $2.4 million across these partnerships through 2031. The Company’s investments range from 3%-5% of any partnership’s interest and are accounted for under the equity method. The following table illustrates changes in the Company’s limited partnership investments for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Limited partnership investments, beginning of period $ 14,011 $ 17,205 $ 15,582 $ 13,879 Capital contributions — 162 48 314 Pro-rata share in the net income (loss) of limited partnerships (32) (114) 32 3,060 Distributions — (1,078) (1,683) (1,078) Limited partnership investments, end of period $ 13,979 $ 16,175 $ 13,979 $ 16,175 Cloud Computing Arrangements The Company defers implementation costs incurred in cloud computing arrangements and amortizes these costs over the term of the arrangement. Other Investments The Company holds investments in education technology start-ups focused on transformational technologies that improve student success. These investments are accounted for at cost less impairment as they do not have readily determinable fair value. Tuition Receivable Non-current tuition receivable, net, represents tuition that the Company expects to collect, but not within the next 12 months. Other Other is comprised primarily of deferred financing costs associated with the Company’s credit facility, deferred contract costs related to commissions paid in the Australia/New Zealand segment to third party international agents, and refundable security deposits associated with the Company’s leased campus and office space. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Trade payables $ 45,826 $ 54,856 Accrued compensation and benefits 32,608 36,767 Accrued student obligations and other 12,154 10,499 Accounts payable and accrued expenses $ 90,588 $ 102,122 |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Long-Term Debt On November 3, 2020, the Company entered into an amended credit facility (“Amended Credit Facility”), which provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of up to $350 million. The Amended Credit Facility provides the Company with an option, subject to obtaining additional loan commitments and satisfaction of certain conditions, to increase the commitments under the Revolving Credit Facility or establish one or more incremental term loans (each, an “Incremental Facility”) in the future in an aggregate amount of up to the sum of (x) the greater of (A) $300 million and (B) 100% of the Company’s consolidated EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation) calculated on a trailing four-quarter basis and on a pro forma basis, and (y) if such Incremental Facility is incurred in connection with a permitted acquisition or other permitted investment, any amounts so long as the Company’s leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75:1.00. In addition, the Amended Credit Facility provides for a subfacility for borrowings in certain foreign currencies in an amount equal to the U.S. dollar equivalent of $150 million. The maturity date of the Amended Credit Facility is November 3, 2025. The Company paid approximately $1.9 million in debt financing costs associated with the Amended Credit Facility, and these costs are being amortized on a straight-line basis over the five-year term of the Amended Credit Facility. On June 13, 2023, the Company amended its Revolving Credit Facility to replace references to LIBOR with alternative benchmark rates, including Term SOFR with respect to loans denominated in U.S. dollars, beginning on June 30, 2023. There were no other significant changes to the Revolving Credit Facility related to the amendment. Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to Term SOFR or a base rate, plus a margin ranging from 1.50% to 2.00% depending on the Company’s leverage ratio. The Company also is subject to a quarterly unused commitment fee ranging from 0.20% to 0.30% per annum depending on the Company’s leverage ratio, times the daily unused amount under the Revolving Credit Facility. The Amended Credit Facility is guaranteed by all domestic subsidiaries, subject to certain exceptions, and secured by substantially all of the assets of the Company and its subsidiary guarantors. The Amended Credit Facility contains customary affirmative and negative covenants, representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Amended Credit Facility. In addition, the Amended Credit Facility requires that the Company satisfy certain financial maintenance covenants, including: • A leverage ratio of not greater than 2.00 to 1.00. Leverage ratio is defined as the ratio of total debt (net of unrestricted cash in an amount not to exceed $150 million) to trailing four-quarter EBITDA. • A coverage ratio of not less than 1.75 to 1.00. Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense. • A U.S. Department of Education (the “Department” or “Department of Education”) Financial Responsibility Composite Score of not less than 1.0 for any fiscal year and not less than 1.5 for any two consecutive fiscal years. The Company was in compliance with all the terms of the Amended Credit Facility as of September 30, 2023. In September 2023, the Company repaid $40.0 million of the outstanding balance under the Revolving Credit Facility. As of December 31, 2022 and September 30, 2023, the Company had approximately $101.4 million and $61.2 million, respectively, outstanding under the Revolving Credit Facility. Approximately $3.4 million and $3.2 million was denominated in Australian dollars as of December 31, 2022 and September 30, 2023, respectively. During the nine months ended September 30, 2022 and 2023, the Company paid $3.0 million and $5.4 million, respectively, of interest and unused commitment fees related to its Revolving Credit Facility. |
Other Long-Term Liabilities
Other Long-Term Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities, Noncurrent [Abstract] | |
Other Long-Term Liabilities | Other Long-Term Liabilities Other long-term liabilities consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Contract liabilities, net of current portion $ 36,540 $ 34,738 Asset retirement obligations 6,283 5,273 Other 3,183 2,948 Other long-term liabilities $ 46,006 $ 42,959 Contract Liabilities As discussed in Note 3, in connection with its student tuition contracts, the Company has an obligation to provide free classes in the future should certain eligibility conditions be maintained (the Graduation Fund). Long-term contract liabilities represent the amount of revenue under these arrangements that the Company expects will be realized after one year. Asset Retirement Obligations Certain of the Company’s lease agreements require the leased premises to be returned in a predetermined condition. |
Equity Awards
Equity Awards | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Awards | Equity Awards The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Instructional and support costs $ 1,802 $ 597 $ 5,190 $ 4,128 General and administration 3,810 3,210 11,019 10,708 Restructuring costs — 270 — 366 Stock-based compensation expense included in operating expense 5,612 4,077 16,209 15,202 Tax benefit 1,460 1,054 4,250 3,988 Stock-based compensation expense, net of tax $ 4,152 $ 3,023 $ 11,959 $ 11,214 During the nine months ended September 30, 2022 and 2023, the Company recognized shortfall tax impacts of approximately $1.4 million related to share-based payment arrangements, which were adjustments to the provision for income taxes. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the nine months ended September 30, 2022 and 2023, the Company recorded income tax expense of $13.6 million and $14.8 million, reflecting an effective tax rate of 32.5% and 32.6%, respectively. Income tax expense for the nine months ended September 30, 2022 and 2023 include shortfall tax impacts of approximately $1.4 million related to share-based payment arrangements. The Company had $0.9 million of unrecognized tax benefits as of December 31, 2022 and September 30, 2023. Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the unaudited condensed consolidated statements of income. The Company paid $20.2 million and $35.6 million in income taxes during the nine months ended September 30, 2022 and 2023, respectively. The tax years since 2019 remain open for federal tax examination, the tax years since 2018 remain open to examination by certain states, and the tax years since 2017 remain open to examination by foreign taxing jurisdictions in which the Company is subject to taxation. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Strategic Education is an educational services company that provides access to high-quality education through campus-based and online post-secondary education offerings, as well as through programs to develop job-ready skills for high-demand markets. Strategic Education’s portfolio of companies is dedicated to closing the skills gap by placing adults on the most direct path between learning and employment. The Company’s organizational structure includes three operating and reportable segments: U.S. Higher Education, Education Technology Services, and Australia/New Zealand. The USHE segment provides flexible and affordable certificate and degree programs to working adults primarily through Strayer University and Capella University, including the Jack Welch Management Institute MBA, which is a unit of Strayer University. USHE also operates non-degree web and mobile application development courses through Hackbright Academy and Devmountain, which are units of Strayer University. The Education Technology Services segment is primarily focused on developing and maintaining relationships with employers to build employee education benefits programs that provide employees with access to affordable and industry relevant training, certificate, and degree programs. The employer relationships developed by the Education Technology Services division are an important source of student enrollment for Strayer University and Capella University, and the majority of the revenue attributed to the Education Technology Services division is driven by the volume of enrollment derived from these employer relationships. Education Technology Services also supports employer partners through Workforce Edge, a platform which provides employers a full-service education benefits administration solution, and Sophia Learning, which enables education benefits programs through the use of low-cost online general education-level courses recommended by the American Council on Education for credit at other colleges and universities. The Australia/New Zealand segment is comprised of Torrens University, Think Education and Media Design School in Australia and New Zealand, which collectively offer certificate and degree programs in business, design, education, hospitality, healthcare, and technology through campuses in Australia, New Zealand, and online. Revenue and operating expenses are generally directly attributable to the segments. Inter-segment revenues are not presented separately, as these amounts are immaterial. The Company’s Chief Operating Decision Maker does not evaluate operating segments using asset information. A summary of financial information by reportable segment for the three and nine months ended September 30, 2022 and 2023 is presented in the following table (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Revenues U.S. Higher Education $ 185,499 $ 201,828 $ 571,291 $ 601,402 Australia/New Zealand 61,177 63,264 177,232 170,239 Education Technology Services 16,447 20,844 47,019 58,581 Consolidated revenues $ 263,123 $ 285,936 $ 795,542 $ 830,222 Income (loss) from operations U.S. Higher Education $ (1,948) $ 10,412 $ 25,386 $ 26,742 Australia/New Zealand 8,934 13,875 20,506 20,984 Education Technology Services 5,222 8,316 15,237 20,278 Amortization of intangible assets (3,522) (3,382) (10,954) (10,364) Merger and integration costs (269) (330) (933) (1,335) Restructuring costs (610) (3,262) (6,129) (15,208) Consolidated income from operations $ 7,807 $ 25,629 $ 43,113 $ 41,097 |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation The Company is involved in litigation and other legal proceedings arising out of the ordinary course of its business. Certain of these matters are discussed below. From time to time, certain matters may arise that are other than ordinary and routine. The outcome of such matters is uncertain, and the Company may incur costs in the future to defend, settle, or otherwise resolve them. The Company accrues for estimated costs related to existing lawsuits, claims and proceedings when it is probable that it will incur these costs in the future and the costs are reasonably estimable. The Company currently believes that the ultimate outcome of such matters will not, individually or in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could materially affect future results of operations in a particular period. On April 20, 2021, Capella University received a letter from the Department of Education referencing Wright, et al. v. Capella Education Co., et al. (subsequently captioned Ornelas, et al. v. Capella, et al.) , United States District Court for the District of Minnesota, Case No. 18-cv-1062, and indicating that the Department would require a fact-finding process pursuant to the borrower defense to repayment regulations to determine the validity of more than 1,000 borrower defense applications that have been submitted regarding Capella University. According to the Department, some of the applications allege similar claims as in the Wright matter concerning alleged misrepresentations of the length of time to complete doctoral programs. Capella University subsequently received approximately 500 applications for borrower defense to repayment. Capella University contested each claim for defense to repayment in individualized responses with supporting evidence, the last of which was sent to the Department in August 2021. Since that time, Capella University has not received any communication from the Department related to the set of borrower defense claims received in 2021, nor has Capella University received indication that any of these claims has been evaluated on the facts presented and adjudicated on the merits. On June 22, 2022, in litigation in which Capella University is not a party, Sweet, et al. v. Miguel Cardona and the United States Department of Education , United States District Court for the Northern District of California, Case No. 3:19-cv-03674-WHA, the Department joined a proposed class settlement agreement that would result in a blanket grant of automatic, presumptive relief for all borrower defense to repayment applications filed by students at any of approximately 150 different listed institutions, including Capella University, through June 22, 2022. The class settlement agreement would also provide certain expedited review of borrower defense claims related to schools excluded from the automatic relief list, as well as for borrowers who applied during the period after execution of the settlement and before final approval. The court granted final approval of the settlement on November 16, 2022. Intervenors, including multiple intervening higher education institutions and companies, appealed the court’s order and moved to stay the court’s final judgment approving the settlement pending resolution of the appeal. Intervenors’ attempts to stay the judgment pending full consideration of appeal have been denied, including by the U.S. Supreme Court on April 13, 2023. In a July 25, 2022 filing in the same litigation, the Department stated that providing automatic relief to such borrowers “does not constitute the granting or adjudication of a borrower defense pursuant to the Borrower Defense Regulations, and therefore provides no basis to the Department for initiating a borrower defense recoupment proceeding against any institution identified” on the list. It is unclear whether the Department would attempt to seek recovery from Capella University for the amounts of discharged loans. The Department has indicated that any recoupment against institutions “could be imposed only after the Department initiated a separate, future proceeding, in accordance with regulations that require the Department to prove a sufficient basis for liability and provide schools with notice and an opportunity to be heard.” If the Department were to seek recovery for the amounts of discharged loans, Capella University would dispute and defend against such efforts. At this time, the Company is unable to predict the ultimate outcome of Capella-related borrower defense applications. |
Regulation
Regulation | 9 Months Ended |
Sep. 30, 2023 | |
Regulation [Abstract] | |
Regulation | Regulation Our higher education institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition, and results of operations. Other than as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our Annual Report on Form 10-K for the year ended December 31, 2022. United States Regulation CARES Act On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. Among other things, the CARES Act suspended payments and interest accrual on federal student loans until September 30, 2020, in addition to suspending involuntary collections such as wage garnishment, tax refund reductions, and reductions of federal benefits like Social Security benefits during the same timeframe. On March 30, 2021, the Secretary of Education also extended student loan relief to all Federal Family Education Loans (“FFEL”) not previously covered. In June 2023, the Department of Education announced that student loan interest would begin to accrue on September 1, 2023, and student loan repayment resumed in October 2023. American Rescue Plan Act of 2021 On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021. Among other things, the legislation amended the “90/10 Rule” to include “all federal education assistance” in the “90” side of the ratio calculation. See “Item 1. Business – Regulation – U.S. Regulatory Environment – The 90/10 Rule” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a description of the 90/10 Rule. The legislation required the Department to conduct a negotiated rulemaking process to modify related Department regulations, which the Department began in January 2022. In March 2022, the Institutional and Programmatic Eligibility negotiated rulemaking committee reached consensus on changes to the 90/10 Rule. On October 27, 2022, the Department of Education released final 90/10 regulations, which are largely consistent with the consensus language. However, within the preamble of the regulation the Department indicated that non-Title IV eligible programs offered via distance education are not eligible to be counted in the “10” side of the ratio calculation. The final regulations also provided for an expanded definition of “federal education assistance” that will be periodically defined by the Secretary of Education. On December 20, 2022, the Department published guidance further indicating that non-Title IV eligible programs offered in part or in whole via distance education are not eligible to be counted in the “10” side of the ratio calculation, and has continued to issue guidance related to implementation of the new rule. On December 21, 2022, the Department released a non-exhaustive list of federal agencies and federal education assistance programs that must be included as federal revenue in the 90/10 calculation. Such agencies include the U.S. Department of Defense (military tuition assistance) and the Department of Veterans Affairs (veterans education benefits), in addition to the Title IV programs already covered by the 90/10 Rule. The new 90/10 regulations are effective for fiscal years beginning on or after January 1, 2023. Current Negotiated Rulemaking Improving Institutional Quality and Accountability Committee In January 2023, the Department indicated its intention to establish one or more rulemaking committees in 2023 to propose new regulations on distance education, improving the use of deferments and forbearances, third-party servicers and related issues, cash management, return of federal funds, state authorization, accreditation and related issues, and TRIO programs. The Department invited interested parties to comment on the topics suggested by the Department at public hearings held on April 11 and 12, 2023. The Department also accepted written comments through April 24, 2023. Section 432(a) Committee In June 2023, the Department indicated its intention to establish a rulemaking committee related to the modification, waiver or compromise of federal student loans, as permitted in HEA Section 432(a). The Department held a public hearing on July 18, and accepted written comments through July 20, 2023. In September 2023, the Department announced its selection of non-federal negotiators and the first round of rulemaking meetings were held on October 10 and 11, 2023. The rulemaking committee is also scheduled to meet in November and December 2023. Following completion of negotiated rulemaking committee meetings, the Department of Education issues proposed rules for public comment. If the negotiated rulemaking committee reaches consensus on a topic, the Department of Education is bound to propose a rule consistent with the consensus. Following public comment, the Department issues final regulations, which, if published by November 1, would generally take effect July 1 of the following year. Financial Value Transparency and Gainful Employment, Financial Responsibility, Administrative Capability, Certification Procedures, and Ability to Benefit On May 17, 2023, the Department released proposed rules on financial value transparency and gainful employment, financial responsibility, administrative capability, certification procedures, and ability to benefit. On September 27, 2023, the Department released final regulations on financial value transparency and gainful employment, which are largely consistent with the proposed rule. The gainful employment final rule establishes two independent metrics, both of which must be passed by a gainful employment program subject to the rule in order to maintain Title IV eligibility. Any gainful employment program that fails either or both metrics in a single year would be required to provide a disclosure to current and prospective students, and any such program that fails the same metric in two out of three consecutive years for which the program’s metrics are calculated would lose its access to federal financial aid. The two metrics are 1) a debt-to-earnings ratio that compares the median earnings of graduates who received federal financial aid to the median annual payments on loan debt borrowed for the program, which must be less than or equal to 8% of annual earnings or 20% of discretionary earnings, and 2) an earnings premium test that measures whether the typical graduates from a program that received federal financial aid earn more than a typical high school graduate in their state (or, in some cases, nationally) and within a certain age range in the labor force. A program that fails in two out of three consecutive years, or is voluntarily discontinued by the institution, would not be eligible to have Title IV reinstated for the program or launch and receive Title IV for a “substantially similar program” (generally defined as a program with the same four-digit CIP code) for a minimum of three years. The final rule describes that the Department will now measure earnings six years after graduation (instead of the proposed rule’s three years after graduation) for certain qualifying graduate programs such as clinical psychology, marriage and family therapy, clinical social work, and clinical counseling. The final rule also includes the requirement that, beginning July 1, 2026, all schools provide a link to a Department of Education-hosted website that includes information on cost, earnings, and licensure information, and the gainful employment metrics. The final gainful employment regulations will take effect July 1, 2024. The Department has indicated that it will release metrics beginning in the 2025 financial aid award year. Beginning July 1, 2026, if a program fails a metric, an institution must provide warnings to students and prospective students meeting certain minimum requirements to be specified by the Department; programs that fail the same metric in the first two years the rates are issued will lose eligibility in 2026. On October 23, 2023, the Department released final rules on financial responsibility, administrative capability, certification procedures, and ability to benefit. The Department’s final rules regarding financial responsibility establish new mandatory triggers—including but not limited to failing 90/10, receiving at least 50% of funds from programs that are failing gainful employment, or being subject to a Department action to recover losses from approved Borrower Defense to Repayment claims that would cause a recalculated composite score to fall below 1.0—that allow the Department to seek financial protection or recalculate the institution’s financial composite score to determine whether an institution’s financial condition has materially weakened. The rules also establish new discretionary triggers that will result in the Department conducting case-by-case analysis to see if additional protection is needed. In general, institutions will be required to report triggering events within 21 days of occurrence. According to the regulation, such triggering events may result in a financial protection requirement that would most likely take the form of a letter of credit or cash escrow and provisional certification to participate in Title IV. Under the final administrative capability rule, institutions will be required to offer adequate services to students, including financial aid counseling and career services support. The final language also includes a new requirement that institutions provide students with geographically accessible clinical or externship opportunities as required for licensure. In final rules regarding certification procedures, the Department indicates, among other things, that it will consider withdrawal rates, gainful employment rates, licensure passage rates, and instructional and advertising spend when making institutional eligibility determinations. The regulation also provides the Secretary authority to require institutions to submit all marketing materials in cases where the institution is provisionally certified and is found to have engaged in substantial misrepresentation, aggressive recruitment, or a failure to comply with incentive compensation rules. The final regulation also makes changes regarding licensure-track programs, including preventing an institution from offering Title IV aid to a student enrolled in a program that does not meet educational prerequisites for licensure in the state in which the student is located. The Department’s final regulation also requires institutions to comply with all State laws related to closure, including record retention, teach-out plans or agreements and tuition recovery funds or surety bonds for each state in which the institution is located and in each state in which students enrolled by the institution in distance education courses are located. Borrower Defenses to Repayment On March 16, 2022, Federal Student Aid (“FSA”) announced that it is monitoring complaints and borrower defense to repayment (“BDTR”) applications from veterans, service members and their family members who report claims of deceptive recruitment and enrollment practices, including misrepresentations related to cost, financing, and application of military and veteran benefits. The Department indicated that it will seek all appropriate corrective measures pursuant to the BDTR regulations if it finds that an institution has engaged in substantial misrepresentation or fraudulent conduct, and that it will share information and complaints with the Department of Defense and Department of Veterans Affairs. On March 14, 2023, the Department of Education announced that the Office of Enforcement of FSA will use “secret shoppers” to monitor post-secondary institutions’ compliance with the laws and regulations governing participation in federal student aid programs. The Department indicated that secret shoppers will evaluate recruitment, enrollment, financial aid, and other practices of post-secondary institutions to help identify potentially deceptive or predatory practices used to recruit and enroll students. The Department noted that findings from secret shopping may serve as evidence in ongoing investigations and reviews or serve as the basis for opening new investigations and reviews. The Department further noted that, where appropriate and permissible, FSA may refer secret shopping findings to other offices within the Department, as well as other state and federal enforcement agencies. The Department of Education’s final BDTR rules that took effect on July 1, 2023 are currently being challenged in litigation, to which we are not a party. The litigation alleges that the new rules are unconstitutional, arbitrary and capricious, and that the Department has exceeded its authority in adopting them. On August 7, 2023, the U.S. Court of Appeals for the Fifth Circuit granted a nationwide emergency injunction preventing the Department of Education’s enforcement of the final BDTR and closed school discharge rules. The matter will be heard by the Fifth Circuit panel during the sitting commencing November 6, 2023, and the previous versions of the BDTR and closed school discharge rules remain in effect until at least then. The Company is unable to predict the ultimate outcome of the litigation. Accrediting Agencies and State Authorization Capella University’s accreditor, Higher Learning Commission (“HLC”), and Strayer University’s accreditor, Middle States Commission on Higher Education (“Middle States”), must periodically be reviewed by the U.S. Secretary of Education in order to maintain recognition as an institutional accrediting agency. On May 31, 2023, the Department of Education, acting on the recommendation of the National Advisory Committee for Institutional Quality and Integrity, renewed its recognition of HLC for a period of five years and required it provide a monitoring report regarding one item of substantial compliance, and continued the current recognition of Middle States for one year, requiring a compliance report regarding one item of noncompliance. State Authorization Reciprocity Agreement (SARA) Strayer University and Capella University participate in the State Authorization Reciprocity Agreement (“SARA”), which allows the Universities to enroll students in distance education programs in each SARA member state, including 49 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Each of the Universities applies separately to non-SARA member states (i.e., California) for authorization to enroll students, if such authorization is required by the state. On March 1, 2023, SARA’s coordinating entity, the National Council for State Authorization Reciprocity Agreements (“NC-SARA”), held its first of two public comment forums to seek input on potential changes to NC-SARA policies. The forum included a discussion of 63 proposed policy changes, some of which, if adopted, would have significantly altered the distance education reciprocity agreements, including a proposal that NC-SARA permit states to apply more stringent standards to for-profit institutions or to eliminate the ability of for-profit institutions to participate in the agreements altogether. In addition to the public comment forums, written comments were accepted through May 17, 2023. In September 2023, NC-SARA’s four regional compacts completed evaluation of the proposed policy changes and unanimously approved six proposed policy changes to be voted upon by the NC-SARA board of directors on October 24, 2023. The remaining proposed policy changes to be voted upon do not include the proposals to permit states to apply more stringent standards to for-profit institutions or exclude for-profit institutions from NC-SARA participation. Title IX On June 23, 2022, the Department of Education released proposed Title IX regulations for public comment. Among other changes, the proposed rule would address all forms of sex-based harassment (not only sexual harassment); clarify that Title IX’s prohibition against sex discrimination includes discrimination on the basis of sex stereotypes, sex characteristics, pregnancy or related conditions, sexual orientation, and gender identity; and eliminate the requirement for live hearings at the post-secondary level. The public comment period on the proposed rule ended on September 12, 2022, and the Department has indicated its intention to publish a final Title IX rule in October 2023. When the Department publishes the final Title IX rule, it will indicate an effective date. Third-Party Servicers Department of Education regulations permit an institution to enter into a written contract with a third-party servicer for the administration of any aspect of the institution’s participation in Title IV programs. The third-party servicer must, among other obligations, comply with Title IV requirements and be jointly and severally liable with the institution to the Secretary of Education for any violation by the servicer of any Title IV provision. An institution must report to the Department of Education new contracts or any significant modifications to contracts with third-party servicers as well as other matters related to third-party servicers. On February 15, 2023 the Department released a Dear Colleague Letter (“DCL”) (GEN 23-03) with updated guidance expanding the definition of third-party servicers and covered activities to include vendors providing student recruitment and retention services, software products and services related to Title IV administration activities, and educational content and instruction, initially requiring institutions to be in compliance with the new guidance by May 1, 2023. On February 28, 2023, the Department extended the effective date of the updated guidance and reporting requirements from May 1, 2023 to September 1, 2023. On April 11, 2023, the Department again delayed the effective date until six months after the Department publishes a new, revised final guidance letter on the topic, and on May 16, 2023, the Department formally rescinded its 2023 and prior guidance (DCL GEN-16-15 and the March 8, 2017 Electronic Announcement) prohibiting contracts between colleges and foreign-owned or operated servicers. Additionally, in March 2023, the Department indicated via Federal Register publication its intention to establish a negotiated rulemaking committee in 2023 to consider new proposed regulations on third-party servicers and related issues. Program Participation Agreement As a result of the August 1, 2018 merger, Capella University experienced a change of ownership, with the Company as its new owner. On January 18, 2019, consistent with standard procedure upon a Title IV institution’s change of ownership, the Department and Capella University executed a new Provisional Program Participation Agreement, approving Capella’s continued participation in Title IV programs with provisional certification through December 31, 2022. As is typical, the Provisional Program Participation Agreement subjected Capella University to certain requirements during the period of provisional certification, including that Capella University must apply for and receive approval from the Department in connection with new locations or the addition of new Title IV-eligible educational programs. Capella University filed its application for recertification in advance of the September 30, 2022 deadline, and on April 18, 2023, Capella University and the Department of Education executed a fully certified Program Participation Agreement, approving Capella University’s continued participation in Title IV programs through September 30, 2025. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net income | $ 18,459 | $ 6,092 | $ 30,662 | $ 28,341 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. All information as of September 30, 2022 and 2023, and for the three and nine months ended September 30, 2022 and 2023 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date. Certain year-to-date amounts have been reclassified to conform to the current period’s presentation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full fiscal year. Below is a description of the nature of the costs included in the Company’s operating expense categories. Instructional and support costs generally contain items of expense directly attributable to activities that support students. This expense category includes salaries and benefits of faculty and academic administrators, as well as admissions and administrative personnel who support and serve student interests. Instructional and support costs also include course development costs and costs associated with delivering course content, including educational supplies, facilities, and all other physical plant and occupancy costs, with the exception of costs attributable to the corporate offices. Bad debt expense incurred on delinquent student account balances is also included in instructional and support costs. General and administration expenses include salaries and benefits of management and employees engaged in finance, human resources, legal, regulatory compliance, marketing and other corporate functions. Also included are the costs of advertising and production of marketing materials. General and administration expense also includes the facilities occupancy and other related costs attributable to such functions. Amortization of intangible assets consists of amortization and depreciation expense related to intangible assets and software assets acquired through the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand (“ANZ”). Merger and integration costs include integration expenses associated with the Company’s merger with Capella Education Company and the Company’s acquisition of ANZ. |
Foreign Currency Translation and Transaction Gains and Losses | Foreign Currency Translation and Transaction Gains and Losses The United States Dollar (“USD”) is the functional currency of the Company and its subsidiaries operating in the United States. The financial statements of its foreign subsidiaries are maintained in their functional currencies. The functional currency of each of the foreign subsidiaries is the currency of the economic environment in which the subsidiary primarily does business. Financial statements of foreign subsidiaries are translated into USD using the exchange rates applicable to the dates of the financial statements. Assets and liabilities are translated into USD using the period-end spot foreign exchange rates. Income and expenses are translated at the weighted-average exchange rates in effect during the period. Equity accounts are translated at historical exchange rates. The effects of these translation adjustments are reported as a component of accumulated other comprehensive income (loss) within shareholders’ equity. |
Restricted Cash | Restricted CashIn the United States, a significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from a U.S. higher education institution during the academic term.In Australia and New Zealand, advance tuition payments from international students are required to be restricted until a student commences his or her course. In addition, a portion of tuition prepayments from students enrolled in a vocational education and training program are held in trust by a third party law firm to adhere to tuition protection requirements.These balances are recorded as restricted cash and included in other current assets in the unaudited condensed consolidated balance sheets.As part of conducting operations in Pennsylvania, the Company is required to maintain a “minimum protective endowment” of at least $0.5 million in an interest-bearing account as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account, which is included in other assets. |
Marketable Securities | Marketable Securities Investments in marketable securities are carried at either amortized cost or fair value. Investments in marketable securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in marketable securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Management determines the appropriate designation of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. All of the Company’s marketable securities are designated as either held-to-maturity or available-for-sale. The Company’s available-for-sale marketable securities consist of tax-exempt municipal securities and corporate debt securities, which are carried at fair value as determined by quoted market prices or other inputs either directly or indirectly observable in the marketplace for identical or similar assets, with unrealized gains and losses, net of tax, recognized as a component of accumulated other comprehensive income (loss) within shareholders’ equity. Management reviews the fair value of the portfolio at least quarterly, and evaluates individual securities with fair value below amortized cost at the balance sheet date for impairment. In order to determine whether there is an impairment, management evaluates whether the Company intends to sell the impaired security and whether it is more likely than not that the Company will be required to sell the security before recovering its amortized cost basis. If management intends to sell an impaired debt security, or it is more likely than not the Company will be required to sell the security prior to recovering its amortized cost basis, an impairment is deemed to have occurred. The amount of an impairment related to a credit loss, or securities that management intends to sell before recovery, is recognized in earnings. The amount of an impairment on debt securities related to other factors is recorded consistent with changes in the fair value of all other available-for-sale securities as a component of accumulated other comprehensive income (loss) within shareholders’ equity. The cost of securities sold is based on the specific identification method. Amortization of premiums, accretion of discounts, interest, dividend income and realized gains and losses are included in other income. The contractual maturity date of available-for-sale securities is based on the days remaining to the effective maturity. The Company classifies marketable securities as either current or non-current assets based on management’s intent with regard to usage of those funds, which is dependent upon the security’s maturity date and liquidity considerations based on current market conditions. If management intends to hold the securities for longer than one year as of the balance sheet date, they are classified as non-current. |
Tuition Receivable and Allowance for Credit Losses | Tuition Receivable and Allowance for Credit Losses The Company records tuition receivable and contract liabilities for its students upon the start of the academic term or program. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the Company’s student bases and through the participation of the majority of the students in federally funded financial aid programs. An allowance for credit losses is established based upon historical collection rates by age of receivable and adjusted for reasonable expectations of future collection performance, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status, likelihood of future enrollment, degree mix trends and changes in the overall economic environment. In the event that current collection trends differ from historical trends, an adjustment is made to the allowance for credit losses and bad debt expense. |
Assets Held for Sale | Assets Held for Sale The Company classifies assets and liabilities as held for sale (“disposal group”) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable to be completed within one year, and the disposal group is available for immediate sale in its present condition. The Company also considers whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a disposal group that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Gains are not recognized until the date of sale. Assets are not depreciated or amortized while they are classified as held for sale. Upon determining that a disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group as assets held for sale and liabilities held for sale in its unaudited condensed consolidated balance sheets. Over the last several years, the Company has been evaluating its owned and leased real estate portfolio to identify underutilized facilities to either downsize or exit. One facility identified to be marketed for sale was an owned U.S. Higher Education campus consisting of land, buildings, and building improvements. The Company determined that it met all of the criteria to classify these assets as held for sale as of March 31, 2023. No loss was recorded as the carrying amount of the net assets was less than the fair value less costs to sell. Fair value was determined based upon the anticipated sales price of these assets. During the second quarter of 2023, the Company sold the long-lived assets related to the owned U.S. Higher Education campus noted above and recognized a $2.1 million gain on sale, which is included in Restructuring costs on the unaudited condensed consolidated statements of income. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets, which include trade names, are recorded at fair value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets are assessed at least annually for impairment on the first day of the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible asset below its carrying amount. The Company identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available, and management regularly reviews the operating results of those components. Finite-lived intangible assets that are acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the asset. Finite-lived intangible assets consist of student relationships. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. |
Authorized Stock | Authorized Stock The Company has authorized 32,000,000 shares of common stock, par value $0.01, of which 24,402,891 and 24,419,092 shares were issued and outstanding as of December 31, 2022 and September 30, 2023, respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which is issued or outstanding. Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. In July 2023, the Company’s Board of Directors declared a regular, quarterly cash dividend of $0.60 per share of common stock. The dividend was paid on September 11, 2023. |
Net Income Per Share | Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock, and restricted stock units (“stock awards”). The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, all of the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options, and (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company. Stock awards are excluded from the computation of diluted earnings per share when their effect would be anti-dilutive. |
Comprehensive Income (Loss) | Comprehensive Income (Loss)Comprehensive income (loss) includes net income and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of unrealized gains and losses on available-for-sale marketable securities, net of tax, and foreign currency translation adjustments. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates include allowances for credit losses, useful lives of property and equipment and intangible assets, incremental borrowing rates, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill and intangible assets, and the provision for income taxes. Actual results could differ from those estimates. |
Recently Issued Accounting Standards Not Yet Adopted | Recently Issued Accounting Standards Not Yet Adopted Accounting Standards Updates recently issued by the FASB but not yet effective are not expected to have a material effect on the Company’s consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Cash, Cash Equivalents, and Restricted Cash | The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows as of September 30, 2022 and 2023 (in thousands): As of September 30, 2022 2023 Cash and cash equivalents $ 262,757 $ 167,707 Restricted cash included in other current assets 15,145 13,238 Restricted cash included in other assets 500 500 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 278,402 $ 181,445 |
Schedule of Tuition Receivable and Allowance for Credit Losses | The Company’s tuition receivable and allowance for credit losses were as follows as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Tuition receivable $ 110,066 $ 145,775 Allowance for credit losses (47,113) (48,346) Tuition receivable, net $ 62,953 $ 97,429 |
Schedule of Allowance for Credit Losses | The following table illustrates changes in the Company’s allowance for credit losses for the three and nine months ended September 30, 2022 and 2023 (in thousands). For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Allowance for credit losses, beginning of period $ 43,507 $ 45,877 $ 48,783 $ 47,113 Additions charged to expense 11,895 14,880 27,899 37,138 Write-offs, net of recoveries (10,462) (12,411) (31,742) (35,905) Allowance for credit losses, end of period $ 44,940 $ 48,346 $ 44,940 $ 48,346 |
Schedule of Reconciliation of Shares Used to Calculate Basic and Diluted Earnings per Share | Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Weighted average shares outstanding used to compute basic earnings per share 23,550 23,365 23,765 23,415 Incremental shares issuable upon the assumed exercise of stock options 3 3 3 4 Unvested restricted stock and restricted stock units 349 502 258 533 Shares used to compute diluted earnings per share 23,902 23,870 24,026 23,952 Anti-dilutive shares excluded from the diluted earnings per share calculation 11 276 149 219 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue from Contracts with Customers | The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 U.S. Higher Education Segment Tuition, net of discounts, grants and scholarships $ 177,678 $ 192,850 $ 546,407 $ 575,725 Other (1) 7,821 8,978 24,884 25,677 Total U.S. Higher Education Segment 185,499 201,828 571,291 601,402 Australia/New Zealand Segment Tuition, net of discounts, grants and scholarships 60,238 61,667 173,621 165,855 Other (1) 939 1,597 3,611 4,384 Total Australia/New Zealand Segment 61,177 63,264 177,232 170,239 Education Technology Services Segment (2) 16,447 20,844 47,019 58,581 Consolidated revenue $ 263,123 $ 285,936 $ 795,542 $ 830,222 _________________________________________ (1) Other revenue is primarily comprised of academic fees, sales of course materials, placement fees and other non-tuition revenue streams. (2) Education Technology Services revenue is primarily derived from tuition revenue. |
Schedule of Graduation Fund liability | The table below presents activity in the contract liability related to the Graduation Fund (in thousands): For the nine months ended September 30, 2022 2023 Balance at beginning of period $ 52,024 $ 46,842 Revenue deferred 12,647 14,543 Benefit redeemed (16,295) (16,931) Balance at end of period $ 48,376 $ 44,454 |
Restructuring and Related Cha_2
Restructuring and Related Charges (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Liability by Type of Cost | The following details the changes in the Company’s severance and other employee separation costs restructuring liabilities related to the 2020 restructuring plan during the nine months ended September 30, 2022 (in thousands): 2020 Balance at December 31, 2021 $ 1,612 Restructuring and other charges 1,241 Payments (2,853) Balance at September 30, 2022 $ — The following details the changes in the Company's severance and other employee separation costs restructuring liabilities during the nine months ended September 30, 2023 (in thousands): Severance Restructuring Liability Balance at December 31, 2022 $ — Restructuring and other charges 11,256 Payments (8,731) Balance at September 30, 2023 (1) $ 2,525 ____________________________________ |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Marketable Securities | The following is a summary of available-for-sale and held-to-maturity securities as of September 30, 2023 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Available-for-sale securities: Tax-exempt municipal securities $ 11,654 $ 1 $ (263) $ 11,392 Corporate debt securities 3,204 — (122) 3,082 Total available-for sale securities $ 14,858 $ 1 $ (385) $ 14,474 Held-to-maturity securities: Term deposits $ 16,400 $ — $ — $ 16,400 The following is a summary of available-for-sale securities as of December 31, 2022 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Available-for-sale securities: Tax-exempt municipal securities $ 15,852 $ 2 $ (507) $ 15,347 Corporate debt securities 7,140 — (208) 6,932 Total $ 22,992 $ 2 $ (715) $ 22,279 |
Schedule of Maturities of Marketable Securities | The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Available-for-sale securities Held-to-maturity securities Available-for-sale securities Held-to-maturity securities Due within one year $ 9,156 $ — $ 12,560 $ 16,400 Due after one year through three years 13,123 — 1,914 — Total $ 22,279 $ — $ 14,474 $ 16,400 |
Schedule of Proceeds from the Maturities of Marketable Securities | The following table summarizes the proceeds from the maturities and sales of available-for-sale securities for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Maturities of marketable securities $ 500 $ 3,215 $ 2,600 $ 8,175 Sales of marketable securities — — — — Total $ 500 $ 3,215 $ 2,600 $ 8,175 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value On A Recurring Basis | Assets measured at fair value on a recurring basis consist of the following as of September 30, 2023 (in thousands): Fair Value Measurements at Reporting Date Using September 30, 2023 Quoted Prices in Significant Significant Assets: Money market funds $ 78,308 $ 78,308 $ — $ — U.S. treasury bills 14,915 14,915 — — Available-for-sale securities : Tax-exempt municipal securities 11,392 — 11,392 — Corporate debt securities 3,082 — 3,082 — Total assets at fair value on a recurring basis $ 107,697 $ 93,223 $ 14,474 $ — Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2022 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2022 Quoted Prices in Significant Significant Assets: Money market funds $ 217 $ 217 $ — $ — Available-for-sale securities : Tax-exempt municipal securities 15,347 — 15,347 — Corporate debt securities 6,932 — 6,932 — Total assets at fair value on a recurring basis $ 22,496 $ 217 $ 22,279 $ — |
Schedule of Changes in Fair Value of Level 3 Liability | Changes in the fair value of the Company’s Level 3 liabilities during the nine months ended September 30, 2022 are as follows (in thousands): As of September 30, 2022 Balance as of the beginning of period $ 658 Amounts paid (658) Other adjustments to fair value — Balance at end of period $ — |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The following table presents changes in the carrying value of goodwill by segment for the nine months ended September 30, 2023 (in thousands): U.S. Higher Education Australia / Education Technology Services Total Balance as of December 31, 2022 $ 632,075 $ 519,202 $ 100,000 $ 1,251,277 Additions — — — — Impairments — — — — Currency translation adjustments — (22,846) — (22,846) Adjustments to prior acquisitions — — — — Balance as of September 30, 2023 $ 632,075 $ 496,356 $ 100,000 $ 1,228,431 |
Schedule of Finite-Lived Intangible Assets | The following table represents the balance of the Company’s intangible assets as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Subject to amortization Student relationships $ 200,185 $ (191,125) $ 9,060 $ 200,095 $ (199,155) $ 940 Not subject to amortization Trade names 251,481 — 251,481 248,574 — 248,574 Total $ 451,666 $ (191,125) $ 260,541 $ 448,669 $ (199,155) $ 249,514 |
Schedule of Indefinite-Lived Intangible Assets | The following table represents the balance of the Company’s intangible assets as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Subject to amortization Student relationships $ 200,185 $ (191,125) $ 9,060 $ 200,095 $ (199,155) $ 940 Not subject to amortization Trade names 251,481 — 251,481 248,574 — 248,574 Total $ 451,666 $ (191,125) $ 260,541 $ 448,669 $ (199,155) $ 249,514 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Prepaid expenses $ 19,073 $ 23,685 Restricted cash 13,287 13,238 Cloud computing arrangements 7,859 7,231 Other 3,066 4,535 Other current assets $ 43,285 $ 48,689 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | Other assets consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Prepaid expenses, net of current portion $ 18,192 $ 17,321 Equity method investments 13,879 16,175 Cloud computing arrangements, net of current portion 7,507 12,021 Other investments 3,396 2,806 Tuition receivable, net, non-current 2,673 2,559 Other 4,005 4,063 Other assets $ 49,652 $ 54,945 |
Schedule of Changes in Company's Limited Partnership Investments | The following table illustrates changes in the Company’s limited partnership investments for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Limited partnership investments, beginning of period $ 14,011 $ 17,205 $ 15,582 $ 13,879 Capital contributions — 162 48 314 Pro-rata share in the net income (loss) of limited partnerships (32) (114) 32 3,060 Distributions — (1,078) (1,683) (1,078) Limited partnership investments, end of period $ 13,979 $ 16,175 $ 13,979 $ 16,175 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payables and Accrued Expenses | Accounts payable and accrued expenses consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Trade payables $ 45,826 $ 54,856 Accrued compensation and benefits 32,608 36,767 Accrued student obligations and other 12,154 10,499 Accounts payable and accrued expenses $ 90,588 $ 102,122 |
Other Long-Term Liabilities (Ta
Other Long-Term Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities, Noncurrent [Abstract] | |
Schedule of Other Long-term Liabilities | Other long-term liabilities consist of the following as of December 31, 2022 and September 30, 2023 (in thousands): December 31, 2022 September 30, 2023 Contract liabilities, net of current portion $ 36,540 $ 34,738 Asset retirement obligations 6,283 5,273 Other 3,183 2,948 Other long-term liabilities $ 46,006 $ 42,959 |
Equity Awards (Tables)
Equity Awards (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three and nine months ended September 30, 2022 and 2023 (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Instructional and support costs $ 1,802 $ 597 $ 5,190 $ 4,128 General and administration 3,810 3,210 11,019 10,708 Restructuring costs — 270 — 366 Stock-based compensation expense included in operating expense 5,612 4,077 16,209 15,202 Tax benefit 1,460 1,054 4,250 3,988 Stock-based compensation expense, net of tax $ 4,152 $ 3,023 $ 11,959 $ 11,214 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Financial Information by Reportable Segment | A summary of financial information by reportable segment for the three and nine months ended September 30, 2022 and 2023 is presented in the following table (in thousands): For the three months ended September 30, For the nine months ended September 30, 2022 2023 2022 2023 Revenues U.S. Higher Education $ 185,499 $ 201,828 $ 571,291 $ 601,402 Australia/New Zealand 61,177 63,264 177,232 170,239 Education Technology Services 16,447 20,844 47,019 58,581 Consolidated revenues $ 263,123 $ 285,936 $ 795,542 $ 830,222 Income (loss) from operations U.S. Higher Education $ (1,948) $ 10,412 $ 25,386 $ 26,742 Australia/New Zealand 8,934 13,875 20,506 20,984 Education Technology Services 5,222 8,316 15,237 20,278 Amortization of intangible assets (3,522) (3,382) (10,954) (10,364) Merger and integration costs (269) (330) (933) (1,335) Restructuring costs (610) (3,262) (6,129) (15,208) Consolidated income from operations $ 7,807 $ 25,629 $ 43,113 $ 41,097 |
Nature of Operations - Narrativ
Nature of Operations - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reporting segments | 3 |
Significant Accounting Polici_4
Significant Accounting Policies - Schedule of Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash included in other current assets | $ 13,238 | $ 15,145 | |
Restricted cash included in other assets | 500 | $ 500 | |
United States | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash included in other current assets | 2,100 | $ 1,400 | |
Australia and New Zealand | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash included in other current assets | 11,200 | $ 11,900 | |
PENNSYLVANIA | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Restricted cash included in other assets | $ 500 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 167,707 | $ 213,667 | $ 262,757 | |
Restricted cash included in other current assets | 13,238 | 15,145 | ||
Restricted cash included in other assets | 500 | 500 | ||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 181,445 | $ 227,454 | $ 278,402 | $ 279,212 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Tuition Receivable and Allowance for Credit Losses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Tuition receivable | $ 145,775 | $ 110,066 |
Allowance for credit losses | (48,346) | (47,113) |
Tuition receivable, net | 97,429 | 62,953 |
Tuition receivable, noncurrent | 2,559 | 2,673 |
Other Noncurrent Assets | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Tuition receivable, noncurrent | $ 2,600 | $ 2,700 |
Significant Accounting Polici_7
Significant Accounting Policies - Schedule of Allowance for Credit Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Allowance for credit losses, beginning of period | $ 45,877 | $ 43,507 | $ 47,113 | $ 48,783 |
Additions charged to expense | 14,880 | 11,895 | 37,138 | 27,899 |
Write-offs, net of recoveries | (12,411) | (10,462) | (35,905) | (31,742) |
Allowance for credit losses, end of period | $ 48,346 | $ 44,940 | $ 48,346 | $ 44,940 |
Significant Accounting Polici_8
Significant Accounting Policies - Assets Held for Sale (Details) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Mar. 31, 2023 uSHigherEducationCampus | |
Accounting Policies [Abstract] | |||
Number of facilities held for sale | uSHigherEducationCampus | 1 | ||
Impairment charge | $ 0 | ||
Gain on sale of long-lived assets | $ 2,100,000 |
Significant Accounting Polici_9
Significant Accounting Policies - Authorized Stock (Details) - $ / shares | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Sep. 11, 2023 | Jul. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | |||||||
Common stock, shares authorized (in shares) | 32,000,000 | 32,000,000 | 32,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Common stock, shares issued (in shares) | 24,419,092 | 24,419,092 | 24,402,891 | ||||
Common stock, shares outstanding (in shares) | 24,419,092 | 24,419,092 | 24,402,891 | ||||
Preferred stock, shares authorized (in shares) | 8,000,000 | 8,000,000 | 8,000,000 | ||||
Issued shares of preferred stock (in shares) | 0 | 0 | 0 | ||||
Outstanding shares of preferred stock (in shares) | 0 | 0 | 0 | ||||
Common stock dividends declared (in dollars per share) | $ 0.60 | $ 0.60 | $ 0.60 | $ 1.80 | $ 1.80 | ||
Common stock dividends paid (in dollars per share) | $ 0.60 |
Significant Accounting Polic_10
Significant Accounting Policies - Schedule of Reconciliation of Shares Used to Calculate Basic and Diluted Earnings per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of reconciliation of shares used to calculate basic and diluted earnings per share | ||||
Weighted average shares outstanding used to compute basic earnings per share (in shares) | 23,365 | 23,550 | 23,415 | 23,765 |
Incremental shares issuable upon the assumed exercise of stock options (in shares) | 3 | 3 | 4 | 3 |
Unvested restricted stock and restricted stock units (in shares) | 502 | 349 | 533 | 258 |
Shares used to compute diluted earnings per share (in shares) | 23,870 | 23,902 | 23,952 | 24,026 |
Anti-dilutive shares excluded from the diluted earnings per share calculation (in shares) | 276 | 11 | 219 | 149 |
Significant Accounting Polic_11
Significant Accounting Policies - Comprehensive Income (Loss) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | |||||
Accumulated other comprehensive loss | $ (62,878,000) | $ (62,878,000) | $ (35,068,000) | ||
Tax from unrealized losses on marketable securities | 100,000 | $ 100,000 | |||
Reclassifications from AOCI | $ 0 | $ 0 | $ 0 | $ 0 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | $ 285,936 | $ 263,123 | $ 830,222 | $ 795,542 |
U.S. Higher Education Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 201,828 | 185,499 | 601,402 | 571,291 |
U.S. Higher Education Segment | Tuition, net of discounts, grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 192,850 | 177,678 | 575,725 | 546,407 |
U.S. Higher Education Segment | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 8,978 | 7,821 | 25,677 | 24,884 |
Australia/New Zealand Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 63,264 | 61,177 | 170,239 | 177,232 |
Australia/New Zealand Segment | Tuition, net of discounts, grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 61,667 | 60,238 | 165,855 | 173,621 |
Australia/New Zealand Segment | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 1,597 | 939 | 4,384 | 3,611 |
Education Technology Services Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | $ 20,844 | $ 16,447 | $ 58,581 | $ 47,019 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) term course | |
Graduation Fund [Line Items] | |
Number of free courses | 1 |
Number of successfully completed courses | 3 |
Consecutive terms of non attendance in which Graduation Fund credits will be lost | term | 1 |
Expected collection period of tuition receivable | 12 months |
Graduation fund estimated to be redeemed | $ | $ 19.4 |
Minimum | |
Graduation Fund [Line Items] | |
Expected collection period of tuition receivable, noncurrent | 2 years |
Minimum | Australia / New Zealand | |
Graduation Fund [Line Items] | |
Deferred acquisition costs, amortization period | 1 year |
Maximum | |
Graduation Fund [Line Items] | |
Expected collection period of tuition receivable, noncurrent | 4 years |
Maximum | Australia / New Zealand | |
Graduation Fund [Line Items] | |
Deferred acquisition costs, amortization period | 2 years |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Graduation Fund liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Graduation Fund [Roll Forward] | ||
Balance at beginning of period | $ 46,842 | $ 52,024 |
Revenue deferred | 14,543 | 12,647 |
Benefit redeemed | (16,931) | (16,295) |
Balance at end of period | $ 44,454 | $ 48,376 |
Restructuring and Related Cha_3
Restructuring and Related Charges - Schedule of Restructuring Liability by Type of Cost (Details) - Severance and Other Employee Separation Costs - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of restructuring liability | |||
Beginning balance | $ 0 | ||
Restructuring and other charges | $ 2,900 | 11,256 | |
Payments | (8,731) | ||
Ending balance | $ 2,525 | $ 2,525 | |
2020 Restructuring Plan | |||
Schedule of restructuring liability | |||
Beginning balance | $ 1,612 | ||
Restructuring and other charges | 1,241 | ||
Payments | (2,853) | ||
Ending balance | $ 0 |
Restructuring and Related Cha_4
Restructuring and Related Charges - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of right-of-use lease assets | $ 5,135 | $ 1,185 | ||
Gain on sale of property and equipment | 2,136 | 0 | ||
2020 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Impairment of right-of-use lease assets | $ 100 | 5,100 | 1,200 | |
Impairment of fixed asset impairment charges | $ 100 | $ 100 | 400 | 2,500 |
Gain on sale of property and equipment | 2,100 | |||
Severance and Other Employee Separation Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | $ 2,900 | $ 11,256 | ||
Severance and Other Employee Separation Costs | 2020 Restructuring Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring and other charges | $ 1,241 |
Marketable Securities - Schedul
Marketable Securities - Schedule of Available-For-Sale Securities (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Available-for-sale securities: | ||
Amortized Cost | $ 14,858,000 | $ 22,992,000 |
Gross Unrealized Gain | 1,000 | 2,000 |
Gross Unrealized (Losses) | (385,000) | (715,000) |
Estimated Fair Value | 14,474,000 | 22,279,000 |
Held-to-maturity securities: | ||
Amortized Cost | 0 | |
Tax-exempt municipal securities | ||
Available-for-sale securities: | ||
Amortized Cost | 11,654,000 | 15,852,000 |
Gross Unrealized Gain | 1,000 | 2,000 |
Gross Unrealized (Losses) | (263,000) | (507,000) |
Estimated Fair Value | 11,392,000 | 15,347,000 |
Corporate debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 3,204,000 | 7,140,000 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized (Losses) | (122,000) | (208,000) |
Estimated Fair Value | 3,082,000 | $ 6,932,000 |
Term deposits | ||
Held-to-maturity securities: | ||
Amortized Cost | 16,400,000 | |
Gross Unrealized Gain | 0 | |
Gross Unrealized (Losses) | 0 | |
Estimated Fair Value | $ 16,400,000 |
Marketable Securities - Narrati
Marketable Securities - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |||||
Debt securities held-to-maturity | $ 0 | ||||
Unrealized loss position for a period longer than twelve months | $ 13,500,000 | $ 13,500,000 | |||
Impairment charges | 0 | $ 0 | 0 | $ 0 | |
Allowance for credit losses | 0 | 0 | |||
Debt securities, held-to-maturity, allowance for credit loss | 0 | 0 | |||
Gross realized gain (loss) related to the sale of marketable securities | $ 0 | $ 0 | $ 0 | $ 0 |
Marketable Securities - Sched_2
Marketable Securities - Schedule of Maturities of Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Available-for-sale securities: | ||
Due within one year | $ 12,560 | $ 9,156 |
Due after one year through three years | 1,914 | 13,123 |
Total | 14,474 | 22,279 |
Held-to-maturity securities | ||
Due within one year | 16,400 | 0 |
Due after one year through three years | 0 | 0 |
Total | $ 16,400 | $ 0 |
Marketable Securities - Sched_3
Marketable Securities - Schedule of Proceeds From Maturities of Available-For-Sale Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Maturities of marketable securities | $ 3,215 | $ 500 | $ 8,175 | $ 2,600 |
Sales of marketable securities | 0 | 0 | 0 | 0 |
Total | $ 3,215 | $ 500 | $ 8,175 | $ 2,600 |
Fair Value Measurement - Schedu
Fair Value Measurement - Schedule of Assets and Liabilities Measured at Fair Value On A Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Assets: | |||
Money market funds | $ 167,707 | $ 213,667 | $ 262,757 |
Available-for-sale securities | 14,474 | 22,279 | |
Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 107,697 | 22,496 | |
Money market funds | Recurring | |||
Assets: | |||
Money market funds | 78,308 | 217 | |
U.S. treasury bills | Recurring | |||
Assets: | |||
Available-for-sale securities | 14,915 | ||
Tax-exempt municipal securities | |||
Assets: | |||
Available-for-sale securities | 11,392 | 15,347 | |
Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 11,392 | 15,347 | |
Corporate debt securities | |||
Assets: | |||
Available-for-sale securities | 3,082 | 6,932 | |
Corporate debt securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 3,082 | 6,932 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 93,223 | 217 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Money market funds | Recurring | |||
Assets: | |||
Money market funds | 78,308 | 217 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | U.S. treasury bills | Recurring | |||
Assets: | |||
Available-for-sale securities | 14,915 | ||
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Corporate debt securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 14,474 | 22,279 | |
Significant Other Observable Inputs (Level 2) | Money market funds | Recurring | |||
Assets: | |||
Money market funds | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | U.S. treasury bills | Recurring | |||
Assets: | |||
Available-for-sale securities | 0 | ||
Significant Other Observable Inputs (Level 2) | Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 11,392 | 15,347 | |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 3,082 | 6,932 | |
Significant Unobservable Inputs (Level 3) | Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Money market funds | Recurring | |||
Assets: | |||
Money market funds | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | U.S. treasury bills | Recurring | |||
Assets: | |||
Available-for-sale securities | 0 | ||
Significant Unobservable Inputs (Level 3) | Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Available-for-sale securities | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Corporate debt securities | Recurring | |||
Assets: | |||
Available-for-sale securities | $ 0 | $ 0 |
Fair Value Measurement - Sche_2
Fair Value Measurement - Schedule of Change in Fair Value of Level 3 Liability (Details) - Deferred Payments $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of the beginning of period | $ 658 |
Amounts paid | (658) |
Other adjustments to fair value | 0 |
Balance at end of period | $ 0 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Changes in carrying amount | ||||
Balance, beginning of period | $ 1,251,277,000 | |||
Additions | 0 | |||
Impairments | $ 0 | $ 0 | 0 | $ 0 |
Currency translation adjustments | (22,846,000) | |||
Adjustments to prior acquisitions | 0 | |||
Balance, end of period | 1,228,431,000 | 1,228,431,000 | ||
U.S. Higher Education | ||||
Changes in carrying amount | ||||
Balance, beginning of period | 632,075,000 | |||
Additions | 0 | |||
Impairments | 0 | |||
Currency translation adjustments | 0 | |||
Adjustments to prior acquisitions | 0 | |||
Balance, end of period | 632,075,000 | 632,075,000 | ||
Australia / New Zealand | ||||
Changes in carrying amount | ||||
Balance, beginning of period | 519,202,000 | |||
Additions | 0 | |||
Impairments | 0 | |||
Currency translation adjustments | (22,846,000) | |||
Adjustments to prior acquisitions | 0 | |||
Balance, end of period | 496,356,000 | 496,356,000 | ||
Education Technology Services | ||||
Changes in carrying amount | ||||
Balance, beginning of period | 100,000,000 | |||
Additions | 0 | |||
Impairments | 0 | |||
Currency translation adjustments | 0 | |||
Adjustments to prior acquisitions | 0 | |||
Balance, end of period | $ 100,000,000 | $ 100,000,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Goodwill Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Impairment of goodwill | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (199,155) | $ (191,125) |
Indefinite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 448,669 | 451,666 |
Accumulated Amortization | (199,155) | (191,125) |
Intangible assets, net | 249,514 | 260,541 |
Trade names | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Trade names | 248,574 | 251,481 |
Student relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 200,095 | 200,185 |
Accumulated Amortization | (199,155) | (191,125) |
Net | 940 | 9,060 |
Indefinite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (199,155) | $ (191,125) |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||||
Useful life - acquired (in years) | 3 years | |||
Amortization expenses | $ 3,382,000 | $ 3,522,000 | $ 10,364,000 | $ 10,954,000 |
Trade names | ||||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||||
Impairment of intangible assets | $ 0 | $ 0 | 0 | 0 |
Student relationships | ||||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||||
Amortization expenses | $ 8,000,000 | $ 8,500,000 |
Other Current Assets - Schedule
Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 23,685 | $ 19,073 |
Restricted cash | 13,238 | 13,287 |
Cloud computing arrangements | 7,231 | 7,859 |
Other | 4,535 | 3,066 |
Other current assets | $ 48,689 | $ 43,285 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||
Prepaid expenses, net of current portion | $ 17,321 | $ 18,192 | ||||
Equity method investments | 16,175 | $ 17,205 | 13,879 | $ 13,979 | $ 14,011 | $ 15,582 |
Cloud computing arrangements, net of current portion | 12,021 | 7,507 | ||||
Other investments | 2,806 | 3,396 | ||||
Tuition receivable, net, non-current | 2,559 | 2,673 | ||||
Other | 4,063 | 4,005 | ||||
Other assets | $ 54,945 | $ 49,652 |
Other Assets - Narrative (Detai
Other Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 144 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2031 | Dec. 31, 2022 | Dec. 31, 2020 | |
Schedule of Other Assets [Line Items] | |||||||
Prepaid expenses, net of current portion | $ 17,321 | $ 17,321 | $ 18,192 | ||||
Capital contributions | $ 162 | $ 0 | $ 314 | $ 48 | |||
Minimum | Limited Partnerships | |||||||
Schedule of Other Assets [Line Items] | |||||||
Ownership percentage | 3% | 3% | |||||
Maximum | Limited Partnerships | |||||||
Schedule of Other Assets [Line Items] | |||||||
Ownership percentage | 5% | 5% | |||||
Forecast | |||||||
Schedule of Other Assets [Line Items] | |||||||
Capital contributions | $ 2,400 | ||||||
Jack Welch Management Institute | |||||||
Schedule of Other Assets [Line Items] | |||||||
Commitment for future services under the perpetual license agreement | $ 25,300 | ||||||
Prepaid expenses, net of current portion | $ 16,500 | $ 16,500 | $ 17,700 | ||||
Prepaid expense, amortization period | 15 years |
Other Assets - Schedule of Chan
Other Assets - Schedule of Changes in Company's Limited Partnership Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Equity Method Investment Summarized Financial Information Assets [Roll Forward] | ||||
Limited partnership investments, beginning of period | $ 17,205 | $ 14,011 | $ 13,879 | $ 15,582 |
Capital contributions | 162 | 0 | 314 | 48 |
Pro-rata share in the net income (loss) of limited partnerships | (114) | (32) | 3,060 | 32 |
Distributions | (1,078) | 0 | (1,078) | (1,683) |
Limited partnership investments, end of period | $ 16,175 | $ 13,979 | $ 16,175 | $ 13,979 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payables and Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 54,856 | $ 45,826 |
Accrued compensation and benefits | 36,767 | 32,608 |
Accrued student obligations and other | 10,499 | 12,154 |
Accounts payable and accrued expenses | $ 102,122 | $ 90,588 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |||
Nov. 03, 2020 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | |||||
Money market funds | $ 167,707,000 | $ 167,707,000 | $ 262,757,000 | $ 213,667,000 | |
Repayments of revolving credit facility | 40,000,000 | 0 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Repayments of revolving credit facility | 40,000,000 | ||||
Revolving credit facility, outstanding | 61,200,000 | 61,200,000 | 101,400,000 | ||
Interest paid | 5,400,000 | $ 3,000,000 | |||
Revolving Credit Facility | Australia, Dollars | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility, outstanding | $ 3,200,000 | $ 3,200,000 | $ 3,400,000 | ||
Revolving Credit Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Unused commitment fee | 0.20% | ||||
Revolving Credit Facility | Minimum | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 1.50% | ||||
Revolving Credit Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Unused commitment fee | 0.30% | ||||
Revolving Credit Facility | Maximum | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||
Debt Instrument [Line Items] | |||||
Margin rate | 2% | ||||
Amended Credit Facility | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility, value | $ 350,000,000 | ||||
Maximum aggregate incremental term loans | $ 300,000,000 | ||||
Percentage of consolidated EBITDA to be funded | 100% | ||||
Maximum leverage ratio allowed in order to increase obligation | 1.75 | ||||
Debt financing costs | $ 1,900,000 | ||||
Debt instrument term | 5 years | ||||
Maximum total leverage ratio | 2 | ||||
Money market funds | $ 150,000,000 | ||||
Minimum coverage ratio | 1.75 | ||||
Minimum department of education financial composite score | 1 | ||||
Minimum department of education financial composite score for two consecutive fiscal years | 1.5 | ||||
Amendment to the Credit Facility, Subfacility for Borrowings in Foreign Currencies | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility, value | $ 150,000,000 |
Other Long-Term Liabilities (De
Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other Liabilities, Noncurrent [Abstract] | ||
Contract liabilities, net of current portion | $ 34,738 | $ 36,540 |
Asset retirement obligations | 5,273 | 6,283 |
Other | 2,948 | 3,183 |
Other long-term liabilities | $ 42,959 | $ 46,006 |
Equity Awards - Schedule of Sto
Equity Awards - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | $ 4,077 | $ 5,612 | $ 15,202 | $ 16,209 |
Tax benefit | 1,054 | 1,460 | 3,988 | 4,250 |
Stock-based compensation expense, net of tax | 3,023 | 4,152 | 11,214 | 11,959 |
Instructional and support costs | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | 597 | 1,802 | 4,128 | 5,190 |
General and administration | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | 3,210 | 3,810 | 10,708 | 11,019 |
Restructuring costs | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | $ 270 | $ 0 | $ 366 | $ 0 |
Equity Awards - Narrative (Deta
Equity Awards - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
Tax shortfall related to share-based payment arrangements | $ 1.4 | $ 1.4 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense | $ 8,012 | $ 1,453 | $ 14,846 | $ 13,639 | |
Effective income tax rate | 32.60% | 32.50% | |||
Tax shortfall related to share-based payment arrangements | $ 1,400 | $ 1,400 | |||
Unrecognized tax benefits | $ 900 | 900 | $ 900 | ||
Cash payments for income taxes | $ 35,600 | $ 20,200 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Number of reporting segments | 3 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | ||||
Revenues | $ 285,936 | $ 263,123 | $ 830,222 | $ 795,542 |
Income (loss) from operations | ||||
Consolidated income from operations | 25,629 | 7,807 | 41,097 | 43,113 |
Amortization of intangible assets | (3,382) | (3,522) | (10,364) | (10,954) |
Merger and integration costs | (330) | (269) | (1,335) | (933) |
Restructuring costs | (3,262) | (610) | (15,208) | (6,129) |
Segment Reconciling Items | ||||
Income (loss) from operations | ||||
Amortization of intangible assets | (3,382) | (3,522) | (10,364) | (10,954) |
Merger and integration costs | (330) | (269) | (1,335) | (933) |
Restructuring costs | (3,262) | (610) | (15,208) | (6,129) |
U.S. Higher Education | ||||
Revenues | ||||
Revenues | 201,828 | 185,499 | 601,402 | 571,291 |
U.S. Higher Education | Operating Segments | ||||
Revenues | ||||
Revenues | 201,828 | 185,499 | 601,402 | 571,291 |
Income (loss) from operations | ||||
Consolidated income from operations | 10,412 | (1,948) | 26,742 | 25,386 |
Australia / New Zealand | ||||
Revenues | ||||
Revenues | 63,264 | 61,177 | 170,239 | 177,232 |
Australia / New Zealand | Operating Segments | ||||
Revenues | ||||
Revenues | 63,264 | 61,177 | 170,239 | 177,232 |
Income (loss) from operations | ||||
Consolidated income from operations | 13,875 | 8,934 | 20,984 | 20,506 |
Education Technology Services | ||||
Revenues | ||||
Revenues | 20,844 | 16,447 | 58,581 | 47,019 |
Education Technology Services | Operating Segments | ||||
Revenues | ||||
Revenues | 20,844 | 16,447 | 58,581 | 47,019 |
Income (loss) from operations | ||||
Consolidated income from operations | $ 8,316 | $ 5,222 | $ 20,278 | $ 15,237 |
Litigation (Details)
Litigation (Details) | Jun. 22, 2022 educational_institution | Apr. 20, 2021 borrowerDefenseApplication |
Commitments and Contingencies Disclosure [Abstract] | ||
Number of borrower defense applications submitted (more than) | 1,000 | |
Number of borrower defense applications submitted received for repayment (approximately) | 500 | |
Number of different institutions impacted by litigation (approximately) | educational_institution | 150 |