Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2021 | Jan. 21, 2022 | |
Cover | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2021 | |
Entity File Number | 001-33883 | |
Entity Registrant Name | Stride, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-4774688 | |
Entity Address, Address Line One | 2300 Corporate Park Drive | |
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 | 483-7000 | |
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | LRN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,787,741 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001157408 | |
Amendment Flag | false |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Current assets | ||
Cash and cash equivalents | $ 256,986 | $ 386,080 |
Accounts receivable, net of allowance of $26,305 and $21,384 | 430,436 | 369,303 |
Inventories, net | 23,941 | 39,690 |
Prepaid expenses | 29,240 | 19,453 |
Other current assets | 75,528 | 43,004 |
Total current assets | 816,131 | 857,530 |
Operating lease right-of-use assets, net | 91,410 | 94,671 |
Property and equipment, net | 74,149 | 72,069 |
Capitalized software, net | 60,520 | 57,308 |
Capitalized curriculum development costs, net | 49,787 | 50,376 |
Intangible assets, net | 95,210 | 99,480 |
Goodwill | 240,921 | 240,353 |
Deposits and other assets | 97,617 | 105,510 |
Total assets | 1,525,745 | 1,577,297 |
Current liabilities | ||
Accounts payable | 33,821 | 62,144 |
Accrued liabilities | 61,462 | 77,642 |
Accrued compensation and benefits | 41,193 | 80,363 |
Deferred revenue | 50,409 | 38,110 |
Current portion of finance lease liability | 36,080 | 27,336 |
Current portion of operating lease liability | 15,233 | 20,649 |
Total current liabilities | 238,198 | 306,244 |
Long-term finance lease liability | 44,612 | 41,568 |
Long-term operating lease liability | 79,020 | 77,458 |
Long-term debt | 410,674 | 299,271 |
Deferred tax liability | 8,282 | 31,853 |
Other long-term liabilities | 10,726 | 16,255 |
Total liabilities | 791,512 | 772,649 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, par value $0.0001; 10,000,000 shares authorized; zero shares issued or outstanding | ||
Common stock, par value $0.0001; 100,000,000 shares authorized; 48,084,410 and 46,911,527 shares issued; and 42,749,667 and 41,576,784 shares outstanding, respectively | 4 | 4 |
Additional paid-in capital | 680,601 | 795,449 |
Accumulated other comprehensive income (loss) | (343) | (474) |
Retained earnings | 156,453 | 112,151 |
Treasury stock of 5,334,743 shares at cost | (102,482) | (102,482) |
Total stockholders' equity | 734,233 | 804,648 |
Total liabilities and stockholders' equity | $ 1,525,745 | $ 1,577,297 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance (in dollars) | $ 26,305 | $ 21,384 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 48,084,410 | 46,911,527 |
Common stock, shares outstanding | 42,749,667 | 41,576,784 |
Treasury stock, shares | 5,334,743 | 5,334,743 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenues | $ 409,507 | $ 376,145 | $ 809,733 | $ 747,105 |
Instructional costs and services | 261,950 | 246,754 | 535,774 | 487,823 |
Gross margin | 147,557 | 129,391 | 273,959 | 259,282 |
Selling, general, and administrative expenses | 90,642 | 90,939 | 224,021 | 208,766 |
Income from operations | 56,915 | 38,452 | 49,938 | 50,516 |
Interest expense, net | (1,875) | (5,024) | (3,868) | (7,131) |
Other income, net | 3,884 | 1,361 | 3,795 | 1,790 |
Income before income taxes and income (loss) from equity method investments | 58,924 | 34,789 | 49,865 | 45,175 |
Income tax expense | (15,928) | (10,642) | (13,035) | (8,266) |
Income (loss) from equity method investments | (992) | 354 | (709) | 258 |
Net income attributable to common stockholders | $ 42,004 | $ 24,501 | $ 36,121 | $ 37,167 |
Net income attributable to common stockholders per share: | ||||
Basic (in dollars per share) | $ 1.01 | $ 0.61 | $ 0.88 | $ 0.93 |
Diluted (in dollars per share) | $ 1 | $ 0.60 | $ 0.85 | $ 0.89 |
Weighted average shares used in computing per share amounts: | ||||
Basic (in shares) | 41,525,736 | 40,160,362 | 41,042,401 | 40,072,360 |
Diluted (in shares) | 41,963,399 | 41,102,425 | 42,413,828 | 41,681,061 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 42,004 | $ 24,501 | $ 36,121 | $ 37,167 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | (13) | (270) | 131 | (462) |
Comprehensive income attributable to common stockholders | $ 41,991 | $ 24,231 | $ 36,252 | $ 36,705 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in CapitalCumulative Effect, Period of Adoption, Adjustment | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Treasury Stock | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance at Jun. 30, 2020 | $ 4 | $ 730,761 | $ 93 | $ (6,253) | $ 46,953 | $ (102,482) | $ (6,253) | $ 675,329 | |
Balance (in shares) at Jun. 30, 2020 | 46,341,627 | (5,334,743) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 12,666 | 12,666 | |||||||
Foreign currency translation adjustment | (192) | (192) | |||||||
Stock-based compensation expense | 9,009 | 9,009 | |||||||
Exercise of stock options | 32 | 32 | |||||||
Exercise of stock options (in shares) | 948,867 | ||||||||
Withholding of stock options for tax withholding | (10,885) | (10,885) | |||||||
Withholding of stock options for tax withholding (in shares) | (655,219) | ||||||||
Equity component of convertible senior notes, net of issuance costs and taxes | 105,477 | 105,477 | |||||||
Purchases of capped calls in connection with convertible senior notes | (60,354) | (60,354) | |||||||
Issuance of restricted stock awards (in shares) | 383,223 | ||||||||
Forfeiture of restricted stock awards (in shares) | (9,329) | ||||||||
Repurchase of restricted stock for tax withholding | (5,808) | (5,808) | |||||||
Repurchase of restricted stock for tax withholding (in shares) | (136,194) | ||||||||
Balance at Sep. 30, 2020 | $ 4 | 768,232 | (99) | 53,366 | $ (102,482) | 719,021 | |||
Balance (in shares) at Sep. 30, 2020 | 46,872,975 | (5,334,743) | |||||||
Balance at Jun. 30, 2020 | $ 4 | 730,761 | 93 | (6,253) | 46,953 | $ (102,482) | (6,253) | 675,329 | |
Balance (in shares) at Jun. 30, 2020 | 46,341,627 | (5,334,743) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 37,167 | ||||||||
Balance at Dec. 31, 2020 | $ 4 | 777,409 | (369) | 77,867 | $ (102,482) | 752,429 | |||
Balance (in shares) at Dec. 31, 2020 | 46,893,934 | (5,334,743) | |||||||
Balance at Sep. 30, 2020 | $ 4 | 768,232 | (99) | 53,366 | $ (102,482) | 719,021 | |||
Balance (in shares) at Sep. 30, 2020 | 46,872,975 | (5,334,743) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 24,501 | 24,501 | |||||||
Foreign currency translation adjustment | (270) | (270) | |||||||
Stock-based compensation expense | 9,181 | 9,181 | |||||||
Exercise of stock options | 271 | 271 | |||||||
Exercise of stock options (in shares) | 15,000 | ||||||||
Equity component of convertible senior notes, net of issuance costs and taxes | 25 | 25 | |||||||
Issuance of restricted stock awards (in shares) | 19,500 | ||||||||
Forfeiture of restricted stock awards (in shares) | (2,122) | ||||||||
Repurchase of restricted stock for tax withholding | (300) | (300) | |||||||
Repurchase of restricted stock for tax withholding (in shares) | (11,419) | ||||||||
Balance at Dec. 31, 2020 | $ 4 | 777,409 | (369) | 77,867 | $ (102,482) | 752,429 | |||
Balance (in shares) at Dec. 31, 2020 | 46,893,934 | (5,334,743) | |||||||
Balance at Jun. 30, 2021 | $ 4 | $ (89,460) | 795,449 | (474) | 8,181 | 112,151 | $ (102,482) | (81,279) | 804,648 |
Balance (in shares) at Jun. 30, 2021 | 46,911,527 | (5,334,743) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (5,883) | (5,883) | |||||||
Foreign currency translation adjustment | 144 | 144 | |||||||
Stock-based compensation expense | 8,050 | 8,050 | |||||||
Exercise of stock options | 246 | 246 | |||||||
Exercise of stock options (in shares) | 15,025 | ||||||||
Issuance of restricted stock awards (in shares) | 398,943 | ||||||||
Forfeiture of restricted stock awards (in shares) | (34,740) | ||||||||
Repurchase of restricted stock for tax withholding | (6,020) | (6,020) | |||||||
Repurchase of restricted stock for tax withholding (in shares) | (179,151) | ||||||||
Balance at Sep. 30, 2021 | $ 4 | 708,265 | (330) | 114,449 | $ (102,482) | 719,906 | |||
Balance (in shares) at Sep. 30, 2021 | 47,111,604 | (5,334,743) | |||||||
Balance at Jun. 30, 2021 | $ 4 | $ (89,460) | 795,449 | (474) | $ 8,181 | 112,151 | $ (102,482) | $ (81,279) | 804,648 |
Balance (in shares) at Jun. 30, 2021 | 46,911,527 | (5,334,743) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | $ 36,121 | ||||||||
Exercise of stock options (in shares) | 15,025 | ||||||||
Balance at Dec. 31, 2021 | $ 4 | 680,601 | (343) | 156,453 | $ (102,482) | $ 734,233 | |||
Balance (in shares) at Dec. 31, 2021 | 48,084,410 | (5,334,743) | |||||||
Balance at Sep. 30, 2021 | $ 4 | 708,265 | (330) | 114,449 | $ (102,482) | 719,906 | |||
Balance (in shares) at Sep. 30, 2021 | 47,111,604 | (5,334,743) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 42,004 | 42,004 | |||||||
Foreign currency translation adjustment | (13) | (13) | |||||||
Stock-based compensation expense | 1,697 | 1,697 | |||||||
Vesting of performance share units, net of tax withholding (in shares) | 1,012,374 | ||||||||
Issuance of restricted stock awards (in shares) | 27,750 | ||||||||
Forfeiture of restricted stock awards (in shares) | (57,480) | ||||||||
Repurchase of restricted stock for tax withholding | (29,361) | (29,361) | |||||||
Repurchase of restricted stock for tax withholding (in shares) | (9,838) | ||||||||
Balance at Dec. 31, 2021 | $ 4 | $ 680,601 | $ (343) | $ 156,453 | $ (102,482) | $ 734,233 | |||
Balance (in shares) at Dec. 31, 2021 | 48,084,410 | (5,334,743) |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||
Net income | $ 36,121 | $ 37,167 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization expense | 49,327 | 41,438 |
Stock-based compensation expense | 8,888 | 17,967 |
Deferred income taxes | 6,008 | 5,375 |
Provision for doubtful accounts | 4,730 | 6,382 |
Amortization of discount and fees on debt | 809 | 4,973 |
Noncash operating lease expense | 10,074 | 9,627 |
Other | 5,550 | 7,244 |
Changes in assets and liabilities: | ||
Accounts receivable | (65,606) | (208,870) |
Inventories, prepaid expenses, deposits and other current and long-term assets | 11,944 | (23,231) |
Accounts payable | (26,810) | (7,202) |
Accrued liabilities | (8,570) | 4,346 |
Accrued compensation and benefits | (39,157) | (5,401) |
Operating lease liability | (10,662) | (10,364) |
Deferred revenue and other liabilities | 5,686 | 40,592 |
Net cash used in operating activities | (11,668) | (79,957) |
Cash flows from investing activities | ||
Purchase of property and equipment | (2,705) | (1,969) |
Capitalized software development costs | (19,330) | (14,061) |
Capitalized curriculum development costs | (7,461) | (7,524) |
Sale of long-lived assets | 223 | |
Sale of other investments | 5,261 | |
Acquisition of MedCerts, LLC, net of cash acquired | (54,775) | |
Acquisition of Tech Elevator, Inc., net of cash acquired | (15,981) | |
Other acquisitions, loans and investments, net of distributions | (3,956) | (188) |
Proceeds from the maturity of marketable securities | 7,248 | |
Purchases of marketable securities | (38,720) | |
Net cash used in investing activities | (59,663) | (94,275) |
Cash flows from financing activities | ||
Repayments on finance lease obligations | (14,744) | (11,455) |
Repayments on credit facility | (100,000) | |
Issuance of convertible senior notes, net of issuance costs | 408,610 | |
Purchases of capped calls in connection with convertible senior notes | (60,354) | |
Payments of deferred purchase consideration | (7,858) | |
Proceeds from exercise of stock options | 246 | 303 |
Withholding of stock options for tax withholding | (10,885) | |
Repurchase of restricted stock for income tax withholding | (35,404) | (6,108) |
Net cash provided by (used in) financing activities | (57,760) | 220,111 |
Net change in cash, cash equivalents and restricted cash | (129,091) | 45,879 |
Cash, cash equivalents and restricted cash, beginning of period | 386,582 | 213,299 |
Cash, cash equivalents and restricted cash, end of period | $ 257,491 | $ 259,178 |
UNAUDITED CONDENSED CONSOLIDA_7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st:: | ||
Cash and cash equivalents | $ 256,986 | $ 258,107 |
Total cash, cash equivalents and restricted cash | 257,491 | 259,178 |
Other current assets | ||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st:: | ||
Restricted cash | $ 505 | 571 |
Deposits and other assets | ||
Reconciliation of cash, cash equivalents and restricted cash to balance sheet as of December 31st:: | ||
Restricted cash | $ 500 |
Description of the Business
Description of the Business | 6 Months Ended |
Dec. 31, 2021 | |
Description of the Business | |
Description of the Business | 1. Description of the Business Stride, Inc., together with its subsidiaries (“Stride” or the “Company”) is an education services company providing virtual and blended learning. On December 16, 2020, the Company changed its name from K12 Inc. to Stride, Inc. The brand reflects the Company’s continued growth into lifelong learning, regardless of a student’s age or location. The Company’s technology-based products and services enable its clients to attract, enroll, educate, track progress, and support students. These products and services, spanning curriculum, systems, instruction, and support services are designed to help learners of all ages reach their full potential through inspired teaching and personalized learning. The Company’s clients are primarily public and private schools, school districts, and charter boards. Additionally, it offers solutions to employers, government agencies and consumers. These products and services are provided through two lines of revenue: ● Products and services for the General Education market are predominantly focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge. Programs utilizing General Education products and services are for students that are not specializing in any particular curriculum or course of study. These programs provide an alternative to traditional school options and address a range of student needs including, safety concerns, increased academic support, scheduling flexibility, physical/health restrictions or advanced learning. Products and services are sold as a comprehensive school-as-a-service offering or à la carte. ● Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, health care and general business. The Company pr ovides middle and high school students with Career Learning programs that complement their core general education coursework in math, English, science and history. Stride offers multiple career pathways supported by a diverse catalog of Career Learning courses. The middle school program exposes students to a variety of career options and introduces career skill development. In high school, students may engage in industry content pathway courses, project-based learning in virtual teams, and career development services. High school students also have the opportunity to progress toward certifications, connect with industry professionals, earn college credits while in high school, and participate in job shadowing and/or work-based learning experiences that are required to succeed in today’s digital, tech-enabled economy. A student enrolled in a school that offers Stride’s General Education program may elect to take Career Learning courses, but that student and the associated revenue is not reported as a Career Learning enrollment or Career Learning revenue. However, a student and the associated revenue is counted as a Career Learning enrollment or Career Learning revenue if the student is enrolled in a Career Learning program . Like General Education products and services, the products and services for the Career Learning market are sold as a comprehensive school-as-a-service offering or à la carte. The Company also offers focused post-secondary career learning programs to adult learners, through its Galvanize, Inc. (“Galvanize”), Tech Elevator, Inc. (“Tech Elevator”), and MedCerts, LLC (“MedCerts”) brands. These include skills training in the data science, software engineering, healthcare, and medical fields, as well as providing staffing and talent development services to employers . These programs are offered directly to consumers, as well as to employers and government agencies. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Dec. 31, 2021 | |
Basis of Presentation | |
Basis of Presentation | 2. Basis of Presentation The accompanying condensed consolidated balance sheet as of December 31, 2021, the condensed consolidated statements of operations and comprehensive income for the three and six months ended December 31, 2021 and 2020, the condensed consolidated statements of cash flows for the six months ended December 31, 2021 and 2020, and the condensed consolidated statements of stockholders’ equity for the three and six months ended December 31, 2021 and 2020 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations for the periods presented. The results for the three and six months ended December 31, 2021 are not necessarily indicative of the results to be expected for the year ending June 30, 2022, for any other interim period or for any other future fiscal year. The condensed consolidated balance sheet as of June 30, 2021 has been derived from the audited consolidated financial statements at that date. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, the Company does not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s condensed consolidated results of operations, financial position and cash flows. Preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and footnotes. Actual results could differ from those estimates. This quarterly report on Form 10-Q should be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 11, 2021, which contains the Company’s audited financial statements for the fiscal year ended June 30, 2021. The Company operates in one operating and reportable |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Recent Accounting Pronouncements Accounting Standards Adopted On July 1, 2021, the Company early adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) During the second quarter of fiscal year 2022, the Company early adopted ASU 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform during the period on a prospective basis. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services using the following steps: ● identify the contract, or contracts, with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when, or as, the Company satisfies a performance obligation. Revenues related to the products and services that the Company provides to students in kindergarten through twelfth grade or adult learners are considered to be General Education or Career Learning based on the school or adult program in which the student is enrolled. General Education products and services are focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge. Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, business, and health services, for students in middle school through high school and adult learners. The majority of the Company’s contracts are with the following types of customers: ● a virtual or blended school whereby the amount of revenue is primarily determined by funding the school receives; ● a school or individual who licenses certain curriculum on a subscription or course-by-course basis; or ● an enterprise who contracts with the Company to provide job training. Funding-based Contracts The Company provides an integrated package of systems, services, products, and professional expertise that is administered together to support a virtual or blended public school. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the Company’s fiscal year. Customers of these programs can obtain administrative support, information technology, academic support services, online curriculum, learning systems platforms and instructional services under the terms of a negotiated service agreement. The schools receive funding on a per student basis from the state in which the public school or school district is located. Shipments of materials for schools that occur in the fourth fiscal quarter and for the upcoming school year are recorded in deferred revenue. The Company generates revenues under contracts with virtual and blended public schools and include the following components, where required: ● providing each of a school’s students with access to the Company’s online school and lessons; ● offline learning kits, which include books and materials to supplement the online lessons; ● the use of a personal computer and associated reclamation services; ● internet access and technology support services; ● instruction by a state-certified teacher; and ● management and technology services necessary to support a virtual or blended school. In certain contracts, revenues are determined directly by per enrollment funding. To determine the pro rata amount of revenue to recognize in a fiscal quarter, the Company estimates the total expected funds each school will receive in a particular school year. Total funds for a school are primarily a function of the number of students enrolled in the school and established per enrollment funding levels, which are generally published on an annual basis by the state or school district. The Company reviews its estimates of funding periodically, and updates as necessary, by adjusting its year-to-date earned revenues to be proportional to the total expected revenues to be earned during the fiscal year. Actual school funding may vary from these estimates and the impact of these differences could impact the Company’s results of operations. Since the end of the school year coincides with the end of the Company’s fiscal year, annual revenues are generally based on actual school funding and actual costs incurred (including costs for the Company’s services to the schools plus other costs the schools may incur). The Company’s schools’ reported results are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results of these audits are incorporated into the Company’s monthly funding estimates for the three and six months ended December 31, 2021 and 2020. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools. As the Company estimates funding for each school, it takes into account the state definition for count dates on which reported enrollment numbers will be used for per pupil funding. The parameters the Company considers in estimating funding for revenue recognition purposes include school district count definitions, withdrawal rates, new registrations, average daily attendance, special needs enrollment, academic progress, historical completion, student location, funding caps and other state specified categorical program funding. Under the contracts where the Company provides products and services to schools, the Company is responsible for substantially all of the expenses incurred by the school and has generally agreed to absorb any operating losses of the schools in a given school year. These school operating losses represent the excess of costs incurred over revenues earned by the virtual or blended public school (the school’s expected funding), as reflected in its respective financial statements, including Company charges to the schools. To the extent a school does not receive sufficient funding for each student enrolled in the school, the school would still incur costs associated with serving the unfunded enrollment. If losses due to unfunded enrollments result in a net operating loss for the year that loss is reflected as a reduction in the revenues and net receivables that the Company collects from the school. A school net operating loss in one year does not necessarily mean the Company anticipates losing money on the entire contract with the school. However, a school’s net operating loss may reduce the Company’s ability to collect its management fees in full and recognized revenues are constrained to reflect the expected cash collections from such schools. The Company records the school’s estimated net operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Actual school net operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. For the three months ended December 31, 2021 and 2020, the Company’s revenues included a reduction for net school operating losses at the schools of $12.3 million and $24.2 million, respectively, and $25.2 million and $44.2 million for the six months ended December 31, 2021 and 2020, respectively. Because the Company has agreed to absorb any operating losses of the schools, the Company records the expenses incurred by the school as both revenue and expenses in the condensed consolidated statements of operations. Amounts recorded as revenues and expenses for the three months ended December 31, 2021 and 2020 were $117.7 million and $102.4 million, respectively, and for the six months ended December 31, 2021 and 2020 were $231.6 million and $212.1 million, respectively. Subscription-based Contracts The Company provides certain online curriculum and services to schools and school districts under subscription agreements. Revenues from the licensing of curriculum under subscription arrangements are recognized on a ratable basis over the subscription period. Revenues from professional consulting, training and support services are deferred and recognized ratably over the service period. In addition, the Company contracts with individual customers who have access for one Enterprise Contracts The Company provides job training over a specified contract period to enterprises. Each of these contracts are considered to be one performance obligation. The Company recognizes these revenues based on the number of students trained during the term of the contract based on the defined contract price. Disaggregated Revenues The revenue recognition related to the types of contracts discussed above can span both of the Company’s lines of revenue as shown below. For example, a funding-based contract may include both General Education and Career Learning students. In total, there is one performance obligation and revenue is recognized over the Company’s fiscal year. The revenue is then disaggregated between General Education and Career Learning based on the Company’s estimated full-year enrollment totals of each category. During the three months ended December 31, 2021 and 2020, approximately 88% and 88%, respectively, of the Company’s General Education revenues, and 99% and 98%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. During the six months ended December 31, 2021 and 2020, approximately 89% and 88%, respectively, of the Company’s General Education revenues, and 99% and 98%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. The following table presents the Company’s revenues disaggregated based on its two lines of revenue for the three and six months ended December 31, 2021 and 2020: Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (In thousands) General Education $ 313,241 $ 313,989 $ 619,582 $ 627,838 Career Learning Middle - High School 75,287 51,376 146,699 100,147 Adult 20,979 10,780 43,452 19,120 Total Career Learning 96,266 62,156 190,151 119,267 Total Revenues $ 409,507 $ 376,145 $ 809,733 $ 747,105 Concentration of Customers During the three and six months ended December 31, 2021 and 2020, the Company had zero contracts that represented greater than 10% of total revenues. Contract Balances The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: December 31, June 30, 2021 2021 (In thousands) Accounts receivable $ 430,436 $ 369,303 Unbilled receivables (included in accounts receivable) 20,997 24,794 Deferred revenue 50,409 38,110 Deferred revenue, long-term (included in other long-term liabilities) 3,505 1,973 The difference between the opening and closing balance of the accounts receivable and unbilled receivables relates to the timing of the Company’s billing in relation to month end and contractual agreements. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the service periods under the contract. Typically, each of these balances are at their highest during the first quarter of the fiscal year and lowest at the end of the fiscal year. The amount of revenue recognized during the three months ended December 31, 2021 and 2020 that was included in the previous October 1 st st Performance Obligations 30 45 one Significant Judgments The Company has determined that the time elapsed method is the most appropriate measure of progress towards the satisfaction of the performance obligation. Generally, the Company delivers the integrated products and services package over the course of the Company’s fiscal year. This package includes enrollment, marketing, teacher training, etc. in addition to the core curriculum and instruction. All of these activities are necessary and contribute to the overall education of its students, which occurs evenly throughout the year. Accordingly, the Company recognizes revenue on a straight-line basis. and the amount of full-year school revenues and operating expenses to determine the amount of revenue the Company will recognize. Enrollment and state funding rates are key inputs to this estimate. The estimates are adjusted monthly, and a cumulative catch-up adjustment is recorded to revenue as necessary to reflect the total revenues earned to date to be proportional to the total revenues to be earned in the fiscal year. The Company builds in known constraints (i.e. enrollment, funding, net operating losses, etc.) into the estimate of the variable consideration to record the most probable amount. Sales Taxes Consolidation The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Investments in Marketable Securities The Company’s marketable securities generally consist of bonds and other securities which are classified as held-to-maturity. The securities with maturities between three months and one year are classified as short-term and are included in other current assets on the condensed consolidated balance sheets. The securities with maturities greater than one year are classified as long-term and are included in other assets on the condensed consolidated balance sheets. Held-to-maturity securities are recorded at their amortized cost. Interest income and dividends are recorded within the condensed consolidated statements of operations. The Company reviews the held-to-maturity debt securities for declines in fair value below the amortized cost basis under the credit loss model of Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses As of December 31, 2021, the Company’s marketable securities consisted of investments in corporate bonds and U.S. treasury notes. The short-term and long-term portions were $51.5 million and $20.0 million, respectively. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands). Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 65,413 $ - $ 65,413 $ (178) $ 65,235 U.S. Treasury Notes 6,096 - 6,096 (24) 6,072 Total $ 71,509 $ - $ 71,509 $ (202) $ 71,307 As of June 30, 2021, the Company’s marketable securities consisted of investments in corporate bonds and U.S. treasury notes. The short-term and long-term portions were $17.3 million and $23.2 million, respectively. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands). Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 31,850 $ - $ 31,850 $ (24) $ 31,826 U.S. Treasury Notes 8,692 - 8,692 - 8,692 Total $ 40,542 $ - $ 40,542 $ (24) $ 40,518 Allowance for Doubtful Accounts The Company maintains an allowance for uncollectible accounts primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company analyzes accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for uncollectible accounts. The Company maintains an allowance under ASC 326 based on historical losses, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions. Inventories Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to virtual and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of December 31, 2021 and June 30, 2021, $7.2 million and $8.8 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $6.0 million and $5.6 million at December 31, 2021 and June 30, 2021, respectively. Other Current Assets Other current assets consist primarily of textbooks, curriculum materials and other supplies which are expected to be returned upon the completion of the school year. Materials not returned are expensed as part of instructional costs and services. Additionally, other current assets include short-term marketable securities. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful life of the asset (or the lesser of the term of the lease and the estimated useful life of the asset under the finance lease). Amortization of assets capitalized under finance lease arrangements is included in depreciation expense. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the asset. The determination of the lease term is discussed below under “Leases.” Property and equipment are depreciated over the following useful lives: Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 - 7 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $1.3 million and $1.1 million for the three months ended December 31, 2021 and 2020, respectively, and $1.9 million and $1.9 million for the six months ended December 31, 2021 and 2020, respectively, related to unreturned student computers. Depreciation expense, including accelerated depreciation, related to computers provided to students reflected in instructional costs and services for the three months ended December 31, 2021 and 2020 was $9.8 million and $9.3 million, respectively, and $17.9 million and $14.8 million, respectively, during the six months ended December 31, 2021 and 2020. Depreciation expense related to property and equipment reflected in selling, general, and administrative expenses for the three months ended December 31, 2021 and 2020 was $1.2 million and $1.0 million, respectively and $2.3 million and $1.9 million, respectively, during the six months ended December 31, 2021 and 2020. The Company fully expenses computer peripheral equipment (e.g., keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $2.5 million and $1.1 million for the three months ended December 31, 2021 and 2020, respectively, and $7.3 million and $5.5 million for the six months ended December 31, 2021 and 2020, respectively, and are recorded as instructional costs and services. Capitalized Software Costs The Company develops software for internal use. Software development costs incurred during the application development stage are capitalized. The Company amortizes these costs over the estimated useful life of the software, which is generally three years. Capitalized software development costs are stated at cost less accumulated amortization. Capitalized software additions totaled $19.3 million and $14.1 million for the six months ended December 31, 2021 and 2020, respectively. The Company recorded amortization expense related to capitalized software of $5.9 million and $5.0 million during the three months ended December 31, 2021 and 2020, respectively, and $12.1 million and $9.7 million during the six months ended December 31, 2021 and 2020, respectively, within instructional costs and services. Amortization expense related to capitalized software reflected in selling, general, and administrative expenses during the three months ended December 31, 2021 and 2020 was $1.3 million and $1.1 million, respectively and $2.6 million and $2.2 million, respectively, during the six months ended December 31, 2021 and 2020. Capitalized Curriculum Development Costs The Company internally develops curriculum, which is primarily provided as online content and accessed via the Internet. The Company also creates textbooks and other materials that are complementary to online content. The Company capitalizes curriculum development costs incurred during the application development stage, as well as the design and deployment phases of the project. As a result, a significant portion of the Company’s courseware development costs qualify for capitalization due to the concentration of its development efforts on the content of the courseware. Capitalization ends when a course is available for general release to its customers, at which time amortization of the capitalized costs begins. The period of time over which these development costs are amortized is generally five years. Total capitalized curriculum development additions were $7.5 million and $7.5 million for the six months ended December 31, 2021 and 2020, respectively. These amounts are recorded on the condensed consolidated balance sheets net of amortization charges. Amortization expense for the three and six months ended December 31, 2021 and 2020 was $3.8 million and $4.3 million, respectively, and $8.0 million and $8.3 million for the six months ended December 31, 2021 and 2020, respectively, and is recorded in instructional costs and services. Leases The Company’s principal leasing activities include student computers and peripherals, classified as finance leases, and facilities, classified as operating leases. Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: ● the lease transfers ownership of the asset at the end of the lease; ● the lease grants an option to purchase the asset which the lessee is expected to exercise; ● the lease term reflects a major part of the asset’s economic life; ● the present value of the lease payments equals or exceeds the fair value of the asset; or ● the asset is specialized with no alternative use to the lessor at the end of the term. Finance Leases The Company enters into agreements to finance the purchase of student computers and peripherals provided to students of its schools. Individual leases typically include 1 Operating Leases The Company enters into agreements for facilities that serve as offices for its headquarters, sales and enrollment teams, and school operations. Initial lease terms vary between 1 Discount Rate The present value of the lease payments is calculated using either the rate implicit in the lease, or the lessee’s incremental borrowing rate, over the lease term. For the Company’s finance leases, the stated rate is defined within the lease terms; while for the Company’s operating leases, the rate is not implicit. For operating leases, the Company uses its incremental borrowing rate as the discount rate; determined as the Company’s borrowing rate on a collateralized basis for a similar term and amount to the term and amount of the lease. The Company’s current incremental borrowing rate of 3.50% is based upon its agreements used for its finance leases. The incremental borrowing rate is subsequently reassessed upon modification of its leasing arrangements or with the execution of a new lease agreement. Policy Elections Short-term Leases The Company has elected as an on-going accounting policy election not to record a right-of-use asset or lease liability on its short-term facility leases of 12 months or less, and will expense its lease payments on a straight-line basis over the lease term. The accounting policy election is made by class of underlying asset to which the right of use relates. The Company has elected to apply the accounting policy election only to operating leases. Income Taxes Deferred tax assets and liabilities are computed based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate. The net deferred tax asset is reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. Goodwill and Intangible Assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired. Finite-lived intangible assets acquired in business combinations subject to amortization are recorded at their fair value. Finite-lived intangible assets include trade names, acquired customers and distributors, developed technology and non-compete agreements. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended December 31, 2021 and 2020 was $3.2 million and $2.5 million, respectively, and $6.4 million and $4.6 million for the six months ended December 31, 2021 and 2020, respectively, and is included within selling, general, and administrative expenses in the condensed consolidated statements of operations. Future amortization of intangible assets is expected to be $6.5 million, $12.9 million, $11.9 million, $10.7 million, and $9.6 million in the fiscal years ending June 30, 2022 through June 30, 2026, respectively, and $43.3 million thereafter. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. The Company has one reporting unit. The process for testing goodwill and intangible assets with indefinite lives for impairment is performed annually, as well as when an event triggering impairment may have occurred. Companies are also allowed to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo the quantitative impairment test as part of their annual goodwill impairment process. The Company performs its annual assessment on May 31 st th During the three and six months ended December 31, 2021, there were no events or changes in circumstances that would indicate that the carrying amount of the goodwill was impaired. During the three and six months ended December 31, 2020 the Company qualitatively assessed its goodwill and intangible assets for impairment. It identified Coronavirus disease 2019 (“COVID-19”) as a triggering event, however there were no indicators that the fair value of the reporting unit may be less than its carrying amount, and as a result, the Company determined that no impairment was required. The following table represents the balance of the Company’s intangible assets as of December 31, 2021 and June 30, 2021: December 31, 2021 June 30, 2021 ($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Trade names $ 85.1 $ (20.2) $ 64.9 $ 84.5 $ (17.4) $ 67.1 Customer and distributor relationships 38.9 (23.2) 15.7 37.7 (21.2) 16.5 Developed technology 21.7 (7.3) 14.4 21.3 (5.7) 15.6 Other 1.4 (1.2) 0.2 1.4 (1.1) 0.3 Total $ 147.1 $ (51.9) $ 95.2 $ 144.9 $ (45.4) $ 99.5 Impairment of Long-Lived Assets Long-lived assets include property, equipment, right-of-use assets, capitalized curriculum and software developed or obtained for internal use. Management reviews the Company’s recorded long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability as well as on a reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. During the three and six months ended December 31, 2021, there were no events or changes in circumstances that may indicate that the carrying amount of the long-lived assets may not be recoverable. During the three and six months ended December 31, 2020, the Company identified COVID-19 as a triggering event, however based on its assessment, the Company determined that COVID-19 did not impact the recoverability of its long-lived assets. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. Measurements are described in a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The carrying values reflected in the condensed consolidated balance sheets for cash and cash equivalents, receivables, and short term debt approximate their fair values, as they are largely short-term in nature. The contingent consideration and Tallo, Inc. convertible note are discussed in more detail in Note 11, “Acquisitions and Investments.” As of D |
Income Taxes
Income Taxes | 6 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | 4. Income Taxes The provision for income taxes is based on earnings reported in the condensed consolidated financial statements. A deferred income tax asset or liability is determined by applying currently enacted tax laws and rates to the expected reversal of the cumulative temporary differences between the carrying value of assets and liabilities for financial statement and income tax purposes. Deferred income tax expense or benefit is measured by the change in the deferred income tax asset or liability during the period. For the three months ended December 31, 2021 and 2020, the Company’s effective income tax rate was 27.5% and 30.3%, respectively, and for the six months ended December 31, 2021 and 2020, the rate was 26.5% and 18.2%, respectively. |
Finance and Operating Leases
Finance and Operating Leases | 6 Months Ended |
Dec. 31, 2021 | |
Finance and Operating Leases | |
Finance and Operating Leases | 5. Finance and Operating Leases Finance Leases The Company is a lessee under finance leases for student computers and peripherals under agreements with Banc of America Leasing & Capital, LLC (“BALC”). As of December 31, 2021 and June 30, 2021, the finance lease liability was $80.7 million and $68.9 million, respectively, with lease interest rates ranging from 1.52% to 2.58%. As of December 31, 2021 and June 30, 2021, the balance of the associated right-of-use assets was $56.9 million and $49.0 million, respectively. The right-of-use asset is recorded within property and equipment, net on the condensed consolidated balance sheets. Lease amortization expense associated with the Company’s finance leases is recorded within instructional costs and services on the condensed consolidated statements of operations. The Company entered into an agreement with BALC in April 2020 for $25.0 million (increased to $41.0 million in July 2020) to provide financing for its leases through March 2021 at varying rates. The Company entered into additional agreements during fiscal year 2021 to provide financing of $54.0 million for its student computers and peripherals leases through October 2022 at varying rates. Individual leases with BALC include 36 month payment terms, fixed rates ranging from 1.52% to 2.58%, and a $1 purchase option at the end of each lease term. The Company has pledged the assets financed to secure the outstanding leases. The following is a summary, as of December 31, 2021 and June 30, 2021, respectively, of the present value of the net minimum lease payments under the Company’s finance leases: December 31, 2021 June 30, 2021 (in thousands) 2022 $ 18,857 $ 28,715 2023 37,266 28,105 2024 23,461 14,303 2025 3,439 — Total minimum payments 83,023 71,123 Less: imputed interest (2,331) (2,219) Finance lease liability 80,692 68,904 Less: current portion of finance lease liability (36,080) (27,336) Long-term finance lease liability $ 44,612 $ 41,568 Operating Leases The Company is a lessee under operating leases for various facilities to support the Company’s operations. As of December 31, 2021 and June 30, 2021, the operating lease liability was $94.3 million and $98.1 million, respectively. As of December 31, 2021 and June 30, 2021, the balance of the associated right-of-use assets was $91.4 million and $94.7 million, respectively. Lease expense associated with the Company’s operating leases is recorded within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations. Individual operating leases range in terms of 1 The following is a summary as of December 31, 2021 and June 30, 2021, respectively, of the present value of the minimum lease payments under the Company’s operating leases: December 31, 2021 June 30, 2021 (in thousands) 2022 $ 9,237 $ 23,030 2023 16,432 16,204 2024 15,752 15,032 2025 15,258 14,222 2026 12,300 11,247 Thereafter 35,267 27,432 Total minimum payments 104,246 107,167 Less: imputed interest (9,993) (9,060) Operating lease liability 94,253 98,107 Less: current portion of operating lease liability (15,233) (20,649) Long-term operating lease liability $ 79,020 $ 77,458 The Company is subleasing two of its facilities through May 2022, one through July 2023 and one through November 2024. Sublease income is recorded as an offset to the related lease expense within both instructional costs and services and selling, general, and administrative expenses on the condensed consolidated statements of operations. The following is a summary as of December 31, 2021 and June 30, 2021, respectively, of the expected sublease income: December 31, 2021 June 30, 2021 (in thousands) 2022 $ 877 $ 1,496 2023 1,117 797 2024 387 66 2025 133 — Total sublease income $ 2,514 $ 2,359 The following is a summary of the Company’s lease cost, weighted-average remaining lease term, weighted-average discount rate and certain other cash flows as it relates to its operating leases for the three and six months ended December 31, 2021 and 2020: Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (in thousands) Lease cost Finance lease cost: Amortization of right-of-use assets $ 9,368 $ 8,341 $ 16,988 $ 13,178 Interest on lease liabilities 445 155 862 273 Instructional costs and services: Operating lease cost 3,931 3,935 7,866 7,881 Short-term lease cost 16 94 35 157 Sublease income (247) (251) (579) (503) Selling, general, and administrative expenses: Operating lease cost 1,777 1,644 3,443 3,231 Short-term lease cost 4 221 9 443 Sublease income (182) (196) (311) (424) Total lease cost $ 15,112 $ 13,943 $ 28,313 $ 24,236 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (5,341) $ (5,199) $ (10,662) $ (10,364) Financing cash flows from finance leases (7,724) (5,786) (14,744) (11,455) Right-of-use assets obtained in exchange for new finance lease liabilities 6,898 30,111 20,881 46,865 Right-of-use assets obtained in exchange for new operating lease liabilities — 377 6,805 589 Weighted-average remaining lease term - finance leases 2.27 yrs. 2.84 yrs. Weighted-average remaining lease term - operating leases 6.73 yrs. 6.81 yrs. Weighted-average discount rate - finance leases 2.40 % 2.49 % Weighted-average discount rate - operating leases 2.76 % 2.76 % |
Debt
Debt | 6 Months Ended |
Dec. 31, 2021 | |
Debt | |
Debt | 6. Debt The following is a summary, as of December 31, 2021 and June 30, 2021, respectively, of the components of the Company’s outstanding long-term debt: December 31, 2021 June 30, 2021 (in thousands) Convertible Senior Notes due 2027 $ 420,000 $ 420,000 Less: unamortized discount — (113,331) Less: unamortized debt issuance costs (9,326) (7,398) Total debt 410,674 299,271 Less: current portion of debt — — Long-term debt $ 410,674 $ 299,271 Convertible Senior Notes due 2027 The Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 1 st st Prior to the adoption of ASU 2020-06, the Company separated the Notes into liability and equity components. The initial carrying amount of the liability component was $294.6 million and was calculated using a discount rate of 6.5%. The discount rate was based on the terms of a similar debt instrument as the Notes without the associated conversion feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the principal amount of the Notes, or $125.4 million. The amount recorded in equity was not subject to remeasurement or amortization. The $125.4 million also represented the initial discount recorded on the Notes. As discussed in Note 3, “Summary of Significant Accounting Policies - Recent Accounting Pronouncements,” the discount recorded within debt and equity was eliminated upon the adoption of ASU 2020-06. The Company incurred debt issuance costs of $11.4 million which are amortized over the contractual term of the Notes. During the three months ended December 31, 2021 and 2020, the Company recorded interest expense related to the amortization of the debt issuance costs of $0.4 million and $0.2 million, respectively, and $0.8 million and $0.2 million, respectively, during the six months ended December 31, 2021 and 2020. Before June 1, 2027, noteholders will have the right to convert their Notes only upon the occurrence of certain events. After June 1, 2027, noteholders may convert their Notes at any time at their election until two days prior to the maturity date. The Company will settle conversions by paying cash up to the outstanding principal amount, and at the Company’s election, will settle the conversion spread by paying or delivering cash or shares of its common stock, or a combination of cash and shares of its common stock. The initial conversion rate is 18.9109 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $52.88 per share of common stock (lower strike price). The Notes will be redeemable at the Company’s option at any time after September 6, 2024 at a cash redemption price equal to the principal amount of the Notes, plus accrued and unpaid interest, subject to certain stock price hurdles as discussed in the Indenture. In connection with the Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain counterparties. The Capped Call Transactions are expected to cover the aggregate number of shares of the Company’s common stock that initially underlie the Notes, and are expected to reduce potential dilution to the Company’s common stock upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes. The upper strike price of the Capped Call Transactions is $86.174 per share. The cost of the Capped Call Transactions was $60.4 million and was recorded within additional paid-in capital. |
Credit Facility
Credit Facility | 6 Months Ended |
Dec. 31, 2021 | |
Credit Facility | |
Credit Facility | 7. Credit Facility On January 27, 2020, the Company entered into a $100.0 million senior secured revolving credit facility (“Credit Facility”) to be used for general corporate operating purposes with PNC Capital Markets LLC. The Credit Facility has a five-year term and incorporates customary financial and other covenants, including but not limited to a maximum leverage ratio and a minimum interest coverage ratio. The majority of the Company’s borrowings under the Credit Facility were at LIBOR plus an additional rate ranging from 0.875% - 1.50% based on the Company’s leverage ratio as defined in the agreement. The Credit Facility is secured by the Company’s assets. The Credit Facility agreement allows for an amendment to establish a new benchmark interest rate when LIBOR is discontinued during the five-year term. As of December 31, 2021, the Company was in compliance with the financial covenants. As part of the proceeds received from the Notes, the Company repaid its $100.0 million outstanding balance and as of December 31, 2021, the Company had no amounts outstanding on the Credit Facility. The Credit Facility also includes a $200.0 million accordion feature. |
Equity Incentive Plan
Equity Incentive Plan | 6 Months Ended |
Dec. 31, 2021 | |
Equity Incentive Plan | |
Equity Incentive Plan | 8. Equity Incentive Plan On December 15, 2016 (the “Effective Date”), the Company’s stockholders approved the 2016 Incentive Award Plan (the “Plan”). The Plan is designed to attract, retain and motivate employees who make important contributions to the Company by providing such individuals with equity ownership opportunities. Awards granted under the Plan may include stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Under the Plan, the following types of shares go back into the pool of shares available for issuance: ● unissued shares related to forfeited or cancelled restricted stock and stock options from Plan awards and Prior Plan awards (that were outstanding as of the Effective Date), and; ● shares tendered to satisfy the tax withholding obligation related to the vesting of restricted stock (but not stock options). Unlike the Company’s 2007 Equity Incentive Award Plan (the “Prior Plan”), the Plan has no evergreen provision to increase the shares available for issuance; any new shares would require stockholder approval. The Prior Plan expired in October 2017, and the Company no longer awards equity from the Prior Plan. As of December 31, 2021, the remaining aggregate number of shares of the Company’s common stock authorized for future issuance under the Plan was 1,905,261. As of December 31, 2021, there were 1,751,780 shares of the Company’s common stock that remain outstanding or nonvested under the Plan and Prior Plan. Compensation expense for all equity-based compensation awards is based on the grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period, which is generally the vesting period of the award. For awards subject to service and performance-based vesting conditions, the Company recognizes stock-based compensation expense retroactively through a cumulative catch-up adjustment when it is probable that the performance condition will be achieved. Performance-based awards are typically granted at threshold, target and outperform levels and final payout percentages can vary depending on the performance of the award. Stock-based compensation expense is recorded within selling, general, and administrative expenses on the consolidated statements of operations. Stock Options Each stock option is exercisable pursuant to the vesting schedule set forth in the stock option agreement granting such stock option, generally over four years. No stock option shall be exercisable after the expiration of its option term. The Company has granted stock options under the Prior Plan and the Company has also granted stock options to executive officers under stand-alone agreements outside the Prior Plan. Stock option activity including stand-alone agreements during the six months ended December 31, 2021 was as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2021 31,450 $ 16.58 0.82 $ 437,037 Granted — — Exercised (15,025) 16.36 Forfeited or canceled (1,000) 31.73 Outstanding and exercisable, December 31, 2021 15,425 $ 15.80 1.07 $ 270,328 The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last day of the period and the exercise price, multiplied by the number of in-the- money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2021. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock. The total intrinsic value of options exercised during the six months ended December 31, 2021 and 2020 was $0.2 million and $24.3 million, respectively. Restricted Stock Awards The Company has approved grants of restricted stock awards (“RSA”) pursuant to the Plan and Prior Plan. Under the Plan and Prior Plan, employees, outside directors and independent contractors are able to participate in the Company’s future performance through the awards of restricted stock. Each RSA vests pursuant to the vesting schedule set forth in the restricted stock agreement granting such RSAs, generally over three years. Under the Plan and Prior Plan, there have been no awards of restricted stock to independent contractors. Restricted stock award activity during the six months ended December 31, 2021 Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2021 1,409,334 $ 30.26 Granted 426,693 35.96 Vested (457,758) 27.61 Canceled (92,220) 34.68 Nonvested, December 31, 2021 1,286,049 $ 32.78 Performance-Based Restricted Stock Awards (included above) During the six months ended December 31, 2021, 27,293 new performance-based restricted stock awards were granted and in total, 377,802 remain nonvested at December 31, 2021. During the six months ended December 31, 2021, 207,732 performance-based restricted stock awards vested. Vesting of the performance-based restricted stock awards is contingent on the achievement of certain financial performance goals and service vesting conditions. one two one two two one is currently amortizing the third tranche over the vesting period because it believes that it is probable that the free cash flow target will be met. The free cash flow metric was not met for fiscal year 2020, however, the Company believes that it will be met in aggregate, and therefore is amortizing the first tranche over a three-year period. Service-Based Restricted Stock Awards (included above) During the six months ended December 31, 2021, 399,400 new service-based restricted stock awards were granted and in total, 908,247 remain nonvested at December 31, 2021. During the six months ended December 31, 2021, 250,026 service-based restricted stock awards vested. Summary of All Restricted Stock Awards As of December 31, 2021, there was $25.5 million of total unrecognized compensation expense related to nonvested restricted stock awards. The cost is expected to be recognized over a weighted average period of 1.5 years. The fair value of restricted stock awards granted for the six months ended December 31, 2021 and 2020 was $15.3 million and $17.5 million, respectively. The total fair value of shares vested for the six months ended December 31, 2021 and 2020 was $15.4 million and $15.4 million, respectively. During the three months ended December 31, 2021 and 2020, the Company recognized $4.2 million and $5.6 million, respectively, of stock-based compensation expense related to restricted stock awards. During the six months ended December 31, 2021 and 2020, the expense was $9.5 million and $11.1 million, respectively. Performance Share Units (“PSU”) The Company has approved grants of performance share units (“PSU”) pursuant to the Plan. Each PSU is earned through the achievement of a performance-based metric, combined with the continuation of employee service over a defined period. The level of performance determines the number of PSUs earned, and is generally measured against threshold, target and outperform achievement levels of the award. Each PSU represents the right to receive one share of the Company’s common stock, or at the option of the Company, an equivalent amount of cash, and is classified as an equity or liability award. When the grant is a fixed monetary amount, and the number of shares is not determined until achievement and the value of the Company’s stock on that day, the PSU is a liability-classified award. Each PSU vests pursuant to the vesting schedule found in the respective PSU agreement. In addition to the performance conditions of the PSUs, there is a service vesting condition which is dependent upon continuing service by the grantee as an employee of the Company, unless the grantee is eligible for earlier vesting upon a change in control and qualifying termination, as defined by the PSU agreement. PSUs are generally subject to graduated vesting schedules and stock-based compensation expense is computed by tranche and recognized on a straight-line basis over the tranches’ applicable vesting period based on the expected achievement level. Performance share unit activity (excluding liability-classified awards) during the six months ended December 31, 2021 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2021 2,878,044 $ 15.26 Granted 346,880 34.90 Vested (1,810,752) 9.95 Canceled (1,023,221) 24.75 Nonvested, December 31, 2021 390,951 $ 32.44 Fiscal Year 2022 LTIP Fiscal Year 2021 Tech Elevator MIP During fiscal year 2021, the Company granted to the executive team of Tech Elevator a time-based award with a value of $4.0 million and a performance-based award with a target value of $4.0 million under a Management Incentive Plan (“MIP”). The time-based award vests equally over three years on the anniversary of the closing date of the acquisition of Tech Elevator (see Note 11, “Acquisitions and Investments” for additional detail on the Company’s acquisition). During the second quarter of fiscal year 2022, one-third vested and was settled with the issuance of 38,575 PSUs. The performance-based award is tied to the achievement of certain revenue and EBITDA targets of Tech Elevator. Seventy percent of the award is based on Tech Elevator’s revenues for the calendar year 2023 (“Tranche #1”) and thirty percent of the earned award is based on Tech Elevator’s EBITDA for the calendar year 2023 (“Tranche #2”), both of which are expected to vest after achievement is certified in January 2024. The level of performance will determine the number of PSUs earned as measured against threshold and target achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The MIP is a liability-classified award. The Company determined the likelihood of achievement of the performance conditions is not able to be determined at this time. Fiscal Year 2021 LTIP During fiscal year 2021, the Company granted 111,450 PSUs at target under a LTIP which are tied to the achievement of certain individualized financial and non-financial performance targets. These PSUs had a grant date fair value of $2.7 million, or a weighted average grant-date fair value of $24.15 per share. Forty percent will vest after achievement is certified during the first quarter of fiscal year 2023 and sixty percent will vest one year later. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The fiscal year 2021 LTIP is an equity-classified award. The Company is currently amortizing certain awards over their vesting periods because it believes that it is probable that the specific metrics will be achieved. Two metrics with a target grant date fair value of $0.2 million are assumed to be achieved at threshold, and the remaining metrics are currently being assessed as not probable of achievement. Fiscal Year 2021 Career Learning PSUs During fiscal year 2021, the Company granted 366,250 PSUs at target which are tied to the achievement of Career Learning revenue targets for fiscal years 2021 – 2023. These PSUs had a grant date fair value of $16.5 million, or a weighted average grant-date fair value of $45.05 per share. The vesting is as follows: ● 77,690 PSUs relate to fiscal year 2021 revenues and if achieved, one -third of the award will vest immediately, and the remaining two -thirds will vest annually over two years ; ● 122,080 PSUs relate to fiscal year 2022 revenues and if achieved, two -thirds of the award will vest immediately, and the remaining one -third will vest the following year; and ● 166,480 PSUs relate to fiscal year 2023 revenues and if achieved, the award will vest immediately. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The fiscal year 2021 Career Learning PSUs are equity-classified awards. In August 2021, the Company determined the performance condition of fiscal year 2021 revenues were not achieved resulting in a forfeiture of those shares. Additionally, in October 2021, the two remaining tranches were forfeited as the grantee of the PSUs separated from the Company. Fiscal Year 2020 Galvanize TRIP During fiscal year 2020, the Company granted to the executive team of Galvanize a target level of $12.3 million under a Transaction Related Incentive Plan (“TRIP”) which is tied to the achievement of certain revenue and EBITDA targets of Galvanize. Seventy percent of the earned award is based on the performance of Galvanize for the calendar year 2021 (“Tranche #1”) and thirty percent of the earned award is based on the performance of Galvanize for the calendar year 2022 (“Tranche #2”), both of which are expected to vest after achievement is certified in January following each of the calendar year ends. The revenue and EBITDA targets are split sixty percent and forty percent, respectively, for both tranches. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In January 2022, the Company determined that the metrics for calendar year 2021 were not met and Tranche #1 was forfeited. The TRIP is a liability-classified award. The Company determined the likelihood of achievement of the performance conditions associated with Tranche #2 is not probable. Fiscal Year 2019 LTIP During fiscal year 2019, the Company granted 263,936 PSUs at target under a LTIP which are tied to certain career learning revenue targets and enrollment levels, as well as students’ academic progress. These PSUs had a grant date fair value of $7.9 million, or a weighted average grant-date fair value of $30.05 per share. During fiscal year 2020, the Company granted an additional 34,030 PSUs at target with a grant date fair value of $0.8 million, or $23.51 per share. Forty-five percent of the earned award is based on students’ academic progress (“Tranche #1”) and twenty-five percent of the earned award is based on certain enrollment levels (“Tranche #2”). In October 2021, Tranche #2 achievement was certified at approximately 193% of target resulting in the vesting of 115,223 shares, while Tranche #1 was not achieved resulting in 107,397 forfeited shares. The remaining thirty percent of the earned award is based on certain revenue targets (“Tranche #3”) and will vest after achievement is certified in August 2022. The level of performance will determine the number of PSUs earned as measured against threshold, target and outperform achievement levels. In all cases, vesting is dependent upon continuing service by the grantee as an employee of the Company. The Company determined the achievement of the performance conditions associated with Tranche #3 was probable at the outperform level. Fiscal Year 2019 SPP During fiscal year 2019, the Company adopted a new long-term shareholder performance plan (“2019 SPP”) that provides for incentive award opportunities to its key senior executives. The awards were granted in the form of PSUs and will be earned based on the Company’s market capitalization growth over a completed three-year performance period. The 2019 SPP was designed to provide the executives with a percentage of shareholder value growth. No amounts will be earned if total stock price growth over the three-year period is below 25% (7.6% annualized). An amount of 6% of total value growth will be earned based on achieving total stock price growth of 33% (10% annualized) and a maximum of 7.5% of total value growth will be earned if total stock price growth equals or exceeds 95% (25% annualized). During fiscal year 2019, the Company granted 2,108,305 PSUs at a weighted average grant-date fair value of $8.18 per share, based on the highest level of performance. During fiscal year 2020, the Company granted an additional 66,934 PSUs at a weighted average grant-date fair value of $12.56 per share, based on the highest level of performance. The final amount of PSUs was determined (and vesting occurred) based on the 30 -day In October 2021, the Company certified achievement of the 2019 SPP based upon the 30-day average price of the Company’s stock during the period of August 18, 2021 – September 17, 2021 of $34.13. The 112% market capitalization growth over the three-year performance period resulted in the vesting 1,656,594 shares to the Company’s six named executive officers. Summary of All Performance Share Units As of December 31, 2021, there was $7.2 million of total unrecognized compensation expense related to nonvested PSUs that are expected to vest based on the Company’s probability assumptions discussed above. The cost is expected to be recognized over a weighted average period of 2.1 Deferred Stock Units (“DSU”) Deferred stock unit activity during the six months ended December 31, 2021 was as follows: Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2021 59,354 $ 22.01 Granted — — Vested — — Canceled — — Nonvested, December 31, 2021 59,354 $ 22.01 Summary of All Deferred Stock Units As of December 31, 2021, there was $0.0 million of total unrecognized compensation expense related to nonvested DSUs. The cost is expected to be recognized over a weighted average period of 0.0 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Litigation Georgia Cyber Academy Arbitration Securities Litigation Employment Agreements The Company has entered into employment agreements with certain executive officers that provide for severance payments and, in some cases other benefits, upon certain terminations of employment. Except for the agreement with the Company’s Executive Chairman with an amended extended term to September 30, 2022, all other agreements provide for employment on an “at-will” basis. If the employee resigns for “good reason” or is terminated without cause, the employee is entitled to salary continuation, and in some cases benefit continuation, for varying periods depending on the agreement. Off-Balance Sheet Arrangements As of December 31, 2021, the Company provided guarantees of approximately $0.3 million related to lease commitments on the buildings for certain of the Company’s schools. In addition, the Company contractually guarantees that certain schools under the Company’s management will not have annual operating deficits and the Company’s management fees from these schools may be reduced accordingly to cover any school operating deficits. Other than these lease and operating deficit guarantees, the Company did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Risks and Uncertainties Impacts of COVID-19 on Stride’s Business While the long-term impact of the global emergence of COVID-19 is not estimable or determinable, beginning in late fiscal year 2020, the Company experienced an increase in demand for its products and services. The Company continues to conduct business as usual with some modifications to employee travel, employee work locations, and cancellation of certain events. The Company will continue to actively monitor the situation and may take further actions that alter its business operations as may be required by federal, state or local authorities or that it determines is in the best interests of its employees, customers, partners, suppliers and stockholders. It is not clear what the potential effects any such alterations or modifications may have on the Company’s business, including the effects on its customers and prospects, or on its long-term financial results. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The Company has evaluated the business provisions in the CARES Act and adopted the deferral of the employer portion of the social security payroll tax (6.2%) outlined within. The deferral was effective from the enactment date through December 31, 2020. The deferred amount of $14.1 million will be paid in two installments, $7.05 million of the deferred amount was paid in December 2021 and the remaining $7.05 million will be paid by December 31, 2022. The deferred payroll taxes due on December 31, 2022 are recorded within accrued compensation and benefits on the condensed consolidated balance sheets. |
Acquisitions and Investments
Acquisitions and Investments | 6 Months Ended |
Dec. 31, 2021 | |
Acquisitions and Investments. | |
Acquisitions and Investments | 11. Acquisitions and Investments Acquisition of MedCerts, LLC On November 30, 2020, the Company acquired 100% of MedCerts in exchange for $70.0 million and estimated contingent consideration of $10.8 million. The purchase price is payable in two tranches; $55.0 million was paid at closing, and $15.0 million plus the final contingent consideration will be paid on the 18-month anniversary of the closing. In addition, during the fourth quarter of fiscal year 2021, the Company paid an additional $0.3 million related to the finalization of working capital. MedCerts students participate in online, hands-on career training courses in the healthcare and medical fields as they prepare for more than a dozen national healthcare certifications. The acquisition of MedCerts further expands the Company’s post-secondary skills training in the healthcare and medical fields. The Company also plans to use MedCerts’ curriculum to create appropriate content to offer high school students. The acquisition has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their fair values as of November 30, 2020, the acquisition date. As of the acquisition date, goodwill was measured as the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. Based on management’s valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price was allocated as follows (in thousands): Allocation of Purchase Price Cash $ 205 Current assets, excluding cash 5,074 Property and equipment, net 1,896 Intangible assets, net 26,607 Goodwill 51,033 Current liabilities (2,201) Deferred revenue (1,562) Deferred tax asset (liability) 16 Total consideration $ 81,068 The fair value of the identified intangible assets was determined primarily using an income-based approach of either the multi-period excess earnings method or relief from royalty method, as appropriate. Intangible assets are amortized on a straight-line basis over the amortization periods noted below. Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 12,072 5.84 Developed technology 11,970 7.00 Trade names 2,565 5.00 $ 26,607 The contingent consideration represents the fair value of additional consideration payable to the seller, estimated using a Monte Carlo simulation model. The amount of consideration to be distributed on the 18-month anniversary of the closing is based on a multiplier calculated using the annualized earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the period December 2021 – May 2022. This multiplier is applied to the annualized trailing EBITDA for the period March 2022 – May 2022 to calculate an enterprise value of MedCerts as of May 2022. The payment, if any, will equal 49% of the enterprise value less 49% of the original purchase price of $70.0 million ( $34.3 million). Subsequent to the acquisition date, the Company is required to reassess its estimate of the fair value of contingent consideration, and record any changes in earnings when the estimate is based on information not known as of the acquisition date. During fiscal year 2021, the Company recorded an expense of $0.3 million related to the estimate of the fair value of its contingent consideration. During the three and six months ended December 31, 2021, the Company recorded an expense of $0.5 million and $0.6 million, respectively, related to the estimate of the fair value of its contingent consideration. Those adjustments are recorded within selling, general, and administrative expenses on the condensed consolidated statements of operations. The fair value of the contingent consideration as of December 31, 2021 was $11.7 million and is recorded within accrued liabilities on the condensed consolidated balance sheets. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the tangible and intangible assets acquired and liabilities assumed. Goodwill will not be amortized but instead will be tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is deductible for tax purposes. Included in the Company’s condensed consolidated results of operations for the three and six months ended December 31, 2021 are revenues of $9.1 million and $17.9 million, respectively, and a loss from operations of $0.3 million and $0.6 million, respectively, related to MedCerts. Included in the Company’s condensed consolidated results of operations for the three and six months ended December 31, 2020 are revenues of $1.0 million and a loss from operations of $1.2 million, related to MedCerts. Acquisition of Tech Elevator, Inc. On November 30, 2020, the Company acquired 100% of Tech Elevator in exchange for $23.5 million, plus working capital of $2.2 million. Like Galvanize, Tech Elevator provides talent development for individuals and enterprises in information technology fields. The acquisition of Tech Elevator expands Galvanize’s student demographic profile, geographic footprint, and hiring partner portfolio; as well as provides additional curriculum to create appropriate content to offer high school students. The acquisition has been accounted for as a business combination under the acquisition method of accounting, which results in acquired assets and assumed liabilities being measured at their fair values as of November 30, 2020, the acquisition date. As of the acquisition date, goodwill was measured as the excess of consideration transferred over the fair values of the assets acquired and liabilities assumed. Based on management’s valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price was allocated as follows (in thousands): Allocation of Purchase Price Cash $ 1,736 Current assets, excluding cash 518 Property and equipment, net 513 Operating lease right-of-use assets, net 724 Intangible assets, net 7,105 Goodwill 17,897 Other assets 377 Current liabilities (267) Deferred revenue (534) Deferred tax liability (1,650) Current operating lease liability (420) Long-term operating lease liability (304) Total consideration $ 25,695 The fair value of the identified intangible assets was determined primarily using an income-based approach of either the multi-period excess earnings method or relief from royalty method, as appropriate. Intangible assets are amortized on a straight-line basis over the amortization periods noted below. Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 311 3.92 Developed technology 2,796 5.00 Trade names 3,998 15.00 $ 7,105 Goodwill represents the excess of the purchase price of an acquired business over the fair value of the tangible and intangible assets acquired and liabilities assumed. Goodwill will not be amortized but instead will be tested for impairment at least annually (or more frequently if indicators of impairment arise). In the event that management determines that the goodwill has become impaired, the Company will incur an accounting charge for the amount of the impairment during the fiscal quarter in which the determination is made. Goodwill is not deductible for tax purposes. Included in the Company’s condensed consolidated results of operations for the three and six months ended December 31, 2021 are revenues of $3.8 million and $7.7 million, respectively, and income from operations of $0.1 million and $0.4 million, respectively, related to Tech Elevator. Included in the Company’s condensed consolidated results of operations for the three and six months ended December 31, 2020 are revenues of $0.6 million and a loss from operations of $0.3 million. Pro Forma Combined Results of Operations The following unaudited pro forma combined results of operations give effect to the acquisition of MedCerts and Tech Elevator as if they had occurred on July 1, 2019. The unaudited pro forma combined results of operations are provided for informational purposes only and do not purport to represent the Company’s actual consolidated results of operations had the acquisitions occurred on the dates assumed, nor are these financial statements necessarily indicative of the Company’s future consolidated results of operations. The unaudited pro forma combined results of operations do not reflect the costs of any integration activities or any benefits that may result from operating efficiencies or revenue synergies. Three Months Ended Six Months Ended (In thousands) December 31, 2020 December 31, 2020 Revenues $ 382,911 $ 762,518 Income from operations 38,461 51,347 Net income 24,723 38,159 Investments in Limited Partnerships Investment in Tallo, Inc. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 6 Months Ended |
Dec. 31, 2021 | |
Supplemental Disclosure of Cash Flow Information | |
Supplemental Disclosure of Cash Flow Information | 12. Supplemental Disclosure of Cash Flow Information Six Months Ended December 31, 2021 2020 (In thousands) Cash paid for interest $ 3,286 $ 1,176 Cash paid for taxes $ 13,099 $ 8,749 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained from acquisitions — 1,280 Right-of-use assets obtained in exchange for new finance lease liabilities 20,881 46,865 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 143 $ 127 Stock-based compensation expense capitalized on curriculum development 57 96 Business combinations: Acquired assets $ 464 $ 11,120 Intangible assets 2,157 33,712 Goodwill 568 69,376 Assumed liabilities (42) (5,584) Deferred revenue (1,084) (2,096) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Standards Adopted On July 1, 2021, the Company early adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) During the second quarter of fiscal year 2022, the Company early adopted ASU 2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform during the period on a prospective basis. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements. |
Revenue Recognition | Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services using the following steps: ● identify the contract, or contracts, with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when, or as, the Company satisfies a performance obligation. Revenues related to the products and services that the Company provides to students in kindergarten through twelfth grade or adult learners are considered to be General Education or Career Learning based on the school or adult program in which the student is enrolled. General Education products and services are focused on core subjects, including math, English, science and history, for kindergarten through twelfth grade students to help build a common foundation of knowledge. Career Learning products and services are focused on developing skills to enter and succeed in careers in high-growth, in-demand industries—including information technology, business, and health services, for students in middle school through high school and adult learners. The majority of the Company’s contracts are with the following types of customers: ● a virtual or blended school whereby the amount of revenue is primarily determined by funding the school receives; ● a school or individual who licenses certain curriculum on a subscription or course-by-course basis; or ● an enterprise who contracts with the Company to provide job training. Funding-based Contracts The Company provides an integrated package of systems, services, products, and professional expertise that is administered together to support a virtual or blended public school. Contractual agreements generally span multiple years with performance obligations being isolated to annual periods which generally coincide with the Company’s fiscal year. Customers of these programs can obtain administrative support, information technology, academic support services, online curriculum, learning systems platforms and instructional services under the terms of a negotiated service agreement. The schools receive funding on a per student basis from the state in which the public school or school district is located. Shipments of materials for schools that occur in the fourth fiscal quarter and for the upcoming school year are recorded in deferred revenue. The Company generates revenues under contracts with virtual and blended public schools and include the following components, where required: ● providing each of a school’s students with access to the Company’s online school and lessons; ● offline learning kits, which include books and materials to supplement the online lessons; ● the use of a personal computer and associated reclamation services; ● internet access and technology support services; ● instruction by a state-certified teacher; and ● management and technology services necessary to support a virtual or blended school. In certain contracts, revenues are determined directly by per enrollment funding. To determine the pro rata amount of revenue to recognize in a fiscal quarter, the Company estimates the total expected funds each school will receive in a particular school year. Total funds for a school are primarily a function of the number of students enrolled in the school and established per enrollment funding levels, which are generally published on an annual basis by the state or school district. The Company reviews its estimates of funding periodically, and updates as necessary, by adjusting its year-to-date earned revenues to be proportional to the total expected revenues to be earned during the fiscal year. Actual school funding may vary from these estimates and the impact of these differences could impact the Company’s results of operations. Since the end of the school year coincides with the end of the Company’s fiscal year, annual revenues are generally based on actual school funding and actual costs incurred (including costs for the Company’s services to the schools plus other costs the schools may incur). The Company’s schools’ reported results are subject to annual school district financial audits, which incorporate enrollment counts, funding and other routine financial audit considerations. The results of these audits are incorporated into the Company’s monthly funding estimates for the three and six months ended December 31, 2021 and 2020. Each state and/or school district has variations in the school funding formulas and methodologies that it uses to estimate funding for revenue recognition at its respective schools. As the Company estimates funding for each school, it takes into account the state definition for count dates on which reported enrollment numbers will be used for per pupil funding. The parameters the Company considers in estimating funding for revenue recognition purposes include school district count definitions, withdrawal rates, new registrations, average daily attendance, special needs enrollment, academic progress, historical completion, student location, funding caps and other state specified categorical program funding. Under the contracts where the Company provides products and services to schools, the Company is responsible for substantially all of the expenses incurred by the school and has generally agreed to absorb any operating losses of the schools in a given school year. These school operating losses represent the excess of costs incurred over revenues earned by the virtual or blended public school (the school’s expected funding), as reflected in its respective financial statements, including Company charges to the schools. To the extent a school does not receive sufficient funding for each student enrolled in the school, the school would still incur costs associated with serving the unfunded enrollment. If losses due to unfunded enrollments result in a net operating loss for the year that loss is reflected as a reduction in the revenues and net receivables that the Company collects from the school. A school net operating loss in one year does not necessarily mean the Company anticipates losing money on the entire contract with the school. However, a school’s net operating loss may reduce the Company’s ability to collect its management fees in full and recognized revenues are constrained to reflect the expected cash collections from such schools. The Company records the school’s estimated net operating loss against revenues based upon the percentage of actual revenues in the period to total estimated revenues for the fiscal year. Actual school net operating losses may vary from these estimates or revisions, and the impact of these differences could have a material impact on results of operations. For the three months ended December 31, 2021 and 2020, the Company’s revenues included a reduction for net school operating losses at the schools of $12.3 million and $24.2 million, respectively, and $25.2 million and $44.2 million for the six months ended December 31, 2021 and 2020, respectively. Because the Company has agreed to absorb any operating losses of the schools, the Company records the expenses incurred by the school as both revenue and expenses in the condensed consolidated statements of operations. Amounts recorded as revenues and expenses for the three months ended December 31, 2021 and 2020 were $117.7 million and $102.4 million, respectively, and for the six months ended December 31, 2021 and 2020 were $231.6 million and $212.1 million, respectively. Subscription-based Contracts The Company provides certain online curriculum and services to schools and school districts under subscription agreements. Revenues from the licensing of curriculum under subscription arrangements are recognized on a ratable basis over the subscription period. Revenues from professional consulting, training and support services are deferred and recognized ratably over the service period. In addition, the Company contracts with individual customers who have access for one Enterprise Contracts The Company provides job training over a specified contract period to enterprises. Each of these contracts are considered to be one performance obligation. The Company recognizes these revenues based on the number of students trained during the term of the contract based on the defined contract price. Disaggregated Revenues The revenue recognition related to the types of contracts discussed above can span both of the Company’s lines of revenue as shown below. For example, a funding-based contract may include both General Education and Career Learning students. In total, there is one performance obligation and revenue is recognized over the Company’s fiscal year. The revenue is then disaggregated between General Education and Career Learning based on the Company’s estimated full-year enrollment totals of each category. During the three months ended December 31, 2021 and 2020, approximately 88% and 88%, respectively, of the Company’s General Education revenues, and 99% and 98%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. During the six months ended December 31, 2021 and 2020, approximately 89% and 88%, respectively, of the Company’s General Education revenues, and 99% and 98%, respectively, of the Company’s Middle – High School Career Learning revenues, were from funding-based contracts. The following table presents the Company’s revenues disaggregated based on its two lines of revenue for the three and six months ended December 31, 2021 and 2020: Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (In thousands) General Education $ 313,241 $ 313,989 $ 619,582 $ 627,838 Career Learning Middle - High School 75,287 51,376 146,699 100,147 Adult 20,979 10,780 43,452 19,120 Total Career Learning 96,266 62,156 190,151 119,267 Total Revenues $ 409,507 $ 376,145 $ 809,733 $ 747,105 Concentration of Customers During the three and six months ended December 31, 2021 and 2020, the Company had zero contracts that represented greater than 10% of total revenues. Contract Balances The opening and closing balance of the Company’s accounts receivable, unbilled receivables and deferred revenue are as follows: December 31, June 30, 2021 2021 (In thousands) Accounts receivable $ 430,436 $ 369,303 Unbilled receivables (included in accounts receivable) 20,997 24,794 Deferred revenue 50,409 38,110 Deferred revenue, long-term (included in other long-term liabilities) 3,505 1,973 The difference between the opening and closing balance of the accounts receivable and unbilled receivables relates to the timing of the Company’s billing in relation to month end and contractual agreements. The difference between the opening and closing balance of the deferred revenue relates to the timing difference between billings to customers and the service periods under the contract. Typically, each of these balances are at their highest during the first quarter of the fiscal year and lowest at the end of the fiscal year. The amount of revenue recognized during the three months ended December 31, 2021 and 2020 that was included in the previous October 1 st st Performance Obligations 30 45 one Significant Judgments The Company has determined that the time elapsed method is the most appropriate measure of progress towards the satisfaction of the performance obligation. Generally, the Company delivers the integrated products and services package over the course of the Company’s fiscal year. This package includes enrollment, marketing, teacher training, etc. in addition to the core curriculum and instruction. All of these activities are necessary and contribute to the overall education of its students, which occurs evenly throughout the year. Accordingly, the Company recognizes revenue on a straight-line basis. and the amount of full-year school revenues and operating expenses to determine the amount of revenue the Company will recognize. Enrollment and state funding rates are key inputs to this estimate. The estimates are adjusted monthly, and a cumulative catch-up adjustment is recorded to revenue as necessary to reflect the total revenues earned to date to be proportional to the total revenues to be earned in the fiscal year. The Company builds in known constraints (i.e. enrollment, funding, net operating losses, etc.) into the estimate of the variable consideration to record the most probable amount. Sales Taxes |
Consolidation | Consolidation The condensed consolidated financial statements include the accounts of the Company, the wholly-owned and affiliated companies that the Company owns, directly or indirectly, and all controlled subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. |
Investments in Marketable Securities | Investments in Marketable Securities The Company’s marketable securities generally consist of bonds and other securities which are classified as held-to-maturity. The securities with maturities between three months and one year are classified as short-term and are included in other current assets on the condensed consolidated balance sheets. The securities with maturities greater than one year are classified as long-term and are included in other assets on the condensed consolidated balance sheets. Held-to-maturity securities are recorded at their amortized cost. Interest income and dividends are recorded within the condensed consolidated statements of operations. The Company reviews the held-to-maturity debt securities for declines in fair value below the amortized cost basis under the credit loss model of Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments – Credit Losses As of December 31, 2021, the Company’s marketable securities consisted of investments in corporate bonds and U.S. treasury notes. The short-term and long-term portions were $51.5 million and $20.0 million, respectively. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands). Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 65,413 $ - $ 65,413 $ (178) $ 65,235 U.S. Treasury Notes 6,096 - 6,096 (24) 6,072 Total $ 71,509 $ - $ 71,509 $ (202) $ 71,307 As of June 30, 2021, the Company’s marketable securities consisted of investments in corporate bonds and U.S. treasury notes. The short-term and long-term portions were $17.3 million and $23.2 million, respectively. The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands). Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 31,850 $ - $ 31,850 $ (24) $ 31,826 U.S. Treasury Notes 8,692 - 8,692 - 8,692 Total $ 40,542 $ - $ 40,542 $ (24) $ 40,518 |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company maintains an allowance for uncollectible accounts primarily for estimated losses resulting from the inability or failure of individual customers to make required payments. The Company analyzes accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for uncollectible accounts. The Company maintains an allowance under ASC 326 based on historical losses, customer-specific information, current economic conditions, and reasonable and supportable forecasts of future economic conditions. The allowance under ASC 326 is updated as additional losses are incurred or information becomes available related to the customer or economic conditions. |
Inventories | Inventories Inventories consist primarily of textbooks and curriculum materials, a majority of which are supplied to virtual and blended public schools, and utilized directly by students. Inventories represent items that are purchased and held for sale and are recorded at the lower of cost (first-in, first-out method) or net realizable value. The Company classifies its inventory as current or long-term based on the holding period. As of December 31, 2021 and June 30, 2021, $7.2 million and $8.8 million, respectively, of inventory, net of reserves, was deemed long-term and included in deposits and other assets on the condensed consolidated balance sheets. The provision for excess and obsolete inventory is established based upon the evaluation of the quantity on hand relative to demand. The excess and obsolete inventory reserve was $6.0 million and $5.6 million at December 31, 2021 and June 30, 2021, respectively. |
Other Current Assets | Other Current Assets Other current assets consist primarily of textbooks, curriculum materials and other supplies which are expected to be returned upon the completion of the school year. Materials not returned are expensed as part of instructional costs and services. Additionally, other current assets include short-term marketable securities. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is calculated using the straight-line method over the estimated useful life of the asset (or the lesser of the term of the lease and the estimated useful life of the asset under the finance lease). Amortization of assets capitalized under finance lease arrangements is included in depreciation expense. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful life of the asset. The determination of the lease term is discussed below under “Leases.” Property and equipment are depreciated over the following useful lives: Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 - 7 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease The Company makes an estimate of unreturned student computers based on an analysis of recent trends of returns. The Company recorded accelerated depreciation of $1.3 million and $1.1 million for the three months ended December 31, 2021 and 2020, respectively, and $1.9 million and $1.9 million for the six months ended December 31, 2021 and 2020, respectively, related to unreturned student computers. Depreciation expense, including accelerated depreciation, related to computers provided to students reflected in instructional costs and services for the three months ended December 31, 2021 and 2020 was $9.8 million and $9.3 million, respectively, and $17.9 million and $14.8 million, respectively, during the six months ended December 31, 2021 and 2020. Depreciation expense related to property and equipment reflected in selling, general, and administrative expenses for the three months ended December 31, 2021 and 2020 was $1.2 million and $1.0 million, respectively and $2.3 million and $1.9 million, respectively, during the six months ended December 31, 2021 and 2020. The Company fully expenses computer peripheral equipment (e.g., keyboards, mouses) upon purchase as recovery has been determined to be uneconomical. These expenses totaled $2.5 million and $1.1 million for the three months ended December 31, 2021 and 2020, respectively, and $7.3 million and $5.5 million for the six months ended December 31, 2021 and 2020, respectively, and are recorded as instructional costs and services. |
Capitalized Software Costs | Capitalized Software Costs The Company develops software for internal use. Software development costs incurred during the application development stage are capitalized. The Company amortizes these costs over the estimated useful life of the software, which is generally three years. Capitalized software development costs are stated at cost less accumulated amortization. Capitalized software additions totaled $19.3 million and $14.1 million for the six months ended December 31, 2021 and 2020, respectively. The Company recorded amortization expense related to capitalized software of $5.9 million and $5.0 million during the three months ended December 31, 2021 and 2020, respectively, and $12.1 million and $9.7 million during the six months ended December 31, 2021 and 2020, respectively, within instructional costs and services. Amortization expense related to capitalized software reflected in selling, general, and administrative expenses during the three months ended December 31, 2021 and 2020 was $1.3 million and $1.1 million, respectively and $2.6 million and $2.2 million, respectively, during the six months ended December 31, 2021 and 2020. |
Capitalized Curriculum Development Costs | Capitalized Curriculum Development Costs The Company internally develops curriculum, which is primarily provided as online content and accessed via the Internet. The Company also creates textbooks and other materials that are complementary to online content. The Company capitalizes curriculum development costs incurred during the application development stage, as well as the design and deployment phases of the project. As a result, a significant portion of the Company’s courseware development costs qualify for capitalization due to the concentration of its development efforts on the content of the courseware. Capitalization ends when a course is available for general release to its customers, at which time amortization of the capitalized costs begins. The period of time over which these development costs are amortized is generally five years. Total capitalized curriculum development additions were $7.5 million and $7.5 million for the six months ended December 31, 2021 and 2020, respectively. These amounts are recorded on the condensed consolidated balance sheets net of amortization charges. Amortization expense for the three and six months ended December 31, 2021 and 2020 was $3.8 million and $4.3 million, respectively, and $8.0 million and $8.3 million for the six months ended December 31, 2021 and 2020, respectively, and is recorded in instructional costs and services. |
Leases | Leases The Company’s principal leasing activities include student computers and peripherals, classified as finance leases, and facilities, classified as operating leases. Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease: ● the lease transfers ownership of the asset at the end of the lease; ● the lease grants an option to purchase the asset which the lessee is expected to exercise; ● the lease term reflects a major part of the asset’s economic life; ● the present value of the lease payments equals or exceeds the fair value of the asset; or ● the asset is specialized with no alternative use to the lessor at the end of the term. Finance Leases The Company enters into agreements to finance the purchase of student computers and peripherals provided to students of its schools. Individual leases typically include 1 Operating Leases The Company enters into agreements for facilities that serve as offices for its headquarters, sales and enrollment teams, and school operations. Initial lease terms vary between 1 Discount Rate The present value of the lease payments is calculated using either the rate implicit in the lease, or the lessee’s incremental borrowing rate, over the lease term. For the Company’s finance leases, the stated rate is defined within the lease terms; while for the Company’s operating leases, the rate is not implicit. For operating leases, the Company uses its incremental borrowing rate as the discount rate; determined as the Company’s borrowing rate on a collateralized basis for a similar term and amount to the term and amount of the lease. The Company’s current incremental borrowing rate of 3.50% is based upon its agreements used for its finance leases. The incremental borrowing rate is subsequently reassessed upon modification of its leasing arrangements or with the execution of a new lease agreement. Policy Elections Short-term Leases The Company has elected as an on-going accounting policy election not to record a right-of-use asset or lease liability on its short-term facility leases of 12 months or less, and will expense its lease payments on a straight-line basis over the lease term. The accounting policy election is made by class of underlying asset to which the right of use relates. The Company has elected to apply the accounting policy election only to operating leases. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are computed based on the difference between the financial reporting and income tax bases of assets and liabilities using the enacted marginal tax rate. The net deferred tax asset is reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the net deferred tax asset will not be realized. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company records as goodwill the excess of the purchase price over the fair value of the identifiable net assets acquired. Finite-lived intangible assets acquired in business combinations subject to amortization are recorded at their fair value. Finite-lived intangible assets include trade names, acquired customers and distributors, developed technology and non-compete agreements. Such intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended December 31, 2021 and 2020 was $3.2 million and $2.5 million, respectively, and $6.4 million and $4.6 million for the six months ended December 31, 2021 and 2020, respectively, and is included within selling, general, and administrative expenses in the condensed consolidated statements of operations. Future amortization of intangible assets is expected to be $6.5 million, $12.9 million, $11.9 million, $10.7 million, and $9.6 million in the fiscal years ending June 30, 2022 through June 30, 2026, respectively, and $43.3 million thereafter. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. The Company has one reporting unit. The process for testing goodwill and intangible assets with indefinite lives for impairment is performed annually, as well as when an event triggering impairment may have occurred. Companies are also allowed to qualitatively assess goodwill impairment through a screening process which would permit companies to forgo the quantitative impairment test as part of their annual goodwill impairment process. The Company performs its annual assessment on May 31 st th During the three and six months ended December 31, 2021, there were no events or changes in circumstances that would indicate that the carrying amount of the goodwill was impaired. During the three and six months ended December 31, 2020 the Company qualitatively assessed its goodwill and intangible assets for impairment. It identified Coronavirus disease 2019 (“COVID-19”) as a triggering event, however there were no indicators that the fair value of the reporting unit may be less than its carrying amount, and as a result, the Company determined that no impairment was required. The following table represents the balance of the Company’s intangible assets as of December 31, 2021 and June 30, 2021: December 31, 2021 June 30, 2021 ($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Trade names $ 85.1 $ (20.2) $ 64.9 $ 84.5 $ (17.4) $ 67.1 Customer and distributor relationships 38.9 (23.2) 15.7 37.7 (21.2) 16.5 Developed technology 21.7 (7.3) 14.4 21.3 (5.7) 15.6 Other 1.4 (1.2) 0.2 1.4 (1.1) 0.3 Total $ 147.1 $ (51.9) $ 95.2 $ 144.9 $ (45.4) $ 99.5 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets include property, equipment, right-of-use assets, capitalized curriculum and software developed or obtained for internal use. Management reviews the Company’s recorded long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability as well as on a reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. During the three and six months ended December 31, 2021, there were no events or changes in circumstances that may indicate that the carrying amount of the long-lived assets may not be recoverable. During the three and six months ended December 31, 2020, the Company identified COVID-19 as a triggering event, however based on its assessment, the Company determined that COVID-19 did not impact the recoverability of its long-lived assets. |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. Measurements are described in a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The carrying values reflected in the condensed consolidated balance sheets for cash and cash equivalents, receivables, and short term debt approximate their fair values, as they are largely short-term in nature. The contingent consideration and Tallo, Inc. convertible note are discussed in more detail in Note 11, “Acquisitions and Investments.” As of December 31, 2021, the estimated fair value of the long-term debt was $412.5 million. The Company estimated the fair value based on the quoted market prices in an inactive market on the last day of the reporting period (Level 2). The long-term debt, comprised of the Company’s convertible senior notes due 2027, is recorded at face value less the unamortized debt issuance costs on its condensed consolidated balance sheet, and is discussed in more detail in Note 6, “Debt.” As of December 31, 2021, the estimated fair value of the Company’s marketable securities was $71.3 million. The Company estimated the fair value based on the quoted market prices in an inactive market on the last day of the reporting period (Level 2). The marketable securities are discussed in more detail in Note 3, “Summary of Significant Accounting Policies - Investments in Marketable Securities.” The following table summarizes certain fair value information at December 31, 2021 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Contingent consideration associated with acquisitions $ 11,726 $ — $ — $ 11,726 Convertible note received in acquisition 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2021 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Contingent consideration associated with acquisitions $ 11,082 $ — $ — $ 11,082 Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 The following table presents activity related to the Company’s fair value measurements categorized as Level 3 in the valuation hierarchy, valued on a recurring basis, for the three and six months ended December 31, 2021 and 2020: Three Months Ended December 31, 2021 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2021 and Settlements Gains/(Losses) December 31, 2021 (In thousands) Contingent consideration associated with acquisitions $ 11,205 $ — $ 521 $ 11,726 Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2020 and Settlements Gains/(Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 Six Months Ended December 31, 2021 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2021 and Settlements Gains (Losses) December 31, 2021 (In thousands) Contingent consideration associated with acquisitions $ 11,082 $ — $ 644 $ 11,726 Convertible note received in acquisition 5,006 — — 5,006 Six Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options and vesting of all dilutive unvested restricted stock awards. The dilutive effect of stock options and restricted stock awards was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options and restricted stock awards, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded as income tax expense when the stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock. Stock options and restricted stock awards are not included in the computation of diluted net income (loss) per share when they are antidilutive. Common stock outstanding reflected in the Company’s condensed consolidated balance sheets includes restricted stock awards outstanding. The dilutive effect of the Company’s convertible debt is determined using the if-converted method when the Company’s stock is trading above the conversion price. However, based on the structure of the instrument and how it is settled upon conversion, it would produce a similar result as the previously applied treasury stock method. The following schedule presents the calculation of basic and diluted net income (loss) per share: Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 42,004 $ 24,501 $ 36,121 $ 37,167 Weighted average common shares — basic 41,525,736 40,160,362 41,042,401 40,072,360 Basic net income per share $ 1.01 $ 0.61 $ 0.88 $ 0.93 Diluted net income per share computation: Net income attributable to common stockholders $ 42,004 $ 24,501 $ 36,121 $ 37,167 Share computation: Weighted average common shares — basic 41,525,736 40,160,362 41,042,401 40,072,360 Effect of dilutive stock options and restricted stock awards 437,663 942,063 1,371,427 1,608,701 Weighted average common shares — diluted 41,963,399 41,102,425 42,413,828 41,681,061 Diluted net income per share $ 1.00 $ 0.60 $ 0.85 $ 0.89 For the three months ended December 31, 2021 and 2020, 5,193 and 372,016 shares issuable in connection with stock options and restricted stock were excluded from the diluted income per common share calculation because the effect would have been antidilutive. For the six months ended December 31, 2021 and 2020, 102,536 and 284,792 shares were excluded, respectively. |
Reclassifications | Reclassifications Certain previous year amounts have been reclassified to conform with current year presentations, as related to the condensed consolidated statement of cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of disaggregation of revenue | Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (In thousands) General Education $ 313,241 $ 313,989 $ 619,582 $ 627,838 Career Learning Middle - High School 75,287 51,376 146,699 100,147 Adult 20,979 10,780 43,452 19,120 Total Career Learning 96,266 62,156 190,151 119,267 Total Revenues $ 409,507 $ 376,145 $ 809,733 $ 747,105 |
Schedule of accounts receivables, unbilled receivables and deferred revenue | December 31, June 30, 2021 2021 (In thousands) Accounts receivable $ 430,436 $ 369,303 Unbilled receivables (included in accounts receivable) 20,997 24,794 Deferred revenue 50,409 38,110 Deferred revenue, long-term (included in other long-term liabilities) 3,505 1,973 |
Schedule of investments in marketable securities | The following table summarizes the amortized cost, net carrying amount, and fair value disaggregated by class of instrument (in thousands). Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 65,413 $ - $ 65,413 $ (178) $ 65,235 U.S. Treasury Notes 6,096 - 6,096 (24) 6,072 Total $ 71,509 $ - $ 71,509 $ (202) $ 71,307 Allowance for Net Carrying Gross Unrealized Amortized Cost Credit Losses Amount Gains (Losses) Fair Value Corporate Bonds $ 31,850 $ - $ 31,850 $ (24) $ 31,826 U.S. Treasury Notes 8,692 - 8,692 - 8,692 Total $ 40,542 $ - $ 40,542 $ (24) $ 40,518 |
Schedule of useful lives of property and equipment | Useful Life Student and state testing computers 3 - 5 years Computer hardware 3 - 7 years Computer software 3 - 5 years Web site development 3 years Office equipment 5 years Furniture and fixtures 7 years Leasehold improvements Shorter of useful life or term of the lease |
Schedule of intangible assets | December 31, 2021 June 30, 2021 ($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Trade names $ 85.1 $ (20.2) $ 64.9 $ 84.5 $ (17.4) $ 67.1 Customer and distributor relationships 38.9 (23.2) 15.7 37.7 (21.2) 16.5 Developed technology 21.7 (7.3) 14.4 21.3 (5.7) 15.6 Other 1.4 (1.2) 0.2 1.4 (1.1) 0.3 Total $ 147.1 $ (51.9) $ 95.2 $ 144.9 $ (45.4) $ 99.5 |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table summarizes certain fair value information at December 31, 2021 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Contingent consideration associated with acquisitions $ 11,726 $ — $ — $ 11,726 Convertible note received in acquisition 5,006 — — 5,006 The following table summarizes certain fair value information at June 30, 2021 for assets or liabilities measured at fair value on a recurring basis: Fair Value Measurements Using: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Input Inputs Description Fair Value (Level 1) (Level 2) (Level 3) (In thousands) Contingent consideration associated with acquisitions $ 11,082 $ — $ — $ 11,082 Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Schedule of activity related to fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | Three Months Ended December 31, 2021 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2021 and Settlements Gains/(Losses) December 31, 2021 (In thousands) Contingent consideration associated with acquisitions $ 11,205 $ — $ 521 $ 11,726 Convertible note received in acquisition 5,006 — — 5,006 Three Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description September 30, 2020 and Settlements Gains/(Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 Six Months Ended December 31, 2021 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2021 and Settlements Gains (Losses) December 31, 2021 (In thousands) Contingent consideration associated with acquisitions $ 11,082 $ — $ 644 $ 11,726 Convertible note received in acquisition 5,006 — — 5,006 Six Months Ended December 31, 2020 Purchases, Fair Value Issuances, Unrealized Fair Value Description June 30, 2020 and Settlements Gains (Losses) December 31, 2020 (In thousands) Contingent consideration associated with acquisitions $ — $ 10,833 $ — $ 10,833 Convertible note received in acquisition $ 5,006 $ — $ — $ 5,006 |
Schedule of calculation of basic and diluted net income (loss) per share | Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (In thousands except share and per share data) Basic net income per share computation: Net income attributable to common stockholders $ 42,004 $ 24,501 $ 36,121 $ 37,167 Weighted average common shares — basic 41,525,736 40,160,362 41,042,401 40,072,360 Basic net income per share $ 1.01 $ 0.61 $ 0.88 $ 0.93 Diluted net income per share computation: Net income attributable to common stockholders $ 42,004 $ 24,501 $ 36,121 $ 37,167 Share computation: Weighted average common shares — basic 41,525,736 40,160,362 41,042,401 40,072,360 Effect of dilutive stock options and restricted stock awards 437,663 942,063 1,371,427 1,608,701 Weighted average common shares — diluted 41,963,399 41,102,425 42,413,828 41,681,061 Diluted net income per share $ 1.00 $ 0.60 $ 0.85 $ 0.89 |
Finance and Operating Leases (T
Finance and Operating Leases (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Finance and Operating Leases | |
Schedule of present value of the minimum lease payments on finance leases | December 31, 2021 June 30, 2021 (in thousands) 2022 $ 18,857 $ 28,715 2023 37,266 28,105 2024 23,461 14,303 2025 3,439 — Total minimum payments 83,023 71,123 Less: imputed interest (2,331) (2,219) Finance lease liability 80,692 68,904 Less: current portion of finance lease liability (36,080) (27,336) Long-term finance lease liability $ 44,612 $ 41,568 |
Schedule of future minimum lease payments under non-cancelable operating leases | December 31, 2021 June 30, 2021 (in thousands) 2022 $ 9,237 $ 23,030 2023 16,432 16,204 2024 15,752 15,032 2025 15,258 14,222 2026 12,300 11,247 Thereafter 35,267 27,432 Total minimum payments 104,246 107,167 Less: imputed interest (9,993) (9,060) Operating lease liability 94,253 98,107 Less: current portion of operating lease liability (15,233) (20,649) Long-term operating lease liability $ 79,020 $ 77,458 |
Schedule of expected sublease income | December 31, 2021 June 30, 2021 (in thousands) 2022 $ 877 $ 1,496 2023 1,117 797 2024 387 66 2025 133 — Total sublease income $ 2,514 $ 2,359 |
Schedule of lease cost, weighted-average remaining lease term, weighted-average discount rate | Three Months Ended December 31, Six Months Ended December 31, 2021 2020 2021 2020 (in thousands) Lease cost Finance lease cost: Amortization of right-of-use assets $ 9,368 $ 8,341 $ 16,988 $ 13,178 Interest on lease liabilities 445 155 862 273 Instructional costs and services: Operating lease cost 3,931 3,935 7,866 7,881 Short-term lease cost 16 94 35 157 Sublease income (247) (251) (579) (503) Selling, general, and administrative expenses: Operating lease cost 1,777 1,644 3,443 3,231 Short-term lease cost 4 221 9 443 Sublease income (182) (196) (311) (424) Total lease cost $ 15,112 $ 13,943 $ 28,313 $ 24,236 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (5,341) $ (5,199) $ (10,662) $ (10,364) Financing cash flows from finance leases (7,724) (5,786) (14,744) (11,455) Right-of-use assets obtained in exchange for new finance lease liabilities 6,898 30,111 20,881 46,865 Right-of-use assets obtained in exchange for new operating lease liabilities — 377 6,805 589 Weighted-average remaining lease term - finance leases 2.27 yrs. 2.84 yrs. Weighted-average remaining lease term - operating leases 6.73 yrs. 6.81 yrs. Weighted-average discount rate - finance leases 2.40 % 2.49 % Weighted-average discount rate - operating leases 2.76 % 2.76 % |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Debt | |
Schedule of components of debt | December 31, 2021 June 30, 2021 (in thousands) Convertible Senior Notes due 2027 $ 420,000 $ 420,000 Less: unamortized discount — (113,331) Less: unamortized debt issuance costs (9,326) (7,398) Total debt 410,674 299,271 Less: current portion of debt — — Long-term debt $ 410,674 $ 299,271 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Schedule of stock option activity | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life (Years) Value Outstanding, June 30, 2021 31,450 $ 16.58 0.82 $ 437,037 Granted — — Exercised (15,025) 16.36 Forfeited or canceled (1,000) 31.73 Outstanding and exercisable, December 31, 2021 15,425 $ 15.80 1.07 $ 270,328 |
Schedule of restricted stock award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2021 1,409,334 $ 30.26 Granted 426,693 35.96 Vested (457,758) 27.61 Canceled (92,220) 34.68 Nonvested, December 31, 2021 1,286,049 $ 32.78 |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2021 2,878,044 $ 15.26 Granted 346,880 34.90 Vested (1,810,752) 9.95 Canceled (1,023,221) 24.75 Nonvested, December 31, 2021 390,951 $ 32.44 |
Deferred Stock Units | |
Schedule of performance share units award activity | Weighted Average Grant-Date Shares Fair Value Nonvested, June 30, 2021 59,354 $ 22.01 Granted — — Vested — — Canceled — — Nonvested, December 31, 2021 59,354 $ 22.01 |
Acquisitions and Investments (T
Acquisitions and Investments (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Acquisitions | |
Schedule of intangible assets | December 31, 2021 June 30, 2021 ($ in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Value Gross Carrying Amount Accumulated Amortization Net Carrying Value Trade names $ 85.1 $ (20.2) $ 64.9 $ 84.5 $ (17.4) $ 67.1 Customer and distributor relationships 38.9 (23.2) 15.7 37.7 (21.2) 16.5 Developed technology 21.7 (7.3) 14.4 21.3 (5.7) 15.6 Other 1.4 (1.2) 0.2 1.4 (1.1) 0.3 Total $ 147.1 $ (51.9) $ 95.2 $ 144.9 $ (45.4) $ 99.5 |
Schedule of unaudited pro forma combined results of operations | Three Months Ended Six Months Ended (In thousands) December 31, 2020 December 31, 2020 Revenues $ 382,911 $ 762,518 Income from operations 38,461 51,347 Net income 24,723 38,159 |
MedCerts | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price Cash $ 205 Current assets, excluding cash 5,074 Property and equipment, net 1,896 Intangible assets, net 26,607 Goodwill 51,033 Current liabilities (2,201) Deferred revenue (1,562) Deferred tax asset (liability) 16 Total consideration $ 81,068 |
Schedule of intangible assets | Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 12,072 5.84 Developed technology 11,970 7.00 Trade names 2,565 5.00 $ 26,607 |
Tech Elevator | |
Acquisitions | |
Schedule estimated fair value of consideration paid and identifiable assets acquired and liabilities assumed | Allocation of Purchase Price Cash $ 1,736 Current assets, excluding cash 518 Property and equipment, net 513 Operating lease right-of-use assets, net 724 Intangible assets, net 7,105 Goodwill 17,897 Other assets 377 Current liabilities (267) Deferred revenue (534) Deferred tax liability (1,650) Current operating lease liability (420) Long-term operating lease liability (304) Total consideration $ 25,695 |
Schedule of intangible assets | Intangible Assets Estimated Intangible Assets Amount Useful Life (In thousands) (In years) Customer relationships $ 311 3.92 Developed technology 2,796 5.00 Trade names 3,998 15.00 $ 7,105 |
Supplemental Disclosure of Ca_2
Supplemental Disclosure of Cash Flow Information (Tables) | 6 Months Ended |
Dec. 31, 2021 | |
Supplemental Disclosure of Cash Flow Information | |
Schedule of supplemental disclosure of cash flow information | Six Months Ended December 31, 2021 2020 (In thousands) Cash paid for interest $ 3,286 $ 1,176 Cash paid for taxes $ 13,099 $ 8,749 Supplemental disclosure of non-cash financing activities: Right-of-use assets obtained from acquisitions — 1,280 Right-of-use assets obtained in exchange for new finance lease liabilities 20,881 46,865 Supplemental disclosure of non-cash investing activities: Stock-based compensation expense capitalized on software development $ 143 $ 127 Stock-based compensation expense capitalized on curriculum development 57 96 Business combinations: Acquired assets $ 464 $ 11,120 Intangible assets 2,157 33,712 Goodwill 568 69,376 Assumed liabilities (42) (5,584) Deferred revenue (1,084) (2,096) |
Description of the Business (De
Description of the Business (Details) | Dec. 31, 2021item |
Description of the Business | |
Number of lines of revenue | 2 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 6 Months Ended |
Dec. 31, 2021segment | |
Basis of Presentation | |
Number of operating segments | 1 |
Number of reportable business segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - ASU (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jul. 01, 2021 | Jun. 30, 2021 |
Summary of Significant Accounting Policies | |||
Retained earnings | $ 156,453 | $ 112,151 | |
Deferred tax liability | 8,282 | 31,853 | |
Long-term debt | 410,674 | 299,271 | |
Additional paid-in capital | $ 680,601 | $ 795,449 | |
ASU 2020-06 | Cumulative Effect, Period of Adoption, Adjustment | |||
Summary of Significant Accounting Policies | |||
Retained earnings | $ 8,200 | ||
Deferred tax liability | (29,300) | ||
Long-term debt | 110,600 | ||
Additional paid-in capital | $ (89,500) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | ||||
Revenues | $ 409,507 | $ 376,145 | $ 809,733 | $ 747,105 |
School operating losses included in the entity's revenue | 12,300 | 24,200 | $ 25,200 | 44,200 |
Minimum | ||||
Summary of Significant Accounting Policies | ||||
Duration of contracts providing access to curriculum via the entity's Web site | 1 year | |||
Maximum | ||||
Summary of Significant Accounting Policies | ||||
Duration of contracts providing access to curriculum via the entity's Web site | 2 years | |||
Primary Obligor | ||||
Summary of Significant Accounting Policies | ||||
Revenues | $ 117,700 | $ 102,400 | $ 231,600 | $ 212,100 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of revenue (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | |
Summary of Significant Accounting Policies | ||||
Number of lines of revenue | item | 2 | 2 | ||
Total Revenues | $ 409,507 | $ 376,145 | $ 809,733 | $ 747,105 |
General Education | ||||
Summary of Significant Accounting Policies | ||||
Percentage of revenues from funding-based contracts | 88.00% | 88.00% | 89.00% | 88.00% |
Total Revenues | $ 313,241 | $ 313,989 | $ 619,582 | $ 627,838 |
Career Learning | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | $ 96,266 | $ 62,156 | $ 190,151 | $ 119,267 |
Middle - High School | ||||
Summary of Significant Accounting Policies | ||||
Percentage of revenues from funding-based contracts | 99.00% | 98.00% | 99.00% | 98.00% |
Total Revenues | $ 75,287 | $ 51,376 | $ 146,699 | $ 100,147 |
Adult | ||||
Summary of Significant Accounting Policies | ||||
Total Revenues | $ 20,979 | $ 10,780 | $ 43,452 | $ 19,120 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Concentration Risk and Inventories (Details) - contract | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue | Customer Concentration Risk | ||||
Concentration of revenues | ||||
Number of customers with concentration | 0 | 0 | 0 | 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | |
Accounts receivables, contract assets and deferred revenue | |||||
Accounts receivable | $ 430,436 | $ 430,436 | $ 369,303 | ||
Unbilled receivables (included in accounts receivable) | 20,997 | 20,997 | 24,794 | ||
Deferred revenue | 50,409 | 50,409 | 38,110 | ||
Deferred revenue, long-term (included in other long-term liabilities) | 3,505 | 3,505 | $ 1,973 | ||
Revenue recognized that was included in opening deferred revenue balance | 34,700 | $ 47,800 | 33,000 | $ 21,400 | |
Revenue recognized from performance obligation satisfied in prior periods | $ 4,600 | $ 1,700 | $ 6,900 | $ 1,600 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Performance Obligations (Details) $ in Millions | 6 Months Ended |
Dec. 31, 2021USD ($) | |
Summary of Significant Accounting Policies | |
Minimum payment term | 30 days |
Maximum payment term | 45 days |
Practical expedient | |
Unsatisfied performance obligations | true |
Unsatisfied performance obligations amount | $ 3.5 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Marketable securities | ||
Marketable securities, short-term portion | $ 51,500 | $ 17,300 |
Marketable securities, long-term portion | 20,000 | 23,200 |
Amortized Cost | 71,509 | 40,542 |
Allowance for Credit Losses | 0 | 0 |
Net Carrying Amount | 71,509 | 40,542 |
Gross Unrealized Gains (Losses) | (202) | (24) |
Fair Value | 71,307 | 40,518 |
Corporate Bonds | ||
Marketable securities | ||
Amortized Cost | 65,413 | 31,850 |
Net Carrying Amount | 65,413 | 31,850 |
Gross Unrealized Gains (Losses) | (178) | (24) |
Fair Value | 65,235 | 31,826 |
U.S. Treasury Notes | ||
Marketable securities | ||
Amortized Cost | 6,096 | 8,692 |
Net Carrying Amount | 6,096 | 8,692 |
Gross Unrealized Gains (Losses) | (24) | |
Fair Value | $ 6,072 | $ 8,692 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Jun. 30, 2021 |
Summary of Significant Accounting Policies | ||
Inventory deemed long-term and included in deposits and other assets | $ 7.2 | $ 8.8 |
Excess and obsolete inventory reserve | $ 6 | $ 5.6 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Property and Equipment and Leases (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and equipment | ||||
Equipment expense | $ 2,500,000 | $ 1,100,000 | $ 7,300,000 | $ 5,500,000 |
Capitalized software development costs | $ 19,330,000 | 14,061,000 | ||
Capitalized Curriculum Development Costs | ||||
Amortization period of capitalized development costs | 5 years | |||
Capitalized curriculum development additions | $ 7,461,000 | 7,524,000 | ||
Finance Leases | ||||
Purchase option | $ 1 | $ 1 | ||
Operating Leases | ||||
Incremental borrowing rate used as discount rate | 3.50% | 3.50% | ||
Minimum | ||||
Finance Leases | ||||
Finance lease term | 1 year | 1 year | ||
Operating Leases | ||||
Operating leases initial term | 1 year | 1 year | ||
Maximum | ||||
Finance Leases | ||||
Finance lease term | 3 years | 3 years | ||
Operating Leases | ||||
Operating leases initial term | 11 years | 11 years | ||
Instructional costs and services | ||||
Property and equipment | ||||
Depreciation expense | $ 9,800,000 | 9,300,000 | $ 17,900,000 | 14,800,000 |
Amortization expense | 5,900,000 | 5,000,000 | 12,100,000 | 9,700,000 |
Capitalized Curriculum Development Costs | ||||
Amortization expense | 3,800,000 | 4,300,000 | 8,000,000 | 8,300,000 |
Selling, general and administrative expenses | ||||
Property and equipment | ||||
Depreciation expense | 1,200,000 | 1,000,000 | 2,300,000 | 1,900,000 |
Amortization expense | 1,300,000 | 1,100,000 | 2,600,000 | 2,200,000 |
Student and state testing computers | ||||
Property and equipment | ||||
Accelerated depreciation | $ 1,300,000 | $ 1,100,000 | $ 1,900,000 | $ 1,900,000 |
Student and state testing computers | Minimum | ||||
Property and equipment | ||||
Useful Life | 3 years | |||
Student and state testing computers | Maximum | ||||
Property and equipment | ||||
Useful Life | 5 years | |||
Computer hardware | Minimum | ||||
Property and equipment | ||||
Useful Life | 3 years | |||
Computer hardware | Maximum | ||||
Property and equipment | ||||
Useful Life | 7 years | |||
Computer software | Minimum | ||||
Property and equipment | ||||
Useful Life | 3 years | |||
Computer software | Maximum | ||||
Property and equipment | ||||
Useful Life | 5 years | |||
Web site development | ||||
Property and equipment | ||||
Useful Life | 3 years | |||
Office equipment | ||||
Property and equipment | ||||
Useful Life | 5 years | |||
Furniture and fixtures | ||||
Property and equipment | ||||
Useful Life | 7 years | |||
Capitalized software | ||||
Property and equipment | ||||
Useful Life | 3 years | |||
Buildings | Minimum | ||||
Operating Leases | ||||
Operating leases initial term | 1 year | 1 year | ||
Buildings | Maximum | ||||
Operating Leases | ||||
Operating leases initial term | 17 years | 17 years |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Goodwill and Intangibles (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Jun. 30, 2021USD ($) | |
Intangible Assets: | |||||
Amortization expense | $ 3.2 | $ 2.5 | $ 6.4 | $ 4.6 | |
Gross Carrying Amount | 147.1 | 147.1 | $ 144.9 | ||
Accumulated Amortization | (51.9) | (51.9) | (45.4) | ||
Net Carrying Value | 95.2 | $ 95.2 | 99.5 | ||
Number of reporting units | segment | 1 | ||||
Future amortization of intangible assets | |||||
Fiscal 2022 - remainder | 6.5 | $ 6.5 | |||
Fiscal 2023 | 12.9 | 12.9 | |||
Fiscal 2024 | 11.9 | 11.9 | |||
Fiscal 2025 | 10.7 | 10.7 | |||
Fiscal 2026 | 9.6 | 9.6 | |||
Thereafter | 43.3 | 43.3 | |||
Trade names | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 85.1 | 85.1 | 84.5 | ||
Accumulated Amortization | (20.2) | (20.2) | (17.4) | ||
Net Carrying Value | 64.9 | 64.9 | 67.1 | ||
Customer relationships | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 38.9 | 38.9 | 37.7 | ||
Accumulated Amortization | (23.2) | (23.2) | (21.2) | ||
Net Carrying Value | 15.7 | 15.7 | 16.5 | ||
Developed technology | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 21.7 | 21.7 | 21.3 | ||
Accumulated Amortization | (7.3) | (7.3) | (5.7) | ||
Net Carrying Value | 14.4 | 14.4 | 15.6 | ||
Other | |||||
Intangible Assets: | |||||
Gross Carrying Amount | 1.4 | 1.4 | 1.4 | ||
Accumulated Amortization | (1.2) | (1.2) | (1.1) | ||
Net Carrying Value | $ 0.2 | $ 0.2 | $ 0.3 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 |
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Estimated fair value of long-term debt | $ 412,500 | |||||
Estimated fair value of marketable securities | 71,300 | |||||
Measured on a recurring basis | Contingent Consideration | Acquisitions | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 11,726 | $ 11,082 | ||||
Measured on a recurring basis | Convertible Note | Acquisitions | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 5,006 | 5,006 | ||||
Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Contingent Consideration | Acquisitions | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | 11,726 | $ 11,205 | 11,082 | $ 10,833 | ||
Measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Convertible Note | Acquisitions | ||||||
Assets and liabilities measured at fair value on a recurring and nonrecurring basis | ||||||
Fair value | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Acquisitions - Measured on a recurring basis - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Contingent Consideration | ||||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||||
Fair Value, beginning of period | $ 11,082 | |||
Fair Value, ending of period | $ 11,726 | 11,726 | ||
Convertible Note | ||||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||||
Fair Value, beginning of period | 5,006 | |||
Fair Value, ending of period | 5,006 | 5,006 | ||
Significant Unobservable Inputs (Level 3) | Contingent Consideration | ||||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||||
Fair Value, beginning of period | 11,205 | 11,082 | ||
Purchases, Issuances and Settlements | $ 10,833 | $ 10,833 | ||
Unrealized Gains/(Losses) | 521 | 644 | ||
Fair Value, ending of period | 11,726 | 10,833 | 11,726 | 10,833 |
Significant Unobservable Inputs (Level 3) | Convertible Note | ||||
Fair value measurements categorized as Level 3 of the valuation hierarchy, valued on a recurring basis | ||||
Fair Value, beginning of period | 5,006 | 5,006 | 5,006 | 5,006 |
Fair Value, ending of period | $ 5,006 | $ 5,006 | $ 5,006 | $ 5,006 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Net Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Basic and diluted income (loss) per share computation: | ||||||
Net income (loss) attributable to common stockholders | $ 42,004 | $ (5,883) | $ 24,501 | $ 12,666 | $ 36,121 | $ 37,167 |
Weighted average common shares-basic | 41,525,736 | 40,160,362 | 41,042,401 | 40,072,360 | ||
Basic net income (loss) per share (in dollars per share) | $ 1.01 | $ 0.61 | $ 0.88 | $ 0.93 | ||
Effect of dilutive stock options and restricted stock awards (in shares) | 437,663 | 942,063 | 1,371,427 | 1,608,701 | ||
Weighted average common shares-diluted | 41,963,399 | 41,102,425 | 42,413,828 | 41,681,061 | ||
Diluted net income (loss) per share (in dollars per share) | $ 1 | $ 0.60 | $ 0.85 | $ 0.89 | ||
Stock options and restricted stock | ||||||
Basic and diluted income (loss) per share computation: | ||||||
Anti-dilutive shares | 5,193 | 372,016 | 102,536 | 284,792 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation to income tax at the statutory rate: | ||||
Effective income tax rate (as a percent) | 27.50% | 30.30% | 26.50% | 18.20% |
Finance and Operating Leases (D
Finance and Operating Leases (Details) - USD ($) | Dec. 31, 2021 | Jun. 30, 2021 | Jul. 31, 2020 | Apr. 30, 2020 |
Finance and Operating Leases | ||||
Finance lease liability | $ 80,692,000 | $ 68,904,000 | ||
Purchase option | $ 1 | |||
Minimum | ||||
Finance and Operating Leases | ||||
Finance lease term | 1 year | |||
Maximum | ||||
Finance and Operating Leases | ||||
Finance lease term | 3 years | |||
BALC | ||||
Finance and Operating Leases | ||||
Finance lease liability | $ 80,700,000 | 68,900,000 | ||
Available line of credit | $ 41,000,000 | $ 25,000,000 | ||
Finance lease right-of-use assets | $ 56,900,000 | 49,000,000 | ||
Finance lease term | 36 months | |||
Purchase option | $ 1 | |||
Additional amount of borrowings as at the and of the reporting period | $ 54,000,000 | |||
BALC | Minimum | ||||
Finance and Operating Leases | ||||
Interest rate on finance lease (as a percent) | 1.52% | |||
Fixed interest rate (as a percent) | 1.52% | |||
BALC | Maximum | ||||
Finance and Operating Leases | ||||
Interest rate on finance lease (as a percent) | 2.58% | |||
Fixed interest rate (as a percent) | 2.58% |
Finance and Operating Leases -
Finance and Operating Leases - Finance leases (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Finance leases | ||
Remainder of fiscal year | $ 18,857 | |
Year 1 | 37,266 | $ 28,715 |
Year 2 | 23,461 | 28,105 |
Year 3 | 3,439 | 14,303 |
Total minimum payments | 83,023 | 71,123 |
Less: imputed interest | (2,331) | (2,219) |
Finance lease liability | 80,692 | 68,904 |
Less: current portion of finance lease liability | (36,080) | (27,336) |
Long-term finance lease liability | $ 44,612 | $ 41,568 |
Finance and Operating Leases _2
Finance and Operating Leases - Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Operating Leases | ||
Remainder of fiscal year | $ 9,237 | |
Year 1 | 16,432 | $ 23,030 |
Year 2 | 15,752 | 16,204 |
Year 3 | 15,258 | 15,032 |
Year 4 | 12,300 | 14,222 |
Year 5 | 11,247 | |
Thereafter | 35,267 | |
Thereafter | 27,432 | |
Total minimum payments | 104,246 | 107,167 |
Less: imputed interest | (9,993) | (9,060) |
Operating lease liability | 94,253 | 98,107 |
Less: current portion of operating lease liability | (15,233) | (20,649) |
Long-term operating lease liability | 79,020 | 77,458 |
Operating lease right-of-use assets, net | $ 91,410 | $ 94,671 |
Minimum | ||
Operating Leases | ||
Operating leases initial term | 1 year | |
Maximum | ||
Operating Leases | ||
Operating leases initial term | 11 years |
Finance and Operating Leases _3
Finance and Operating Leases - Sub Leases (Details) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021USD ($)facility | Jun. 30, 2021USD ($) | |
Finance and Operating Leases | ||
Remainder of current fiscal year | $ 877 | |
Year 1 | 1,117 | $ 1,496 |
Year 2 | 387 | 797 |
Year 3 | 133 | 66 |
Total sublease income | $ 2,514 | $ 2,359 |
Number of entity's facilities that are being subleased through May 2022 | facility | 2 | |
Number of entity's facilities that are being subleased through July 2023 | facility | 1 | |
Number of entity's facilities that are being subleased through November 2024 | facility | 1 |
Finance and Operating Leases _4
Finance and Operating Leases - Lease cost and other information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finance lease cost: | ||||
Amortization of right-of-use assets | $ 9,368 | $ 8,341 | $ 16,988 | $ 13,178 |
Interest on lease liabilities | 445 | 155 | 862 | 273 |
Total lease cost | 15,112 | 13,943 | 28,313 | 24,236 |
Cash paid for amounts included in the measurement of lease liabilities | ||||
Operating cash flows from operating leases | (5,341) | (5,199) | (10,662) | (10,364) |
Financing cash flows from finance leases | (7,724) | (5,786) | (14,744) | (11,455) |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 6,898 | 30,111 | 20,881 | 46,865 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 377 | $ 6,805 | $ 589 | |
Weighted-average remaining lease term - finance leases | 2 years 3 months 7 days | 2 years 10 months 2 days | 2 years 3 months 7 days | 2 years 10 months 2 days |
Weighted-average remaining lease term - operating leases | 6 years 8 months 23 days | 6 years 9 months 21 days | 6 years 8 months 23 days | 6 years 9 months 21 days |
Weighted-average discount rate - finance leases | 2.40% | 2.49% | 2.40% | 2.49% |
Weighted-average discount rate - operating leases | 2.76% | 2.76% | 2.76% | 2.76% |
Instructional Costs and Services | ||||
Finance lease cost: | ||||
Operating lease cost | $ 3,931 | $ 3,935 | $ 7,866 | $ 7,881 |
Short-term lease cost | 16 | 94 | 35 | 157 |
Sublease income | (247) | (251) | (579) | (503) |
Selling, general and administrative expenses | ||||
Finance lease cost: | ||||
Operating lease cost | 1,777 | 1,644 | 3,443 | 3,231 |
Short-term lease cost | 4 | 221 | 9 | 443 |
Sublease income | $ (182) | $ (196) | $ (311) | $ (424) |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Jun. 30, 2021 |
Debt | ||
Less: unamortized discount | $ (113,331) | |
Less: unamortized debt issuance costs | $ (9,326) | (7,398) |
Total debt | 410,674 | 299,271 |
Long-term debt | 410,674 | 299,271 |
Convertible Senior Notes Due 2027 | ||
Debt | ||
Total debt | $ 420,000 | $ 420,000 |
Debt - Additional Information (
Debt - Additional Information (Details) - Convertible Senior Notes Due 2027 - USD ($) $ / shares in Units, $ in Millions | 2 Months Ended | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt | |||||
Face amount | $ 420 | ||||
Interest rate (as percent) | 1.125% | ||||
Net proceeds | $ 408.6 | ||||
Interest expense | $ 1.2 | $ 1.2 | $ 2.4 | $ 1.6 | |
Carrying amount of the liability component | $ 294.6 | ||||
Discount rate (as percent) | 6.50% | ||||
Fair value of the liability component | $ 125.4 | 125.4 | 125.4 | ||
Debt issuance costs | $ 11.4 | ||||
Amortization of debt issuance costs | $ 0.4 | $ 0.2 | $ 0.8 | $ 0.2 | |
Period prior to maturity date where noteholders may convert their notes at their election prior to the maturity date | 2 days | ||||
Conversion rate | 18.9109 | ||||
Conversion price (in dollars per share) | $ 52.88 | ||||
Upper strike price (in dollars per share) | $ 86.174 | ||||
Capped call transaction | $ 60.4 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) $ in Thousands | Jan. 27, 2020 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2021 |
Credit Facility | ||||
Repayments on credit facility | $ 100,000 | |||
Credit Facility. | ||||
Credit Facility | ||||
Face amount | $ 100,000 | |||
Term of debt | 5 years | |||
Repayments on credit facility | $ 100,000 | |||
Amount outstanding | $ 0 | |||
Amount of accordion feature under the credit facility | $ 200,000 | |||
Credit Facility. | LIBOR | Minimum | ||||
Credit Facility | ||||
Interest rate spread added to base rate (as a percent) | 0.875% | |||
Credit Facility. | LIBOR | Maximum | ||||
Credit Facility | ||||
Interest rate spread added to base rate (as a percent) | 1.50% |
Equity Incentive Plan - Share B
Equity Incentive Plan - Share Based Compensation (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Jun. 30, 2021 | |
Stock option activity | ||
Vesting period | 4 years | |
Shares | ||
Outstanding at the beginning of the period (in shares) | 31,450 | |
Exercised (in shares) | (15,025) | |
Forfeited or canceled (in shares) | (1,000) | |
Outstanding at the end of the period (in shares) | 15,425 | 31,450 |
Exercisable after expiration of option term (in shares) | 0 | |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 16.58 | |
Exercised (in dollars per share) | 16.36 | |
Forfeited or canceled (in dollars per share) | 31.73 | |
Outstanding at the end of the period (in dollars per share) | $ 15.80 | $ 16.58 |
Additional information | ||
Weighted Average Remaining Contractual Life | 1 year 25 days | 9 months 25 days |
Aggregate Intrinsic Value | $ 270,328 | $ 437,037 |
Plan | ||
Stock option activity | ||
Shares reserved for issuance | 1,905,261 | |
Plan and Prior Plan | ||
Shares | ||
Outstanding at the end of the period (in shares) | 1,751,780 |
Equity Incentive Plan - Vesting
Equity Incentive Plan - Vesting (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee and Non Employees Stock Option | ||||
Equity Transactions | ||||
Intrinsic value of options exercised | $ 0.2 | $ 24.3 | ||
Unrecognized compensation | $ 0 | 0 | ||
Stock based compensation expense | 0 | $ 0 | 0 | 0 |
Restricted Stock | ||||
Equity Transactions | ||||
Unrecognized compensation | 25.5 | 25.5 | ||
Stock based compensation expense | 4.2 | 5.6 | 9.5 | 11.1 |
Performance Share Units | ||||
Equity Transactions | ||||
Unrecognized compensation | 7.2 | 7.2 | ||
Stock based compensation expense | $ (3.6) | $ 3.4 | $ (0.6) | $ 6.8 |
Equity Incentive Plan - Restric
Equity Incentive Plan - Restricted Stock (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Jun. 30, 2021 | |
Restricted Stock | ||
Shares | ||
Nonvested at the beginning of the period (in shares) | 1,409,334 | |
Granted (in shares) | 426,693 | |
Vested (in shares) | (457,758) | |
Forfeited or canceled (in shares) | (92,220) | |
Nonvested at the end of the period (in shares) | 1,286,049 | 1,409,334 |
Weighted-Average Grant Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 30.26 | |
Granted (in dollars per share) | 35.96 | |
Vested (in dollars per share) | 27.61 | |
Forfeited or canceled (in dollars per share) | 34.68 | |
Nonvested at the end of the period (in dollars per share) | $ 32.78 | $ 30.26 |
Restricted Stock | Vesting Based On Performance And Service | ||
Shares | ||
Granted (in shares) | 27,293 | |
Vested (in shares) | (207,732) | |
Nonvested at the end of the period (in shares) | 377,802 | |
Restricted Stock | Independent contractors | ||
Shares | ||
Granted (in shares) | 0 | |
Performance Share Units | ||
Shares | ||
Nonvested at the beginning of the period (in shares) | 2,878,044 | |
Granted (in shares) | 346,880 | |
Vested (in shares) | (1,810,752) | |
Forfeited or canceled (in shares) | (1,023,221) | |
Nonvested at the end of the period (in shares) | 390,951 | 2,878,044 |
Weighted-Average Grant Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 15.26 | |
Granted (in dollars per share) | 34.90 | |
Vested (in dollars per share) | 9.95 | |
Forfeited or canceled (in dollars per share) | 24.75 | |
Nonvested at the end of the period (in dollars per share) | $ 32.44 | $ 15.26 |
Performance Share Units | CEO | Vesting Based on Performance | ||
Shares | ||
Granted (in shares) | 30,364 | |
Weighted-Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 24.70 | |
Performance Share Units | Executive Officers | Vesting Based on Performance | ||
Shares | ||
Granted (in shares) | 82,710 | |
Weighted-Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 45.33 | |
Deferred Stock Units | ||
Shares | ||
Nonvested at the beginning of the period (in shares) | 59,354 | |
Nonvested at the end of the period (in shares) | 59,354 | 59,354 |
Weighted-Average Grant Date Fair Value | ||
Nonvested at the beginning of the period (in dollars per share) | $ 22.01 | |
Nonvested at the end of the period (in dollars per share) | $ 22.01 | $ 22.01 |
Equity Incentive Plan - Other (
Equity Incentive Plan - Other (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jan. 31, 2022shares | Oct. 31, 2021shares | Sep. 17, 2021employee$ / sharesshares | Aug. 31, 2021shares | Dec. 31, 2021USD ($)shares | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($) | Jun. 30, 2021USD ($)item$ / sharesshares | Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($)$ / sharesshares | |
2019 SPP | |||||||||||
Equity Transactions | |||||||||||
Vesting period | 3 years | ||||||||||
Fiscal Year 2021 LTIP | |||||||||||
Equity Transactions | |||||||||||
Number of metrics assumed to be achieved at threshold | item | 2 | ||||||||||
Threshold grant date fair value of metrics | $ | $ 0.2 | ||||||||||
Career Learning Revenue Performance Based Share Units | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 366,250 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 45.05 | ||||||||||
Fair value | $ | $ 16.5 | ||||||||||
Career Learning Revenue Performance Based Share Units | Fiscal Year 2021 | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 77,690 | ||||||||||
Vesting period | 2 years | ||||||||||
Career Learning Revenue Performance Based Share Units | Fiscal Year 2022 | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 122,080 | ||||||||||
Career Learning Revenue Performance Based Share Units | Fiscal Year 2023 | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 166,480 | ||||||||||
Career Learning Revenue Performance Based Share Units | Vest immediately | Fiscal Year 2021 | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 33.33% | ||||||||||
Career Learning Revenue Performance Based Share Units | Vest immediately | Fiscal Year 2022 | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 66.67% | ||||||||||
Career Learning Revenue Performance Based Share Units | Vest annually over two years. | Fiscal Year 2021 | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 66.67% | ||||||||||
Career Learning Revenue Performance Based Share Units | Vest the following year | Fiscal Year 2022 | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 33.33% | ||||||||||
Restricted Stock | |||||||||||
Equity Transactions | |||||||||||
Nonvested at the beginning of the period (in shares) | 1,286,049 | 1,409,334 | |||||||||
Granted (in shares) | 426,693 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 35.96 | ||||||||||
Nonvested at the end of the period (in shares) | 1,286,049 | 1,286,049 | 1,409,334 | ||||||||
Vested (in shares) | 457,758 | ||||||||||
Forfeited or canceled (in shares) | 92,220 | ||||||||||
Vesting period | 3 years | ||||||||||
Unrecognized compensation | $ | $ 25.5 | $ 25.5 | |||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 1 year 6 months | ||||||||||
Fair value of share-based compensation awards granted in period | $ | $ 15.3 | $ 17.5 | |||||||||
Fair value of share-based compensation awards vested in period | $ | 15.4 | 15.4 | |||||||||
Stock based compensation expense | $ | $ 4.2 | $ 5.6 | $ 9.5 | 11.1 | |||||||
Restricted Stock | Service based awards | |||||||||||
Equity Transactions | |||||||||||
Nonvested at the beginning of the period (in shares) | 908,247 | ||||||||||
Granted (in shares) | 399,400 | ||||||||||
Nonvested at the end of the period (in shares) | 908,247 | 908,247 | |||||||||
Vested (in shares) | 250,026 | ||||||||||
Restricted Stock | Vesting Based On Performance And Service | |||||||||||
Equity Transactions | |||||||||||
Nonvested at the beginning of the period (in shares) | 377,802 | ||||||||||
Granted (in shares) | 27,293 | ||||||||||
Nonvested at the end of the period (in shares) | 377,802 | 377,802 | |||||||||
Vested (in shares) | 207,732 | ||||||||||
Performance Share Units | |||||||||||
Equity Transactions | |||||||||||
Number of shares of common stock each unit has the right to receive | 1 | 1 | |||||||||
Nonvested at the beginning of the period (in shares) | 390,951 | 2,878,044 | |||||||||
Granted (in shares) | 346,880 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 34.90 | ||||||||||
Nonvested at the end of the period (in shares) | 390,951 | 390,951 | 2,878,044 | ||||||||
Vested (in shares) | 1,810,752 | ||||||||||
Forfeited or canceled (in shares) | 1,023,221 | ||||||||||
Unrecognized compensation | $ | $ 7.2 | $ 7.2 | |||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 2 years 1 month 6 days | ||||||||||
Stock based compensation expense | $ | $ (3.6) | 3.4 | $ (0.6) | 6.8 | |||||||
Performance Share Units | 2019 SPP | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 66,934 | 2,108,305 | |||||||||
Granted (in dollars per share) | $ / shares | $ 12.56 | ||||||||||
Vested (in shares) | 1,656,594 | ||||||||||
Number of named executive officers | employee | 6 | ||||||||||
Market capitalization growth (as a percent) | 112.00% | ||||||||||
Vesting period | 3 years | ||||||||||
Average price of Company stock during the performance period (in dollars per share) | $ / shares | $ 34.13 | ||||||||||
Performance Share Units | Fiscal Year 2019 LTIP | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 34,030 | 263,936 | |||||||||
Granted (in dollars per share) | $ / shares | $ 23.51 | $ 30.05 | |||||||||
Vested (in shares) | 115,223 | ||||||||||
Forfeited or canceled (in shares) | 107,397 | ||||||||||
Fair value | $ | $ 0.8 | $ 7.9 | |||||||||
Threshold period average price of stock to determine final amount | 30 days | ||||||||||
Performance Share Units | Fiscal Year 2020 TRIP | |||||||||||
Equity Transactions | |||||||||||
Fair value | $ | $ 12.3 | ||||||||||
Performance Share Units | Fiscal Year 2021 MIP | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 38,575 | ||||||||||
Performance Share Units | Fiscal Year 2021 LTIP | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 111,450 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 24.15 | ||||||||||
Fair value | $ | $ 2.7 | ||||||||||
Performance Share Units | Fiscal Year 2022 LTIP | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 250,250 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 36.30 | ||||||||||
Vesting period | 3 years | ||||||||||
Fair value | $ | $ 9.1 | $ 9.1 | |||||||||
Performance Share Units | Tech Elevator | |||||||||||
Equity Transactions | |||||||||||
Stock based compensation expense | $ | $ 0.3 | 0 | $ 0.7 | 0 | |||||||
Performance Share Units | Tech Elevator | Fiscal Year 2021 MIP | |||||||||||
Equity Transactions | |||||||||||
Intrinsic value of awards | $ | $ 4 | ||||||||||
Performance Share Units | Revenue | Fiscal Year 2020 TRIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 60.00% | ||||||||||
Performance Share Units | EBITDA | Fiscal Year 2020 TRIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 40.00% | ||||||||||
Performance Share Units | Vest immediately | Fiscal Year 2021 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 40.00% | ||||||||||
Performance Share Units | Vest annually over two years. | Fiscal Year 2021 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 60.00% | ||||||||||
Performance Shares Tranche #1 | Fiscal Year 2019 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 45.00% | ||||||||||
Performance Shares Tranche #1 | Calendar Year 2021 | Fiscal Year 2020 TRIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 70.00% | ||||||||||
Performance Shares Tranche #1 | Vest immediately | Fiscal Year 2022 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 50.00% | ||||||||||
Performance Shares Tranche #1 | Vest annually over two years. | Fiscal Year 2022 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 50.00% | ||||||||||
Performance Shares Tranche #2 | Fiscal Year 2019 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 25.00% | ||||||||||
Certified achievement percentage | 193.00% | ||||||||||
Performance Shares Tranche #2 | Calendar Year 2022 | Fiscal Year 2020 TRIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 30.00% | ||||||||||
Performance Shares Tranche #3 | Fiscal Year 2019 LTIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 30.00% | ||||||||||
Time Based Award | Tech Elevator | Fiscal Year 2021 MIP | |||||||||||
Equity Transactions | |||||||||||
Vesting period | 3 years | ||||||||||
Intrinsic value of awards | $ | $ 4 | ||||||||||
Time Based Award | Vest immediately | Tech Elevator | Fiscal Year 2021 MIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 70.00% | ||||||||||
Time Based Award | Vest annually over two years. | Tech Elevator | Fiscal Year 2021 MIP | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 30.00% | ||||||||||
Deferred Stock Units | |||||||||||
Equity Transactions | |||||||||||
Nonvested at the beginning of the period (in shares) | 59,354 | 59,354 | |||||||||
Nonvested at the end of the period (in shares) | 59,354 | 59,354 | 59,354 | ||||||||
Unrecognized compensation | $ | $ 0 | $ 0 | |||||||||
Weighted average period for recognition of total unrecognized compensation expense related to unvested stock options granted | 0 years | ||||||||||
Stock based compensation expense | $ | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 | |||||||
Chief Executive Officer And Executive Chairman | Performance Share Units | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 358,294 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 27.91 | ||||||||||
Chief Executive Officer And Executive Chairman | Performance Share Units | Vesting Based on Performance | |||||||||||
Equity Transactions | |||||||||||
Vesting in first subsequent fiscal year (as a percent) | 66.67% | ||||||||||
Vesting in second subsequent fiscal year (as a percent) | 33.33% | ||||||||||
Chief Executive Officer And Executive Chairman | Performance Shares Tranche #1 | |||||||||||
Equity Transactions | |||||||||||
Amortization period | 3 years | ||||||||||
Chief Executive Officer And Executive Chairman | Performance Shares Tranche #2 | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 119,431 | ||||||||||
Senior Executives | Performance Share Units | 2019 SPP | |||||||||||
Equity Transactions | |||||||||||
Granted (in dollars per share) | $ / shares | $ 8.18 | ||||||||||
Market capitalization growth performance period | 3 years | ||||||||||
Threshold period average price of stock to determine final amount | 30 days | ||||||||||
Threshold days after release of fiscal year 2021 results to calculate average price of stock | 7 days | ||||||||||
Senior Executives | Performance Share Units | Total stock price growth less than 25% | 2019 SPP | |||||||||||
Equity Transactions | |||||||||||
Amount earned as percentage of total value growth | 0.00% | ||||||||||
Percentage of total stock price growth | 25.00% | ||||||||||
Annualized percentage of total stock price growth | 7.60% | ||||||||||
Senior Executives | Performance Share Units | Total stock price growth 33% | 2019 SPP | |||||||||||
Equity Transactions | |||||||||||
Amount earned as percentage of total value growth | 6.00% | ||||||||||
Percentage of total stock price growth | 33.00% | ||||||||||
Annualized percentage of total stock price growth | 10.00% | ||||||||||
Senior Executives | Performance Share Units | Total stock price growth equals or greater than 95% | 2019 SPP | |||||||||||
Equity Transactions | |||||||||||
Amount earned as percentage of total value growth | 7.50% | ||||||||||
Percentage of total stock price growth | 95.00% | ||||||||||
Annualized percentage of total stock price growth | 25.00% | ||||||||||
Chief Executive Officer | Performance Share Units | Vest immediately upon achievement of the performance goals | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 33.33% | ||||||||||
Chief Executive Officer | Performance Share Units | Vest annually over two years | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 66.67% | ||||||||||
Vesting period | 2 years | ||||||||||
Chief Executive Officer | Performance Share Units | Vesting Based on Performance | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 30,364 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 24.70 | ||||||||||
Chief Executive Officer | Performance Share Units | Vesting Based On Performance And Service | |||||||||||
Equity Transactions | |||||||||||
Certified achievement percentage | 133.00% | ||||||||||
Number of shares earned upon reaching performance threshold | 10,020 | ||||||||||
Executive Officers | Performance Share Units | Vest immediately upon achievement of the performance goals | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 33.33% | ||||||||||
Executive Officers | Performance Share Units | Vest annually over two years | |||||||||||
Equity Transactions | |||||||||||
Earned award vesting percentage | 66.67% | ||||||||||
Vesting period | 2 years | ||||||||||
Executive Officers | Performance Share Units | Vesting Based on Performance | |||||||||||
Equity Transactions | |||||||||||
Granted (in shares) | 82,710 | ||||||||||
Granted (in dollars per share) | $ / shares | $ 45.33 | ||||||||||
Executive Officers | Performance Share Units | Vesting Based On Performance And Service | |||||||||||
Equity Transactions | |||||||||||
Certified achievement percentage | 133.00% | ||||||||||
Number of shares earned upon reaching performance threshold | 27,293 |
Related Party Transactions (Det
Related Party Transactions (Details) - Future of School - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2019 | |
Related Party Transactions | ||||||
Contributions made to related party | $ 0.2 | $ 0.3 | $ 0.8 | $ 1 | ||
Accrued contributions to related party | $ 2.7 | $ 2.7 | $ 3.5 | $ 2.5 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 4 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2021USD ($) | Aug. 31, 2021USD ($) | Dec. 11, 2020lawsuit | Jul. 31, 2020USD ($) | Apr. 30, 2021stockholder | Jun. 30, 2020USD ($) | Dec. 31, 2022USD ($) | Dec. 31, 2020USD ($)installment | Mar. 27, 2020 | |
Commitments and contingencies | |||||||||
Employer portion of social security payroll tax percentage | 6.20% | ||||||||
Deferred amount of employer portion of social security payroll tax | $ 14,100 | ||||||||
Number of installments that deferred employer social security payroll taxes will be repaid | installment | 2 | ||||||||
Deferred amount paid | $ 7,050 | ||||||||
Forecast | |||||||||
Commitments and contingencies | |||||||||
Deferred amount payable | $ 7,050 | ||||||||
Buildings | |||||||||
Commitments and contingencies | |||||||||
Guarantees related to lease commitments | $ 300 | ||||||||
Georgia Cyber Academy, Inc. | |||||||||
Commitments and contingencies | |||||||||
Settlement and release agreement | $ 9,000 | $ 19,000 | |||||||
Litigation settlement payment receivable period | 2 years | ||||||||
Proceeds from legal settlements | $ 8,640 | $ 10,000 | |||||||
Securities Litigation | Pending Litigation | |||||||||
Commitments and contingencies | |||||||||
Number of lawsuits | lawsuit | 2 | ||||||||
Shemen Case And Ahmed Case | Pending Litigation | |||||||||
Commitments and contingencies | |||||||||
Number of shareholders who filed suit | stockholder | 3 |
Acquisitions and Investments (D
Acquisitions and Investments (Details) item in Thousands, $ in Thousands | Nov. 30, 2020USD ($)tranche | Oct. 31, 2021USD ($) | Aug. 31, 2020USD ($)item | Dec. 31, 2021USD ($) | Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2019USD ($)fund | Dec. 31, 2021USD ($) | Aug. 31, 2018USD ($) |
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 2,157 | $ 33,712 | $ 2,157 | $ 33,712 | $ 2,157 | |||||||
Goodwill | 240,921 | $ 240,353 | 240,921 | $ 240,353 | 240,921 | |||||||
Deferred revenue | (1,084) | (2,096) | (1,084) | (2,096) | (1,084) | |||||||
Pro forma results | ||||||||||||
Revenues | 382,911 | 762,518 | ||||||||||
Income (loss) from operations | 38,461 | 51,347 | ||||||||||
Net income (loss) | 24,723 | 38,159 | ||||||||||
Two early stage funds | ||||||||||||
Pro forma results | ||||||||||||
Number of limited partnerships invested in | fund | 2 | |||||||||||
Investment commitment | $ 13,000 | |||||||||||
Investments in limited partnerships | 7,900 | |||||||||||
New Markets | ||||||||||||
Pro forma results | ||||||||||||
Investment recorded at cost | 2,200 | 2,200 | 2,200 | |||||||||
Rethink | ||||||||||||
Pro forma results | ||||||||||||
Equity method investment | 5,700 | |||||||||||
Tallo | ||||||||||||
Pro forma results | ||||||||||||
Investment | $ 2,300 | $ 6,700 | ||||||||||
Ownership percentage | 46.10% | 39.50% | ||||||||||
Convertible note | $ 5,000 | |||||||||||
Ownership percentage on an if-converted basis | 53.00% | |||||||||||
Term of debt | 48 months | |||||||||||
Loans receivable | $ 3,000 | |||||||||||
Loans receivable interest rate | 5.00% | |||||||||||
Maturity term of loans receivable | 5 years | |||||||||||
Loans receivable funded amount | 2,000 | 2,000 | 2,000 | |||||||||
Tallo | Series D Preferred shares | ||||||||||||
Pro forma results | ||||||||||||
Convertible into Series D Preferred shares | item | 3,670 | |||||||||||
Tallo | Base Rate | ||||||||||||
Pro forma results | ||||||||||||
Interest rate spread added to base rate (as a percent) | 0.25% | |||||||||||
MedCerts | ||||||||||||
Acquisition and Investments | ||||||||||||
Ownership percentage acquired (as a percent) | 100.00% | |||||||||||
Total consideration | $ 70,000 | |||||||||||
Contingent consideration | $ 10,800 | |||||||||||
Contingent consideration repayment term | 18 months | |||||||||||
Number of tranches purchase price is payable in | tranche | 2 | |||||||||||
Payment Related to Finalization of Working Capital | $ 300 | |||||||||||
Expense on Estimate of Fair Value of Contingent Consideration | 500 | 600 | 300 | |||||||||
Allocation of Purchase Price | ||||||||||||
Cash | $ 205 | |||||||||||
Current assets, excluding cash | 5,074 | |||||||||||
Property and equipment, net | 1,896 | |||||||||||
Intangible assets, net | 26,607 | |||||||||||
Goodwill | 51,033 | |||||||||||
Current liabilities | (2,201) | |||||||||||
Deferred revenue | (1,562) | |||||||||||
Deferred tax asset (liability) | 16 | |||||||||||
Total consideration | $ 81,068 | |||||||||||
Percentage of enterprise value | 49.00% | |||||||||||
Reduced percentage | 49.00% | |||||||||||
Original purchase price | $ 34,300 | |||||||||||
Revenues of acquiree | 9,100 | 1,000 | 17,900 | 1,000 | ||||||||
Income (loss) of acquiree | (300) | (1,200) | (600) | (1,200) | ||||||||
Pro forma results | ||||||||||||
Expense on Estimate of Fair Value of Contingent Consideration | 500 | 600 | $ 300 | |||||||||
MedCerts | Accrued Liabilities | ||||||||||||
Acquisition and Investments | ||||||||||||
Contingent Consideration Fair Value Disclosure | 11,700 | 11,700 | $ 11,700 | |||||||||
MedCerts | Customer relationships | ||||||||||||
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 12,072 | |||||||||||
Estimated useful life (in years) | 5 years 10 months 2 days | |||||||||||
MedCerts | Developed technology | ||||||||||||
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 11,970 | |||||||||||
Estimated useful life (in years) | 7 years | |||||||||||
MedCerts | Trade names | ||||||||||||
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 2,565 | |||||||||||
Estimated useful life (in years) | 5 years | |||||||||||
MedCerts | Purchase Price Payable at Closing of Acquisition | ||||||||||||
Acquisition and Investments | ||||||||||||
Purchase price paid at closing | $ 55,000 | |||||||||||
MedCerts | Purchase Price Payable at Eighteen Month Anniversary from Closing of Acquisition | ||||||||||||
Acquisition and Investments | ||||||||||||
Purchase price paid at closing | $ 15,000 | |||||||||||
Tech Elevator | ||||||||||||
Acquisition and Investments | ||||||||||||
Ownership percentage acquired (as a percent) | 100.00% | |||||||||||
Total consideration | $ 23,500 | |||||||||||
Working capital | 2,200 | |||||||||||
Allocation of Purchase Price | ||||||||||||
Cash | 1,736 | |||||||||||
Current assets, excluding cash | 518 | |||||||||||
Property and equipment, net | 513 | |||||||||||
Operating lease right-of-use assets, net | 724 | |||||||||||
Intangible assets, net | 7,105 | |||||||||||
Goodwill | 17,897 | |||||||||||
Other assets | 377 | |||||||||||
Current liabilities | (267) | |||||||||||
Deferred revenue | (534) | |||||||||||
Deferred tax asset (liability) | (1,650) | |||||||||||
Current operating lease liability | (420) | |||||||||||
Long-term operating lease liability | (304) | |||||||||||
Total consideration | 25,695 | |||||||||||
Revenues of acquiree | 3,800 | 600 | 7,700 | 600 | ||||||||
Income (loss) of acquiree | $ 100 | $ (300) | $ 400 | $ (300) | ||||||||
Tech Elevator | Customer relationships | ||||||||||||
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 311 | |||||||||||
Estimated useful life (in years) | 3 years 11 months 1 day | |||||||||||
Tech Elevator | Developed technology | ||||||||||||
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 2,796 | |||||||||||
Estimated useful life (in years) | 5 years | |||||||||||
Tech Elevator | Trade names | ||||||||||||
Allocation of Purchase Price | ||||||||||||
Intangible assets, net | $ 3,998 | |||||||||||
Estimated useful life (in years) | 15 years |
Supplemental Disclosure of Ca_3
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | $ 3,286 | $ 1,176 |
Cash paid for taxes | 13,099 | 8,749 |
Supplemental disclosure of non-cash financing activities: | ||
Right-of-use assets obtained from acquisitions | 1,280 | |
Right-of-use assets obtained in exchange for new finance lease liabilities | 20,881 | 46,865 |
Supplemental disclosure of non-cash investing activities: | ||
Stock-based compensation expense capitalized on software development | 143 | 127 |
Stock-based compensation expense capitalized on curriculum development | 57 | 96 |
Business Combinations: | ||
Acquired assets | 464 | 11,120 |
Intangible assets, net | 2,157 | 33,712 |
Goodwill | 568 | 69,376 |
Assumed liabilities | (42) | (5,584) |
Deferred revenue | $ (1,084) | $ (2,096) |