Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2022 | May 06, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-33810 | |
Entity Registrant Name | AMERICAN PUBLIC EDUCATION, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 01-0724376 | |
Entity Address, Address Line One | 111 West Congress Street, | |
Entity Address, City or Town | Charles Town, | |
Entity Address, State or Province | WV | |
Entity Address, Postal Zip Code | 25414 | |
City Area Code | 304 | |
Local Phone Number | 724-3700 | |
Title of 12(b) Security | Common Stock, $.01 par value | |
Trading Symbol | APEI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,856,352 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001201792 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash, cash equivalents, and restricted cash (Note 2) | $ 170,943 | $ 149,627 |
Accounts receivable, net of allowance of $11,769 in 2022 and $11,396 in 2021 | 33,664 | 36,026 |
Prepaid expenses | 15,527 | 11,681 |
Income tax receivable | 4,766 | 5,303 |
Total current assets | 224,900 | 202,637 |
Property and equipment, net | 100,052 | 102,417 |
Operating lease assets, net | 104,484 | 77,943 |
Goodwill | 243,993 | 243,486 |
Intangible assets, net | 82,094 | 85,082 |
Other assets, net | 15,887 | 14,043 |
Total assets | 771,410 | 725,608 |
Current liabilities: | ||
Accounts payable | 11,273 | 13,497 |
Accrued compensation and benefits | 17,552 | 15,131 |
Accrued liabilities | 13,791 | 10,819 |
Deferred revenue and student deposits | 27,920 | 21,776 |
Lease liabilities, current | 14,416 | 13,705 |
Long-term debt, current | 8,750 | 8,750 |
Total current liabilities | 93,702 | 83,678 |
Lease liabilities, long-term | 96,859 | 69,488 |
Deferred income taxes | 7,456 | 5,059 |
Long-term debt, net | 150,212 | 151,771 |
Total liabilities | 348,229 | 309,996 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $.01 par value; 10,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $.01 par value; 100,000 shares authorized; 18,856 issued and outstanding in 2022; 18,709 issued and outstanding in 2021 | 189 | 187 |
Additional paid-in capital | 287,295 | 286,385 |
Accumulated other comprehensive income | 1,432 | 108 |
Retained earnings | 134,265 | 128,932 |
Total stockholders’ equity | 423,181 | 415,612 |
Total liabilities and stockholders’ equity | $ 771,410 | $ 725,608 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Accounts receivable, allowance | $ 11,769 | $ 11,396 |
Stockholders’ equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 18,856,000 | 18,709,000 |
Common stock, outstanding (in shares) | 18,856,000 | 18,709,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 154,747 | $ 88,541 |
Costs and expenses: | ||
Instructional costs and services | 71,698 | 32,319 |
Selling and promotional | 39,319 | 19,402 |
General and administrative | 29,589 | 23,524 |
Loss on disposals of long-lived assets | 793 | 8 |
Depreciation and amortization | 8,148 | 2,651 |
Total costs and expenses | 149,547 | 77,904 |
Income from operations before interest and income taxes | 5,200 | 10,637 |
Gain on acquisition | 4,533 | 0 |
Interest (expense) income | (3,355) | 114 |
Income before income taxes | 6,378 | 10,751 |
Income tax expense | 1,040 | 2,639 |
Equity investment loss | (5) | (5) |
Net income | $ 5,333 | $ 8,107 |
Net income per common share: | ||
Basic (in dollars per share) | $ 0.28 | $ 0.50 |
Diluted (in dollars per share) | $ 0.28 | $ 0.49 |
Weighted average number of common shares: | ||
Basic (in shares) | 18,805 | 16,211 |
Diluted (in shares) | 18,879 | 16,422 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 5,333 | $ 8,107 |
Other comprehensive income, net of tax: | ||
Unrealized gain on hedging derivatives, net of taxes | 1,324 | 0 |
Comprehensive income | $ 6,657 | $ 8,107 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2020 | 14,809 | ||||
Beginning balance at Dec. 31, 2020 | $ 306,925 | $ 148 | $ 195,597 | $ 0 | $ 111,180 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in public offering (in shares) | 3,680 | ||||
Issuance of common stock in public offering | 86,205 | $ 37 | 86,168 | ||
Issuance of common stock under employee benefit plans (in shares) | 272 | ||||
Issuance of common stock under employee benefit plans | 0 | $ 3 | (3) | ||
Deemed repurchased shares of common and restricted stock for tax withholding (in shares) | (90) | ||||
Deemed repurchased shares of common and restricted stock for tax withholding | (2,773) | $ (1) | (2,772) | ||
Stock-based compensation | 2,180 | 2,180 | |||
Unrealized gain on hedging derivatives, net of taxes | 0 | ||||
Net income | 8,107 | 8,107 | |||
Ending balance (in shares) at Mar. 31, 2021 | 18,671 | ||||
Ending balance at Mar. 31, 2021 | 400,644 | $ 187 | 281,170 | 0 | 119,287 |
Beginning balance (in shares) at Dec. 31, 2021 | 18,709 | ||||
Beginning balance at Dec. 31, 2021 | 415,612 | $ 187 | 286,385 | 108 | 128,932 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under employee benefit plans (in shares) | 218 | ||||
Issuance of common stock under employee benefit plans | 0 | $ 3 | (3) | ||
Deemed repurchased shares of common and restricted stock for tax withholding (in shares) | (71) | ||||
Deemed repurchased shares of common and restricted stock for tax withholding | (1,444) | $ (1) | (1,443) | ||
Stock-based compensation | 2,356 | 2,356 | |||
Unrealized gain on hedging derivatives, net of taxes | 1,324 | 1,324 | |||
Net income | 5,333 | 5,333 | |||
Ending balance (in shares) at Mar. 31, 2022 | 18,856 | ||||
Ending balance at Mar. 31, 2022 | $ 423,181 | $ 189 | $ 287,295 | $ 1,432 | $ 134,265 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities | ||
Net income | $ 5,333 | $ 8,107 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,148 | 2,651 |
Amortization of debt issuance costs | 654 | 0 |
Stock-based compensation | 2,356 | 2,180 |
Equity investment loss | 5 | 5 |
Deferred income taxes | 901 | 1,646 |
Loss on disposals of long-lived assets | 793 | 8 |
Gain on acquisition | (4,533) | 0 |
Other | 5 | 3 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for bad debt | 6,644 | 4,210 |
Prepaid expenses | (3,623) | (2,989) |
Income tax receivable/payable | 537 | 905 |
Operating leases, net | 1,218 | 27 |
Other assets | 241 | 228 |
Accounts payable | (2,492) | (779) |
Accrued compensation and benefits | 2,401 | (3,389) |
Accrued liabilities | 2,492 | (1,159) |
Deferred revenue and student deposits | 4,175 | (428) |
Net cash provided by operating activities | 25,255 | 11,226 |
Investing activities | ||
Cash received from acquisition, net of cash paid | 1,932 | 0 |
Capital expenditures | (2,965) | (1,528) |
Proceeds from the sale of real property | 754 | 0 |
Net cash used in investing activities | (279) | (1,528) |
Financing activities | ||
Cash paid for repurchase of common stock | (1,444) | (2,773) |
Cash received from issuance of common stock | 0 | 86,205 |
Cash paid for principal on borrowings and finance leases | (2,216) | 0 |
Net cash (used in) provided by financing activities | (3,660) | 83,432 |
Net increase in cash, cash equivalents, and restricted cash | 21,316 | 93,130 |
Cash, cash equivalents, and restricted cash at beginning of period | 149,627 | 227,686 |
Cash, cash equivalents, and restricted cash at end of period | 170,943 | 320,816 |
Supplemental disclosure of cash flow information | ||
Interest paid | 2,700 | 0 |
Income taxes paid | $ 41 | $ 62 |
Nature of the Business
Nature of the Business | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the Business American Public Education, Inc., or APEI, which together with its subsidiaries is referred to as the “Company,” is a provider of online and campus-based postsecondary education and, with the acquisition of Graduate School USA, career learning to students through the following subsidiary institutions: • American Public University System, Inc., or APUS, provides online postsecondary education directed primarily at the needs of the military, military-affiliated, public service and service-minded communities through American Military University, or AMU, and American Public University, or APU. APUS is institutionally accredited by the Higher Learning Commission, or HLC. • Rasmussen College, LLC, which is referred to herein as Rasmussen University, or RU, a nursing- and health sciences-focused institution, provides postsecondary education to students at its 23 campuses across six states and online. The Company completed the acquisition of RU, or the Rasmussen Acquisition, on September 1, 2021, or the RU Closing Date. Please refer to “Note 3. Acquisition Activity” for more information on this acquisition. The Consolidated Financial Statements do not include the operating results or financial position of RU for any periods prior to the RU Closing Date. RU is institutionally accredited by HLC. • National Education Seminars, Inc., which is referred to herein as Hondros College of Nursing, or HCN, provides nursing education to students enrolled at six campuses in Ohio and one campus in Indianapolis, Indiana, to serve the needs of the nursing and healthcare communities. HCN is institutionally accredited by the Accrediting Bureau for Health Education Schools, or ABHES. • American Public Training LLC, which is referred to herein as Graduate School USA, or GSUSA, provides career learning in-person and online to the federal workforce through a catalog of over 300 courses specializing in foundational and continuing professional development, as well as leadership training to advance the performance of government agencies through the competency and career advancement of their employees. The Company completed the acquisition of substantially all the assets of GSUSA, or the GSUSA Acquisition, on January 1, 2022, or the GSUSA Closing Date. Please refer to “Note 3. Acquisition Activity” for more information on this acquisition. The Consolidated Financial Statements do not include the operating results or financial position of GSUSA for any periods prior to the GSUSA Closing Date. GSUSA is accredited by the Accrediting Council for Continuing Education and Training, or ACCET. GSUSA operates as a stand-alone subsidiary of APEI, however GSUSA does not meet the quantitative thresholds to qualify as a reportable segment; therefore, this operating segment is combined and presented within “Corporate and Other”. Please refer to “Note 9. Segment Information” for more information on the Company’s reporting segments. The Company’s subsidiary institutions are licensed or otherwise authorized by state authorities to offer postsecondary education programs to the extent the institutions believe such licenses or authorizations are required, and APUS, RU, and HCN are certified by the United States Department of Education, or ED, to participate in student financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, or Title IV programs. During the third quarter of 2021, the Company revised its reportable segments, as discussed further in “Note 9. Segment Information”. Prior period segment disclosures have been restated to conform to the current period presentation. The Company’s operations are organized into three reportable segments: • American Public University System Segment, or APUS Segment. This segment reflects the operational activities of APUS. • Rasmussen University Segment, or RU Segment . This segment reflects the operational activities of RU. • Hondros College of Nursing Segment, or HCN Segment. This segment reflects the operational activities of HCN. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies A summary of the Company’s significant accounting policies follows: Basis of Presentation and Accounting The accompanying unaudited, interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Business Combinations The Company accounts for business combinations in accordance with Financial Accounting Standards Bureau, or FASB, Accounting Standards Codification 805, Business Combinations , or ASC 805, which requires the acquisition method to be used for all business combinations. Under ASC 805, the assets and liabilities of an acquired company are reported at business fair value along with the fair value of acquired intangible assets at the date of acquisition. Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed, and the fair value assigned to identifiable intangible assets. Principles of Consolidation The accompanying unaudited interim Consolidated Financial Statements include the accounts of APEI and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Unaudited Interim Financial Information The unaudited interim Consolidated Financial Statements do not include all of the information and notes required by GAAP for audited annual financial statement presentations. 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 financial position, results of operations, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. This Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021, or the Annual Report. Use of Estimates In preparing financial statements in conformity with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, and various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions, and the impact of such differences may be material to the Consolidated Financial Statements. Cash and Cash Equivalents The Company considers all short-term highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of demand deposits with financial institutions, money market funds, and U.S. Treasury bills. Cash and cash equivalents are Level 1 assets in the fair value reporting hierarchy. Restricted Cash Restricted cash includes funds held for students for unbilled educational services that were received from Title IV programs. As a trustee of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with ED. Restricted cash also includes amounts to secure letters of credit, including $24.2 million in a restricted certificate of deposit account to secure a letter of credit for the benefit of ED on behalf of RU in connection with RU’s 2020 composite score, which is used by ED for determining compliance with financial responsibility standards, being below the minimum required, and a $0.6 million restricted certificate of deposit to secure a letter of credit in lieu of a security deposit for a RU leased campus. Restricted cash on the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, excluding the restricted certificates of deposit, was $1.6 million and $2.2 million, respectively. Total restricted cash as of March 31, 2022 and December 31, 2021 was $26.4 million and $27.0 million, respectively. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Goodwill is not amortized. Intangible assets are recorded at their estimated fair value as of the acquisition date and are classified as either indefinite-lived or definite-lived. Goodwill and indefinite-lived intangible assets are assessed at least annually for impairment or more frequently if circumstances indicate potential impairment. Definite-lived intangible assets are amortized on a straight-line basis over the estimated useful life of the asset. Stock-based Compensation Stock-based payments may include incentive stock options or non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance shares, performance units, cash-based awards, other stock-based awards, including unrestricted shares, or any combination of the foregoing. Stock-based compensation cost is recognized as expense, generally over a three-year vesting period, using the straight-line method for employees and the graded-vesting method for members of the Board of Directors, and is measured using the Company’s closing stock price on the date of the grant. An accelerated one-year period is used to recognize stock-based compensation cost for employees who have reached certain service and retirement eligibility criteria on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model that uses certain assumptions, including assumptions with respect to expected stock price volatility and the risk-free interest rate. Judgment is required in estimating the percentage of share-based awards that are expected to vest, and in the case of performance stock units, or PSUs, the level of performance that will be achieved and the number of shares that will be earned. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. If actual results differ significantly from these estimates, stock-based compensation expense could be higher and have a material impact on the Consolidated Financial Statements. Estimates are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value. Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was as follows (in thousands): Three Months Ended March 31, 2022 2021 (Unaudited) Instructional costs and services $ 459 $ 466 Selling and promotional 296 309 General and administrative 1,601 1,405 Total stock-based compensation expense $ 2,356 $ 2,180 Incentive-based Compensation The Company provides incentive-based compensation opportunities to certain employees through cash incentive and equity awards. The expense associated with these awards is reflected within the Company’s operating expenses. For the years ending December 31, 2022 and 2021, the Management Development and Compensation Committee of the Company’s Board of Directors approved an annual incentive arrangement for senior management employees. The aggregate amount of any awards payable is dependent upon the achievement of certain Company financial and operational goals, as well as the satisfaction of individual performance goals. Given that the awards are generally contingent upon achieving annual objectives, final determination of the current year incentive awards cannot be made until after the results for the year are finalized. The Company recognizes the estimated fair value of performance-based restricted stock units by assuming the satisfaction of any performance-based objectives at the “target” level, which is the most probable outcome determined for accounting purposes at the time of grant and multiplying the corresponding number of shares earned based upon such achievement by the closing price of the Company’s stock on the date of grant. To the extent performance goals are not met, compensation cost is not ultimately recognized against the goals and, to the extent previously recognized, compensation cost is reversed. Amounts accrued are subject to change in future interim periods if actual future financial results or operational performance are better or worse than expected. During the three months ended March 31, 2022 and 2021, the Company recognized an aggregate expense associated with the Company’s annual incentive-based compensation plans of $1.8 million and $1.2 million, respectively. Income Taxes The Company determines its interim tax provision by applying the estimated income tax rate expected for the full calendar year to income before income taxes for the period adjusted for discrete items. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates, or ASUs, issued by the FASB. All ASUs issued subsequent to the filing of the Annual Report on March 2, 2022 were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s consolidated financial position and/or results of operations. |
Acquisition Activity
Acquisition Activity | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition Activity | Acquisition Activity Acquisition of Rasmussen University On the RU Closing Date, the Company completed the Rasmussen Acquisition pursuant to a membership interest purchase agreement dated October 28, 2020, or the Purchase Agreement, acquiring RU for an adjusted aggregate purchase price, subject to post-closing working capital adjustments, and net of cash acquired, of $325.5 million in cash. The Company applied the acquisition method of accounting to the Rasmussen Acquisition, whereby the excess of the acquisition date fair value of consideration transferred over the fair value of identifiable net assets was allocated to goodwill. Goodwill reflects the fair value associated with the RU workforce and synergies expected from cost savings, operations, and revenue enhancements of the combined company that are expected to result from the acquisition. The goodwill recorded as part of the acquisition was allocated to the RU Segment in the amount of $217.4 million and is deductible for tax purposes. The preliminary opening balance sheet is subject to adjustment based on a final assessment of the fair values of certain acquired assets and liabilities, primarily intangible assets and goodwill. The Company has up to one year from the RU Closing Date, or the measurement period, to complete the allocation of the purchase price. As the Company finalizes its assessment of the fair values of certain acquired assets and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments occur. During the three months ended March 31, 2022, the Company recorded a $0.5 million increase in goodwill recorded in connection with the Rasmussen Acquisition based on the final working capital adjustment. The following table summarizes the components of the estimated consideration along with the purchase price allocation (in thousands): Purchase Price Allocation Amount Cash and cash equivalents $ 329,000 Working capital adjustment and additional cash contributions 2,333 Total consideration 331,333 Assets acquired: Cash and cash equivalents 5,200 Accounts receivable 10,700 Prepaid expenses 4,600 Property and equipment, net 36,996 Operating lease assets 75,800 Deferred tax asset 3,049 Intangible assets 86,500 Other assets 600 Total assets acquired 223,445 Liabilities assumed: Accounts payable 1,200 Accrued expenses 6,142 Deferred revenue 22,700 Operating lease liabilities, current 11,200 Operating lease liabilities, long-term 67,000 Other liabilities 1,300 Total liabilities assumed 109,542 Net assets acquired 113,903 Goodwill $ 217,430 The fair value of the identified intangible assets, including the trade name, student roster, and lead conversions were determined using the income-based approach. The fair value of curricula and accreditation, licensing, and Title IV identified intangible assets were determined using the cost approach. The table below presents a summary of intangible assets acquired and the useful lives of these assets (in thousands): Intangible Assets Useful life Amount Trade name Indefinite 26,500 Accreditation, licensing and Title IV Indefinite 24,500 Student roster 2 years 20,000 Curricula 3 years 14,000 Lead conversions 2 years 1,500 $ 86,500 Acquisition of Graduate School USA On the GSUSA Closing Date, the Company completed the GSUSA Acquisition pursuant to an Asset Purchase Agreement dated August 10, 2021 by and among American Public Training LLC, and Graduate School USA, or the Seller, for an aggregate purchase price of $1.0 million, subject to working capital adjustments. At closing, the Company received approximately $1.9 million from the Seller, which represents the estimated net working capital at closing net of the initial cash payment to the Seller of $0.5 million which is the purchase price less $0.5 million retained by the Company to secure the indemnification obligations of the Seller. The purchase price reflects the $0.5 million due to Seller post-closing, and additional adjustments to the estimated net working capital at closing. The Company applied the acquisition method of accounting to the GSUSA Acquisition, whereby the assets acquired and liabilities assumed were recognized at fair value on the GSUSA Closing Date. There was no goodwill recorded as a result of the GSUSA Acquisition, but an approximate $4.5 million noncash, non-taxable gain on the acquisition was recorded and is included as a separate line item on the Consolidated Statements of Income for the three months ended March 31, 2022. The preliminary opening balance sheet is subject to adjustment based on a final assessment of the fair values of certain acquired assets and liabilities assumed. The Company has up to one year from the GSUSA Closing Date, or the measurement period, to complete the allocation of the purchase price. As the Company finalizes its assessment of the fair values of certain acquired assets and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments occur. The following table summarizes the components of the estimated consideration along with the purchase price allocation (in thousands): Purchase Price Allocation (Unaudited) Amount Cash and cash equivalents $ 1,000 Working capital adjustment (3,388) Total consideration (2,388) Assets acquired: Accounts receivable 4,282 Prepaid expenses 1,096 Property and equipment, net 400 Operating lease assets 31,635 Intangible assets 965 Total assets acquired 38,378 Liabilities assumed: Accounts payable and accrued expenses 810 Deferred revenue 1,969 Lease liabilities, current 1,179 Lease liabilities, long-term 30,779 Deferred tax liability 1,496 Total liabilities assumed 36,233 Net assets acquired 2,145 Gain on acquisition $ 4,533 The gain on acquisition represents the excess of the fair value of net assets acquired over consideration paid. The consideration paid represents a substantial discount to the book value of GSUSA’s net assets at the GSUSA Closing Date, primarily due to the fair value adjustments related to the trade name, fixed assets, and right-of-use lease assets and liabilities compared to book value. The gain on acquisition was primarily the result of the impact of the COVID-19 pandemic on GSUSA’s revenue and earnings, and a lack of access to capital by the Seller. The agreed upon purchase price reflected the fact that GSUSA may need additional capital to fund operating losses. The fair value of the identified intangible assets, including customer contracts and relationships and trade name were determined using the income-based approach. The fair value of curricula and accreditation and licensing identified intangible assets were determined using the cost approach. The table below presents a summary of intangible assets acquired and the useful lives of these assets (in thousands): Intangible Assets (Unaudited) Useful life Amount Customer contracts and relationships 2.5 years 744 Curricula 3 years 158 Trade name 1 year 35 Accreditation and licenses 2.5 years 28 $ 965 Pro forma financial information relating to the GSUSA Acquisition is not presented because the GSUSA Acquisition did not represent a significant business acquisition for the Company. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of Revenue In the following table, revenue, shown net of grants and scholarships, is disaggregated by type of service provided. The table also includes a reconciliation of the disaggregated revenue with the reportable segments (in thousands): Three Months Ended March 31, 2022 (Unaudited) APUS RU HCN Corporate and Other Consolidated Instructional services, net of grants and scholarships $ 72,585 $ 55,917 $ 9,733 $ 3,017 $ 141,252 Graduation fees 335 — — — 335 Textbook and other course materials — 10,294 1,663 — 11,957 Other fees 170 888 145 — 1,203 Total Revenue $ 73,090 $ 67,099 $ 11,541 $ 3,017 $ 154,747 Three Months Ended March 31, 2021 (Unaudited) APUS RU HCN Corporate and Other Consolidated Instructional services, net of grants and scholarships $ 76,885 $ — $ 9,365 $ (67) $ 86,183 Graduation fees 373 — — — 373 Textbook and other course materials — — 1,631 — 1,631 Other fees 218 — 136 — 354 Total Revenue $ 77,476 $ — $ 11,132 $ (67) $ 88,541 The RU Segment reflects the operations of RU, which was acquired on the RU Closing Date. The Company did not consolidate the financial results of the RU Segment prior to the RU Closing Date. Corporate and Other includes tuition and contract training revenue earned by GSUSA from the GSUSA Closing Date through March 31, 2022. Contract career learning revenue represents both individual and customized training programs and is recognized when the services are performed. Additionally, the APUS Segment charges the HCN Segment and corporate employees for the value of courses taken by HCN Segment employees at APUS. The elimination of this intersegment revenue is included within Corporate and Other. Contract Balances and Performance Obligations The Company had no contract assets or deferred contract costs as of March 31, 2022 and December 31, 2021. The Company recognizes a contract liability, or deferred revenue, when a student begins an online course or term, in the case of APUS, or starts a term, in the case of RU and HCN. Deferred revenue at March 31, 2022 was $27.9 million and includes $10.7 million in future revenue that has not yet been earned for courses and terms that are in progress, as well as $17.2 million in consideration received in advance for future courses or terms, or student deposits. Deferred revenue at December 31, 2021 was $21.8 million and includes $12.9 million in future revenue that has not yet been earned for courses and terms that are in progress, as well as $8.9 million in student deposits. Deferred revenue represents the Company’s performance obligation to transfer future instructional services to students. The Company’s remaining performance obligations represent the transaction price allocated to future reporting periods. The Company has elected, as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with students that have an expected duration of one year or less. When the Company begins performing its obligations, a contract receivable is created, resulting in accounts receivable on the Consolidated Balance Sheets. The Company accounts for receivables in accordance with FASB ASC 310, Receivables . The Company uses the portfolio approach, a practical expedient, to evaluate if a contract exists and to assess collectability at the time of contract inception based on historical experience. Contracts are subsequently reviewed for collectability if significant events or circumstances indicate a change. The allowance for doubtful accounts is based on management’s evaluation of the status of existing accounts receivable. Among other factors, management considers the age of the receivable, the anticipated source of payment, and historical allowance considerations. Consideration is also given to any specific known risk areas among the existing accounts receivable balances. Recoveries of receivables previously written off are recorded when received. APUS, RU, and GSUSA do not charge interest on past due accounts receivable. HCN charges interest on payment plans when a student graduates or otherwise exits the program. Interest charged by HCN on payment plans was immaterial for the periods presented. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company’s principal leasing activities include facilities, classified as operating leases, and, as a result of the GSUSA Acquisition, copiers and printers, classified as finance 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. Operating Leases The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for one Operating lease assets are right-of-use, or ROU, assets, which represent the right to use the underlying assets for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in the operating lease assets, net, and lease liabilities, current and long-term, on the Consolidated Balance Sheets. These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments. The ROU assets include all remaining lease payments and exclude lease incentives. Lease expense for operating leases is recognized on a straight-line basis over the lease term. There are no variable lease payments. Lease expense for the three month periods ended March 31, 2022 and 2021 was $5.0 million and $0.8 million, respectively. These costs are primarily related to long-term operating leases, but also include amounts for short-term leases with terms greater than 30 days that are not material. Cash paid for amounts included in the present value of operating lease liabilities during the three month periods ended March 31, 2022 and 2021 was $4.8 million and $0.7 million, respectively, and is included in operating cash flows. Finance Leases In connection with the GSUSA Acquisition, the Company acquired leases for copiers and printers that are classified as finance leases and expire on December 31, 2024. The Company pledged the assets financed to secure the outstanding leases. As of March 31, 2022, the total finance lease liability was $0.3 million with an average interest rate of 3.75%. The ROU asset is recorded within Property and equipment, net on the Consolidated Balance Sheets. Lease amortization expense associated with the Company’s finance leases was approximately $0.03 million for the three months ended March 31, 2022 and is recorded within Depreciation and amortization expense on the Consolidated Statements of Income. The following tables present information about the amount and timing of cash flows arising from the Company’s finance and operating leases as of March 31, 2022 (dollars in thousands): Maturity of Lease Liabilities (Unaudited) Operating Leases Finance Leases 2022 (remaining) $ 14,148 $ 85 2023 16,072 114 2024 14,436 113 2025 13,284 — 2026 12,830 — 2027 12,586 — 2028 and beyond 55,551 — Total future minimum lease payments $ 138,907 $ 312 Less: imputed interest (27,928) (16) Present value of operating lease liabilities $ 110,979 $ 296 Less: lease liabilities, current (14,312) (104) Lease liabilities, long-term $ 96,667 $ 192 Balance Sheet Classification (Unaudited) Current Operating lease liabilities, current $ 14,312 Finance lease liabilities, current 104 Long-term Operating lease liabilities, long-term 96,667 Finance lease liabilities, long-term 192 Total lease liabilities $ 111,275 Other Information (Unaudited) Weighted average remaining lease term (in years) Operating leases 5.35 Finance leases 2.75 Weighted average discount rate Operating leases 4.0 % Finance leases 3.8 % |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets In connection with its acquisitions, the Company applied ASC 805, using the acquisition method of accounting. In connection with the Rasmussen Acquisition, the Company recorded $217.4 million of goodwill, representing the excess of the purchase price over the fair value of assets acquired and liabilities assumed, including identifiable intangible assets. The Company previously recorded goodwill in the amount of $38.6 million in connection with its acquisition of HCN, and later recorded impairment charges reducing the carrying value of our goodwill to $26.6 million. There was no goodwill recorded in connection with the acquisition of GSUSA. The following table summarizes the changes in the carrying amount of goodwill by reportable segment as of March 31, 2022 (in thousands): RU Segment HCN Segment Total Goodwill (Unaudited) Goodwill as of December 31, 2021 $ 216,923 $ 26,563 $ 243,486 Goodwill acquired — — — Impairment — — — Adjustments 507 — 507 Goodwill as of March 31, 2022 $ 217,430 $ 26,563 $ 243,993 In addition to goodwill, in connection with the acquisitions of RU and HCN, the Company recorded identified intangible assets with an indefinite useful life in the aggregate amount of $51.0 million and $3.7 million, respectively, which includes trade name, accreditation, licensing and Title IV, and affiliate agreements. There were no indefinite useful life intangible assets identified as a result of the GSUSA Acquisition. The Company recorded $35.5 million, $4.4 million and $1.0 million, respectively, of identified intangible assets with a definite useful life in connection with the acquisitions of RU, HCN and GSUSA. Amortization expense related to definite lived intangibles assets was approximately $4.0 million for the three months ended March 31, 2022. The following table represents the balance of the Company’s intangible assets as of March 31, 2022 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Unaudited) Finite-lived intangible assets Student roster $ 20,000 5,833 14,167 Curricula 14,563 3,140 11,423 Student and customer contracts and relationships 4,614 3,944 670 Lead conversions 1,500 438 1,062 Non-compete agreements 86 86 — Tradename 35 9 26 Accreditation and licenses 28 3 25 Total finite-lived intangible assets $ 40,826 $ 13,453 $ 27,373 Indefinite-lived intangible assets Trade name 28,498 — 28,498 Accreditation, licensing and Title IV 26,186 — 26,186 Affiliation agreements 37 — 37 Total indefinite-lived intangible assets 54,721 — 54,721 Total intangible assets $ 95,547 $ 13,453 $ 82,094 The following table represents the balance of the Company’s intangible assets as of December 31, 2021 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-lived intangible assets Student roster $ 20,000 3,333 16,667 Curricula 14,405 1,961 12,444 Student contracts and relationships 3,870 3,870 — Lead conversions 1,500 250 1,250 Non-compete agreements 86 86 — Total finite-lived intangible assets $ 39,861 $ 9,500 $ 30,361 Indefinite-lived intangible assets Trade name 28,498 — 28,498 Accreditation, licensing and Title IV 26,186 — 26,186 Affiliation agreements 37 — 37 Total indefinite-lived intangible assets 54,721 — 54,721 Total intangible assets $ 94,582 $ 9,500 $ 85,082 The Company evaluated events and circumstances related to the valuation of goodwill and intangibles, recorded within our RU and HCN Segments, through March 31, 2022 and 2021, respectively, to determine if there were indicators of impairment. This evaluation included consideration of enrollment trends and financial performance, as well as industry and market conditions, and the impact of the COVID-19 pandemic. These evaluations concluded there were no indicators of impairment during the three months ended March 31, 2022 and 2021, and consequently, there was no impairment of goodwill or intangible assets during those periods. Determining fair value of goodwill and intangible assets requires judgment and the use of significant estimates and assumptions, including, but not limited to, fluctuations in enrollments, revenue growth rates, operating margins, discount rates, and future market conditions. Given the current competitive and regulatory environment, the impact of COVID-19, and the uncertainties regarding the related impact on the business, there can be no assurance that the estimates and assumptions made for purposes of the Company’s interim and annual goodwill impairment tests will prove to be accurate predictions of the future. If the Company’s assumptions are not realized, the Company may record goodwill impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would result or whether such charge would be material. For additional information on goodwill and intangible assets, see the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Annual Report. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | Net Income Per Common Share Basic net income per common share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share increases the shares used in the per share calculation by the dilutive effects of restricted stock and option awards. The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted net income per common share (in thousands). Three Months Ended March 31, 2022 2021 (Unaudited) Basic weighted average shares outstanding 18,805 16,211 Effect of dilutive restricted stock and options 74 211 Diluted weighted average shares outstanding 18,879 16,422 The table below reflects a summary of securities that could potentially dilute basic net income per common share in future periods that were not included in the computation of diluted earnings per share because the effect would have been antidilutive (in thousands). Three Months Ended March 31, 2022 2021 (Unaudited) Antidilutive securities: Stock Options 103 18 Restricted Shares 173 3 Total antidilutive securities 276 21 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt In connection with the Rasmussen Acquisition, APEI, as borrower, entered into a Credit Agreement with Macquarie Capital Funding LLC, or the Credit Agreement, as administrative agent and collateral agent, Macquarie Capital USA Inc. and Truist Securities, Inc., as lead arrangers and joint bookrunners, and certain lenders party thereto. The Credit Agreement provides for (i) a senior secured term loan facility in an aggregate original principal amount of $175 million, or the Term Loan, with a scheduled maturity date of September 1, 2027 and (ii) a senior secured revolving loan facility in an aggregate commitment amount of $20.0 million, or the Revolving Credit Facility, which together with the Term Loan, is referred to as the Facilities, with a scheduled maturity date of September 1, 2026, the full capacity of which may be utilized for the issuance of letters of credit. The Revolving Credit Facility also includes a $5.0 million sub-facility for swing line loans. The Term Loan, the proceeds of which were used as part of the cash consideration for the Rasmussen Acquisition, was fully funded on the Closing Date and is presented net of the debt issuance costs at origination of $13.1 million on the Consolidated Balance Sheets. The debt issuance costs are being amortized using the effective interest method over the term of the Term Loan. Debt issuance costs of $0.5 million related to the Revolving Credit Facility were recorded as an asset and are being amortized to interest expense over the term of the Revolving Credit Facility. There were no borrowings outstanding on the Revolving Credit Facility at March 31, 2022 and December 31, 2021. Outstanding borrowings under the Facilities bear interest at a per annum rate equal to LIBOR (subject to a 0.75% floor) plus 5.50%, which shall increase by an additional 2.00% on all past due obligations if APEI fails to pay any amount when due. An unused commitment fee in the amount of 0.50% is payable quarterly in arrears based on the average daily unused amount of the commitments under the Revolving Credit Facility. APEI is also required to make principal payments of the Term Loan on the last day of each quarter, in an amount equal to $2.2 million per quarter. The Credit Agreement contains customary affirmative and negative covenants, including limitations on APEI’s and its subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case, subject to certain exceptions, as well as customary representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Facilities. In addition, the Credit Agreement contains a financial covenant that requires APEI to maintain a Total Net Leverage Ratio of no greater than 2.0 to 1.0. At March 31, 2022, the Company was in compliance with all debt covenants. Long-term debt consists of the following as of March 31, 2022 (in thousands): Long-Term debt (Unaudited) Credit agreement $ 170,625 Deferred financing fees (11,663) Total debt 158,962 Less: Current portion (8,750) Long-Term Debt $ 150,212 Scheduled maturities of long-term debt at March 31, 2022 are as follows (in thousands): Maturities of Long-Term Debt (Unaudited) Loan Payments 2022 (remaining) 6,562 2023 8,750 2024 8,750 2025 8,750 2026 8,750 2027 129,063 Total 170,625 Derivatives and Hedging The Company is subject to interest rate risk, as all outstanding borrowings under the Credit Agreement are subject to a variable rate of interest. On September 30, 2021, the Company entered into an interest rate cap agreement to manage its exposure to the variable rate of interest with a total notional value of $87.5 million. This interest rate cap agreement, designated as a cash flow hedge, provides the Company with interest rate protection in the event the LIBOR rate exceeds 2.0%. The interest rate cap is effective October 1, 2021 and will expire on January 1, 2025. Changes in the fair value of the interest rate cap designated as a hedging instrument that effectively offset the variability of cash flows associated with our variable-rate, long-term debt obligations are reported in accumulated other comprehensive income. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information In connection with the Rasmussen Acquisition (as further described in Note 3, “Acquisition Activity”), the Company revised its reportable segments to reflect the manner in which the chief operating decision-maker evaluates performance and allocates resources, and to include RU as a separately reportable segment. Prior to the third quarter of 2021, the Company had two reportable segments: the American Public Education, Inc. Segment, or APEI Segment, and the Hondros College of Nursing, or HCN Segment. Post-acquisition, the Company has three reportable segments: the APUS Segment, which was previously included within the former APEI Segment; the RU Segment; and the HCN Segment. The APEI Segment previously reported the results of both APUS and remaining unallocated Company expenses. GSUSA does not meet the quantitative thresholds to qualify as a reportable segment; therefore, its operational activities are presented below within “Corporate and Other”. Adjustments to reconcile segment results to the Consolidated Financial Statements, including unallocated corporate activity and eliminations, which generally were previously reported within the APEI Segment, are also included in “Corporate and Other”. Prior periods have been updated to conform to the revised presentation. In accordance with FASB ASC 280, Segment Reporting , the chief operating decision-maker has been identified as the Company’s Chief Executive Officer. The Company’s Chief Executive Officer reviews operating results to make decisions about allocating resources and assessing performance for the APUS, RU, and HCN Segments. A summary of financial information by reportable segment is as follows (in thousands): Three Months Ended March 31, 2022 2021 (Unaudited) Revenue: APUS Segment $ 73,090 $ 77,476 RU Segment 67,099 — HCN Segment 11,541 11,132 Corporate and Other 3,017 (67) Total Revenue $ 154,747 $ 88,541 Depreciation and amortization: APUS Segment $ 1,701 $ 2,493 RU Segment 6,079 — HCN Segment 222 148 Corporate and Other 146 10 Total Depreciation and amortization $ 8,148 $ 2,651 Income (loss) from operations before interest and income taxes: APUS Segment $ 13,182 $ 14,031 RU Segment 891 — HCN Segment (995) 783 Corporate and Other (7,878) (4,177) Total income from operations before interest and income taxes $ 5,200 $ 10,637 Interest (expense) income: APUS Segment $ 39 $ 91 RU Segment 3 — HCN Segment 2 2 Corporate and Other (3,399) 21 Total Interest (expense) income $ (3,355) $ 114 Income tax expense (benefit): APUS Segment $ 4,674 $ 3,767 RU Segment 306 — HCN Segment (316) 205 Corporate and Other (3,624) (1,333) Total Income tax expense $ 1,040 $ 2,639 Capital expenditures: APUS Segment $ 441 $ 971 RU Segment 1,924 — HCN Segment 500 557 Corporate and Other 100 — Total Capital Expenditures $ 2,965 $ 1,528 A summary of the Company’s consolidated assets by reportable segment is as follows (in thousands): As of March 31, 2022 As of December 31, 2021 (Unaudited) Assets: APUS Segment $ 136,573 $ 126,926 RU Segment 426,073 429,299 HCN Segment 50,803 51,936 Corporate and Other 157,961 117,447 Total Assets $ 771,410 $725,608 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses, associated with any such contingency. From time to time, the Company is involved in legal matters in the normal course of its business. |
Concentration
Concentration | 3 Months Ended |
Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Concentration | Concentration Our students utilize various payment sources and programs to finance their education expenses, including funds from: the U.S. Department of Defense, or DoD, tuition assistance programs, or TA, education benefit programs administered by the U.S. Department of Veterans Affairs, or VA, and federal student aid from Title IV programs; and cash and other sources. A summary of APUS Segment revenue derived from students by primary funding source is as follows (unaudited): Three Months Ended March 31, 2022 2021 DoD tuition assistance programs 48% 45% VA education benefits 21% 21% Title IV programs 18% 20% Cash and other sources 13% 14% A summary of RU Segment revenue derived from students by primary funding source is as follows (unaudited): Three Months Ended March 31, 2022 2021 Title IV programs 74% 76% Cash and other sources 24% 22% VA education benefits 2% 2% A summary of HCN Segment revenue derived from students by primary funding source is as follows (unaudited): Three Months Ended March 31, 2022 2021 Title IV programs 79% 81% Cash and other sources 19% 18% VA education benefits 2% 1% |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Accounting | Basis of Presentation and AccountingThe accompanying unaudited, interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. |
Business Combinations | Business Combinations The Company accounts for business combinations in accordance with Financial Accounting Standards Bureau, or FASB, Accounting Standards Codification 805, Business Combinations , or ASC 805, which requires the acquisition method to be used for all business combinations. Under ASC 805, the assets and liabilities of an acquired company are reported at business fair value along with the fair value of acquired intangible assets at the date of acquisition. Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed, and the fair value assigned to identifiable intangible assets. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited interim Consolidated Financial Statements include the accounts of APEI and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The unaudited interim Consolidated Financial Statements do not include all of the information and notes required by GAAP for audited annual financial statement presentations. 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 financial position, results of operations, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. This Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021, or the Annual Report. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, and various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions, and the impact of such differences may be material to the Consolidated Financial Statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of demand deposits with financial institutions, money market funds, and U.S. Treasury bills. Cash and cash equivalents are Level 1 assets in the fair value reporting hierarchy. |
Restricted Cash | Restricted Cash Restricted cash includes funds held for students for unbilled educational services that were received from Title IV programs. As a trustee of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with ED. Restricted cash also includes amounts to secure letters of credit, including $24.2 million in a restricted certificate of deposit account to secure a letter of credit for the benefit of ED on behalf of RU in connection with RU’s 2020 composite score, which is used by ED for determining compliance with financial responsibility standards, being below the minimum required, and a $0.6 million restricted certificate of deposit to secure a letter of credit in lieu of a security deposit for a RU leased campus. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Goodwill is not amortized. Intangible assets are recorded at their estimated fair value as of the acquisition date and are classified as either indefinite-lived or definite-lived. Goodwill and indefinite-lived intangible assets are assessed at least annually for impairment or more frequently if circumstances indicate potential impairment. |
Stock-based Compensation | Stock-based Compensation Stock-based payments may include incentive stock options or non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance shares, performance units, cash-based awards, other stock-based awards, including unrestricted shares, or any combination of the foregoing. Stock-based compensation cost is recognized as expense, generally over a three-year vesting period, using the straight-line method for employees and the graded-vesting method for members of the Board of Directors, and is measured using the Company’s closing stock price on the date of the grant. An accelerated one-year period is used to recognize stock-based compensation cost for employees who have reached certain service and retirement eligibility criteria on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model that uses certain assumptions, including assumptions with respect to expected stock price volatility and the risk-free interest rate. Judgment is required in estimating the percentage of share-based awards that are expected to vest, and in the case of performance stock units, or PSUs, the level of performance that will be achieved and the number of shares that will be earned. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. If actual results differ significantly from these estimates, stock-based compensation expense could be higher and have a material impact on the Consolidated Financial Statements. Estimates are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value. Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was as follows (in thousands): Three Months Ended March 31, 2022 2021 (Unaudited) Instructional costs and services $ 459 $ 466 Selling and promotional 296 309 General and administrative 1,601 1,405 Total stock-based compensation expense $ 2,356 $ 2,180 Incentive-based Compensation The Company provides incentive-based compensation opportunities to certain employees through cash incentive and equity awards. The expense associated with these awards is reflected within the Company’s operating expenses. For the years ending December 31, 2022 and 2021, the Management Development and Compensation Committee of the Company’s Board of Directors approved an annual incentive arrangement for senior management employees. The aggregate amount of any awards payable is dependent upon the achievement of certain Company financial and operational goals, as well as the satisfaction of individual performance goals. Given that the awards are generally contingent upon achieving annual objectives, final determination of the current year incentive awards cannot be made until after the results for the year are finalized. The Company recognizes the estimated fair value of performance-based restricted stock units by assuming the satisfaction of any performance-based objectives at the “target” level, which is the most probable outcome determined for accounting purposes at the time of grant and multiplying the corresponding number of shares earned based upon such achievement by the closing price of the Company’s stock on the date of grant. To the extent performance goals are not met, compensation cost is not ultimately |
Income Taxes | Income Taxes The Company determines its interim tax provision by applying the estimated income tax rate expected for the full calendar year to income before income taxes for the period adjusted for discrete items. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates, or ASUs, issued by the FASB. All ASUs issued subsequent to the filing of the Annual Report on March 2, 2022 were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s consolidated financial position and/or results of operations. |
Commitments and Contingencies | Commitments and Contingencies The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses, associated with any such contingency. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Stock-based Compensation Cost Charged Against Income | Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was as follows (in thousands): Three Months Ended March 31, 2022 2021 (Unaudited) Instructional costs and services $ 459 $ 466 Selling and promotional 296 309 General and administrative 1,601 1,405 Total stock-based compensation expense $ 2,356 $ 2,180 |
Acquisition Activity (Tables)
Acquisition Activity (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Identifiable Assets Acquired and Liabilities Assumed Based on the Fair Values | The following table summarizes the components of the estimated consideration along with the purchase price allocation (in thousands): Purchase Price Allocation Amount Cash and cash equivalents $ 329,000 Working capital adjustment and additional cash contributions 2,333 Total consideration 331,333 Assets acquired: Cash and cash equivalents 5,200 Accounts receivable 10,700 Prepaid expenses 4,600 Property and equipment, net 36,996 Operating lease assets 75,800 Deferred tax asset 3,049 Intangible assets 86,500 Other assets 600 Total assets acquired 223,445 Liabilities assumed: Accounts payable 1,200 Accrued expenses 6,142 Deferred revenue 22,700 Operating lease liabilities, current 11,200 Operating lease liabilities, long-term 67,000 Other liabilities 1,300 Total liabilities assumed 109,542 Net assets acquired 113,903 Goodwill $ 217,430 The following table summarizes the components of the estimated consideration along with the purchase price allocation (in thousands): Purchase Price Allocation (Unaudited) Amount Cash and cash equivalents $ 1,000 Working capital adjustment (3,388) Total consideration (2,388) Assets acquired: Accounts receivable 4,282 Prepaid expenses 1,096 Property and equipment, net 400 Operating lease assets 31,635 Intangible assets 965 Total assets acquired 38,378 Liabilities assumed: Accounts payable and accrued expenses 810 Deferred revenue 1,969 Lease liabilities, current 1,179 Lease liabilities, long-term 30,779 Deferred tax liability 1,496 Total liabilities assumed 36,233 Net assets acquired 2,145 Gain on acquisition $ 4,533 |
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The fair value of the identified intangible assets, including the trade name, student roster, and lead conversions were determined using the income-based approach. The fair value of curricula and accreditation, licensing, and Title IV identified intangible assets were determined using the cost approach. The table below presents a summary of intangible assets acquired and the useful lives of these assets (in thousands): Intangible Assets Useful life Amount Trade name Indefinite 26,500 Accreditation, licensing and Title IV Indefinite 24,500 Student roster 2 years 20,000 Curricula 3 years 14,000 Lead conversions 2 years 1,500 $ 86,500 The fair value of the identified intangible assets, including customer contracts and relationships and trade name were determined using the income-based approach. The fair value of curricula and accreditation and licensing identified intangible assets were determined using the cost approach. The table below presents a summary of intangible assets acquired and the useful lives of these assets (in thousands): Intangible Assets (Unaudited) Useful life Amount Customer contracts and relationships 2.5 years 744 Curricula 3 years 158 Trade name 1 year 35 Accreditation and licenses 2.5 years 28 $ 965 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | In the following table, revenue, shown net of grants and scholarships, is disaggregated by type of service provided. The table also includes a reconciliation of the disaggregated revenue with the reportable segments (in thousands): Three Months Ended March 31, 2022 (Unaudited) APUS RU HCN Corporate and Other Consolidated Instructional services, net of grants and scholarships $ 72,585 $ 55,917 $ 9,733 $ 3,017 $ 141,252 Graduation fees 335 — — — 335 Textbook and other course materials — 10,294 1,663 — 11,957 Other fees 170 888 145 — 1,203 Total Revenue $ 73,090 $ 67,099 $ 11,541 $ 3,017 $ 154,747 Three Months Ended March 31, 2021 (Unaudited) APUS RU HCN Corporate and Other Consolidated Instructional services, net of grants and scholarships $ 76,885 $ — $ 9,365 $ (67) $ 86,183 Graduation fees 373 — — — 373 Textbook and other course materials — — 1,631 — 1,631 Other fees 218 — 136 — 354 Total Revenue $ 77,476 $ — $ 11,132 $ (67) $ 88,541 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of Minimum Rental Commitments | The following tables present information about the amount and timing of cash flows arising from the Company’s finance and operating leases as of March 31, 2022 (dollars in thousands): Maturity of Lease Liabilities (Unaudited) Operating Leases Finance Leases 2022 (remaining) $ 14,148 $ 85 2023 16,072 114 2024 14,436 113 2025 13,284 — 2026 12,830 — 2027 12,586 — 2028 and beyond 55,551 — Total future minimum lease payments $ 138,907 $ 312 Less: imputed interest (27,928) (16) Present value of operating lease liabilities $ 110,979 $ 296 Less: lease liabilities, current (14,312) (104) Lease liabilities, long-term $ 96,667 $ 192 Balance Sheet Classification (Unaudited) Current Operating lease liabilities, current $ 14,312 Finance lease liabilities, current 104 Long-term Operating lease liabilities, long-term 96,667 Finance lease liabilities, long-term 192 Total lease liabilities $ 111,275 |
Schedule of Information Related to Leases | Other Information (Unaudited) Weighted average remaining lease term (in years) Operating leases 5.35 Finance leases 2.75 Weighted average discount rate Operating leases 4.0 % Finance leases 3.8 % |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table summarizes the changes in the carrying amount of goodwill by reportable segment as of March 31, 2022 (in thousands): RU Segment HCN Segment Total Goodwill (Unaudited) Goodwill as of December 31, 2021 $ 216,923 $ 26,563 $ 243,486 Goodwill acquired — — — Impairment — — — Adjustments 507 — 507 Goodwill as of March 31, 2022 $ 217,430 $ 26,563 $ 243,993 |
Schedule of Intangible Assets and Goodwill | The following table represents the balance of the Company’s intangible assets as of March 31, 2022 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Unaudited) Finite-lived intangible assets Student roster $ 20,000 5,833 14,167 Curricula 14,563 3,140 11,423 Student and customer contracts and relationships 4,614 3,944 670 Lead conversions 1,500 438 1,062 Non-compete agreements 86 86 — Tradename 35 9 26 Accreditation and licenses 28 3 25 Total finite-lived intangible assets $ 40,826 $ 13,453 $ 27,373 Indefinite-lived intangible assets Trade name 28,498 — 28,498 Accreditation, licensing and Title IV 26,186 — 26,186 Affiliation agreements 37 — 37 Total indefinite-lived intangible assets 54,721 — 54,721 Total intangible assets $ 95,547 $ 13,453 $ 82,094 The following table represents the balance of the Company’s intangible assets as of December 31, 2021 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Finite-lived intangible assets Student roster $ 20,000 3,333 16,667 Curricula 14,405 1,961 12,444 Student contracts and relationships 3,870 3,870 — Lead conversions 1,500 250 1,250 Non-compete agreements 86 86 — Total finite-lived intangible assets $ 39,861 $ 9,500 $ 30,361 Indefinite-lived intangible assets Trade name 28,498 — 28,498 Accreditation, licensing and Title IV 26,186 — 26,186 Affiliation agreements 37 — 37 Total indefinite-lived intangible assets 54,721 — 54,721 Total intangible assets $ 94,582 $ 9,500 $ 85,082 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share | The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted net income per common share (in thousands). Three Months Ended March 31, 2022 2021 (Unaudited) Basic weighted average shares outstanding 18,805 16,211 Effect of dilutive restricted stock and options 74 211 Diluted weighted average shares outstanding 18,879 16,422 |
Schedule of Antidilutive Securities | The table below reflects a summary of securities that could potentially dilute basic net income per common share in future periods that were not included in the computation of diluted earnings per share because the effect would have been antidilutive (in thousands). Three Months Ended March 31, 2022 2021 (Unaudited) Antidilutive securities: Stock Options 103 18 Restricted Shares 173 3 Total antidilutive securities 276 21 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt consists of the following as of March 31, 2022 (in thousands): Long-Term debt (Unaudited) Credit agreement $ 170,625 Deferred financing fees (11,663) Total debt 158,962 Less: Current portion (8,750) Long-Term Debt $ 150,212 |
Schedule of Maturities of Long-term Debt | Scheduled maturities of long-term debt at March 31, 2022 are as follows (in thousands): Maturities of Long-Term Debt (Unaudited) Loan Payments 2022 (remaining) 6,562 2023 8,750 2024 8,750 2025 8,750 2026 8,750 2027 129,063 Total 170,625 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Summary of Financial Information by Reportable Segment | A summary of financial information by reportable segment is as follows (in thousands): Three Months Ended March 31, 2022 2021 (Unaudited) Revenue: APUS Segment $ 73,090 $ 77,476 RU Segment 67,099 — HCN Segment 11,541 11,132 Corporate and Other 3,017 (67) Total Revenue $ 154,747 $ 88,541 Depreciation and amortization: APUS Segment $ 1,701 $ 2,493 RU Segment 6,079 — HCN Segment 222 148 Corporate and Other 146 10 Total Depreciation and amortization $ 8,148 $ 2,651 Income (loss) from operations before interest and income taxes: APUS Segment $ 13,182 $ 14,031 RU Segment 891 — HCN Segment (995) 783 Corporate and Other (7,878) (4,177) Total income from operations before interest and income taxes $ 5,200 $ 10,637 Interest (expense) income: APUS Segment $ 39 $ 91 RU Segment 3 — HCN Segment 2 2 Corporate and Other (3,399) 21 Total Interest (expense) income $ (3,355) $ 114 Income tax expense (benefit): APUS Segment $ 4,674 $ 3,767 RU Segment 306 — HCN Segment (316) 205 Corporate and Other (3,624) (1,333) Total Income tax expense $ 1,040 $ 2,639 Capital expenditures: APUS Segment $ 441 $ 971 RU Segment 1,924 — HCN Segment 500 557 Corporate and Other 100 — Total Capital Expenditures $ 2,965 $ 1,528 |
Summary of Consolidated Assets by Reportable Segment | A summary of the Company’s consolidated assets by reportable segment is as follows (in thousands): As of March 31, 2022 As of December 31, 2021 (Unaudited) Assets: APUS Segment $ 136,573 $ 126,926 RU Segment 426,073 429,299 HCN Segment 50,803 51,936 Corporate and Other 157,961 117,447 Total Assets $ 771,410 $725,608 |
Concentration (Tables)
Concentration (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Summary of segment revenues | A summary of APUS Segment revenue derived from students by primary funding source is as follows (unaudited): Three Months Ended March 31, 2022 2021 DoD tuition assistance programs 48% 45% VA education benefits 21% 21% Title IV programs 18% 20% Cash and other sources 13% 14% A summary of RU Segment revenue derived from students by primary funding source is as follows (unaudited): Three Months Ended March 31, 2022 2021 Title IV programs 74% 76% Cash and other sources 24% 22% VA education benefits 2% 2% A summary of HCN Segment revenue derived from students by primary funding source is as follows (unaudited): Three Months Ended March 31, 2022 2021 Title IV programs 79% 81% Cash and other sources 19% 18% VA education benefits 2% 1% |
Nature of the Business - Narrat
Nature of the Business - Narrative (Details) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2022campuscoursesegmentstate | Jun. 30, 2021segment | |
Segment Reporting Information [Line Items] | ||
Number of courses | course | 300 | |
Number of reportable segments | segment | 3 | 2 |
RU Segment | ||
Segment Reporting Information [Line Items] | ||
Number of campuses | 23 | |
Number of states | state | 6 | |
HCN Segment | Ohio | ||
Segment Reporting Information [Line Items] | ||
Number of campuses | 6 | |
HCN Segment | INDIANA | ||
Segment Reporting Information [Line Items] | ||
Number of campuses | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Options previously granted vesting period | 3 years |
Award accelerated service period | 1 year |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Escrow deposit | $ 24.2 | |
Principal amount | 0.6 | |
Restricted cash, excluding certificates of deposit | 1.6 | $ 2.2 |
Restricted cash | $ 26.4 | $ 27 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | $ 2,356 | $ 2,180 |
Instructional costs and services | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | 459 | 466 |
Selling and promotional | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | 296 | 309 |
General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation expense | $ 1,601 | $ 1,405 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Incentive-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense in operating income | $ 2,356 | $ 2,180 |
Incentive-Based Compensation Plan | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense in operating income | $ 1,800 | $ 1,200 |
Acquisition Activity - Narrativ
Acquisition Activity - Narrative (Details) - USD ($) | Jan. 01, 2022 | Sep. 01, 2021 | Aug. 10, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 243,993,000 | $ 243,486,000 | ||||
Acquisition-related expenses | 900,000 | $ 600,000 | ||||
Rasmussen | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses, net of cash acquired | $ 325,500,000 | |||||
Goodwill | 217,430,000 | 217,400,000 | ||||
Goodwill, period increase (decrease) | 500,000 | |||||
Aggregate purchase price | $ 329,000,000 | |||||
Graduate School USA | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | $ 0 | |||||
Aggregate purchase price | $ 1,000,000 | 1,000,000 | ||||
Net working capital | 1,900,000 | |||||
Initial cash payment | 500,000 | |||||
Consideration retained by acquirer | $ 500,000 | |||||
Non-taxable gain on acquisition | $ 4,500,000 |
Acquisition Activity - Assets A
Acquisition Activity - Assets Acquired and Liabilities (Details) - USD ($) | Jan. 01, 2022 | Sep. 01, 2021 | Aug. 10, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Assets acquired: | |||||
Intangible assets | $ 965,000 | $ 86,500,000 | |||
Liabilities assumed: | |||||
Goodwill | $ 243,993,000 | $ 243,486,000 | |||
Rasmussen | |||||
Business Acquisition [Line Items] | |||||
Cash and cash equivalents | 329,000,000 | ||||
Working capital adjustment and additional cash contributions | 2,333,000 | ||||
Total consideration | 331,333,000 | ||||
Assets acquired: | |||||
Cash and cash equivalents | 5,200,000 | ||||
Accounts receivable | 10,700,000 | ||||
Prepaid expenses | 4,600,000 | ||||
Property and equipment, net | 36,996,000 | ||||
Operating lease assets | 75,800,000 | ||||
Deferred tax asset | 3,049,000 | ||||
Intangible assets | 86,500,000 | ||||
Other assets | 600,000 | ||||
Total assets acquired | 223,445,000 | ||||
Liabilities assumed: | |||||
Accounts payable | 1,200,000 | ||||
Accrued expenses | 6,142,000 | ||||
Deferred revenue | 22,700,000 | ||||
Operating lease liabilities, current | 11,200,000 | ||||
Operating lease liabilities, long-term | 67,000,000 | ||||
Other liabilities | 1,300,000 | ||||
Total liabilities assumed | 109,542,000 | ||||
Net assets acquired | 113,903,000 | ||||
Goodwill | $ 217,430,000 | $ 217,400,000 | |||
Graduate School USA | |||||
Business Acquisition [Line Items] | |||||
Cash and cash equivalents | 1,000,000 | $ 1,000,000 | |||
Working capital adjustment and additional cash contributions | (3,388,000) | ||||
Total consideration | (2,388,000) | ||||
Assets acquired: | |||||
Accounts receivable | 4,282,000 | ||||
Prepaid expenses | 1,096,000 | ||||
Property and equipment, net | 400,000 | ||||
Operating lease assets | 31,635,000 | ||||
Intangible assets | 965,000 | ||||
Total assets acquired | 38,378,000 | ||||
Liabilities assumed: | |||||
Accounts payable and accrued expenses | 810,000 | ||||
Deferred revenue | 1,969,000 | ||||
Operating lease liabilities, current | 1,179,000 | ||||
Operating lease liabilities, long-term | 30,779,000 | ||||
Deferred tax liability | 1,496,000 | ||||
Total liabilities assumed | 36,233,000 | ||||
Net assets acquired | 2,145,000 | ||||
Goodwill | $ 0 | ||||
Gain on acquisition | $ 4,533,000 |
Acquisition Activity - Schedule
Acquisition Activity - Schedule of Fair Value of Identified Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Jan. 01, 2022 | Sep. 01, 2021 |
Business Acquisition [Line Items] | ||
Intangible assets | $ 965 | $ 86,500 |
Student roster | ||
Business Acquisition [Line Items] | ||
Useful life | 2 years | |
Identified intangible assets with finite useful life | $ 20,000 | |
Curricula | ||
Business Acquisition [Line Items] | ||
Useful life | 3 years | 3 years |
Identified intangible assets with finite useful life | $ 158 | $ 14,000 |
Lead conversions | ||
Business Acquisition [Line Items] | ||
Useful life | 2 years | |
Identified intangible assets with finite useful life | $ 1,500 | |
Customer contracts and relationships | ||
Business Acquisition [Line Items] | ||
Useful life | 2 years 6 months | |
Identified intangible assets with finite useful life | $ 744 | |
Trade name | ||
Business Acquisition [Line Items] | ||
Identified intangible assets with finite useful life | 35 | |
Accreditation, licensing and Title IV | ||
Business Acquisition [Line Items] | ||
Identified intangible assets with finite useful life | $ 28 | |
Trade name | ||
Business Acquisition [Line Items] | ||
Useful life | 1 year | |
Indefinite-lived intangible assets acquired | 26,500 | |
Accreditation, licensing and Title IV | ||
Business Acquisition [Line Items] | ||
Useful life | 2 years 6 months | |
Indefinite-lived intangible assets acquired | $ 24,500 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 154,747 | $ 88,541 |
Instructional services, net of grants and scholarships | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 141,252 | 86,183 |
Graduation fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 335 | 373 |
Textbook and other course materials | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 11,957 | 1,631 |
Other fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 1,203 | 354 |
Corporate and Other | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 3,017 | (67) |
Corporate and Other | Instructional services, net of grants and scholarships | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 3,017 | (67) |
Corporate and Other | Graduation fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
Corporate and Other | Textbook and other course materials | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
Corporate and Other | Other fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
APUS | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 73,090 | 77,476 |
APUS | Operating Segments | Instructional services, net of grants and scholarships | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 72,585 | 76,885 |
APUS | Operating Segments | Graduation fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 335 | 373 |
APUS | Operating Segments | Textbook and other course materials | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
APUS | Operating Segments | Other fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 170 | 218 |
RU | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 67,099 | 0 |
RU | Operating Segments | Instructional services, net of grants and scholarships | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 55,917 | 0 |
RU | Operating Segments | Graduation fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
RU | Operating Segments | Textbook and other course materials | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 10,294 | 0 |
RU | Operating Segments | Other fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 888 | 0 |
HCN | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 11,541 | 11,132 |
HCN | Operating Segments | Instructional services, net of grants and scholarships | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 9,733 | 9,365 |
HCN | Operating Segments | Graduation fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 0 | 0 |
HCN | Operating Segments | Textbook and other course materials | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 1,663 | 1,631 |
HCN | Operating Segments | Other fees | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 145 | $ 136 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Disaggregation of Revenue [Line Items] | ||
Contract assets | $ 0 | $ 0 |
Deferred revenue | 27,920,000 | 21,776,000 |
Courses in Progress | ||
Disaggregation of Revenue [Line Items] | ||
Future revenue | 10,700,000 | 12,900,000 |
Future Courses | ||
Disaggregation of Revenue [Line Items] | ||
Future revenue | $ 17,200,000 | $ 8,900,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Leases [Abstract] | ||
Extension term | 1 year | |
Variable lease payments | $ 0 | |
Lease expense | 5,000,000 | $ 800,000 |
Cash paid for amounts included in operating lease liabilities | 4,800,000 | $ 700,000 |
Present value of operating lease liabilities | $ 296,000 | |
Interest rate | 3.75% | |
Finance lease expense | $ 30,000 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Operating Leases | |
2022 (remaining) | $ 14,148 |
2023 | 16,072 |
2024 | 14,436 |
2025 | 13,284 |
2026 | 12,830 |
2027 | 12,586 |
2028 and beyond | 55,551 |
Total future minimum lease payments | 138,907 |
Less: imputed interest | (27,928) |
Present value of operating lease liabilities | 110,979 |
Operating lease liabilities, current | (14,312) |
Lease liabilities, long-term | 96,667 |
Finance Leases | |
2022 (remaining) | 85 |
2023 | 114 |
2024 | 113 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
2028 and beyond | 0 |
Total future minimum lease payments | 312 |
Less: imputed interest | (16) |
Present value of operating lease liabilities | 296 |
Less: lease liabilities, current | (104) |
Lease liabilities, long-term | $ 192 |
Leases - Other Information (Det
Leases - Other Information (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Current | |
Operating lease liabilities, current | $ 14,312 |
Finance lease liabilities, current | 104 |
Long-term | |
Operating lease liabilities, long-term | 96,667 |
Finance lease liabilities, long-term | 192 |
Present value of operating lease liabilities | $ 111,275 |
Operating leases, weighted average remaining lease term | 5 years 4 months 6 days |
Finance leases, weighted average remaining lease term | 2 years 9 months |
Operating lease weighted average discount rate percent | 4.00% |
Finance lease weighted average discount rate percent | 3.80% |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | 3 Months Ended | |||||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Sep. 01, 2021 | Aug. 10, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 243,993,000 | $ 243,486,000 | ||||
Amortization | 4,000,000 | |||||
Goodwill and intangible asset impairment | 0 | $ 0 | ||||
Rasmussen | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | 217,400,000 | $ 217,430,000 | ||||
Identified intangible assets with finite useful life | 35,500,000 | |||||
HCN Segment | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | 26,600,000 | $ 38,600,000 | ||||
Indefinite-lived intangible assets acquired | 51,000,000 | $ 3,700,000 | ||||
Identified intangible assets with finite useful life | 4,400,000 | |||||
Graduate School USA | ||||||
Business Acquisition [Line Items] | ||||||
Goodwill | $ 0 | |||||
Identified intangible assets with finite useful life | $ 1,000,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill by Reportable Segment (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 243,486 |
Goodwill acquired | 0 |
Impairment | 0 |
Adjustments | 507 |
Ending balance | 243,993 |
RU Segment | |
Goodwill [Roll Forward] | |
Beginning balance | 216,923 |
Goodwill acquired | 0 |
Impairment | 0 |
Adjustments | 507 |
Ending balance | 217,430 |
HCN Segment | |
Goodwill [Roll Forward] | |
Beginning balance | 26,563 |
Goodwill acquired | 0 |
Impairment | 0 |
Adjustments | 0 |
Ending balance | $ 26,563 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Finite-lived intangible assets | ||
Gross Carrying Amount | $ 40,826 | $ 39,861 |
Accumulated Amortization | 13,453 | 9,500 |
Net Carrying Amount | 27,373 | 30,361 |
Indefinite-lived intangible assets | ||
Gross/net carrying amount | 54,721 | 54,721 |
Gross Carrying Amount | 95,547 | 94,582 |
Net Carrying Amount | 82,094 | 85,082 |
Trade name | ||
Indefinite-lived intangible assets | ||
Gross/net carrying amount | 28,498 | 28,498 |
Accreditation, licensing and Title IV | ||
Indefinite-lived intangible assets | ||
Gross/net carrying amount | 26,186 | 26,186 |
Affiliation agreements | ||
Indefinite-lived intangible assets | ||
Gross/net carrying amount | 37 | 37 |
Student roster | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 20,000 | 20,000 |
Accumulated Amortization | 5,833 | 3,333 |
Net Carrying Amount | 14,167 | 16,667 |
Curricula | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 14,563 | 14,405 |
Accumulated Amortization | 3,140 | 1,961 |
Net Carrying Amount | 11,423 | 12,444 |
Student and customer contracts and relationships | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 4,614 | 3,870 |
Accumulated Amortization | 3,944 | 3,870 |
Net Carrying Amount | 670 | 0 |
Lead conversions | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 1,500 | 1,500 |
Accumulated Amortization | 438 | 250 |
Net Carrying Amount | 1,062 | 1,250 |
Non-compete agreements | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 86 | 86 |
Accumulated Amortization | 86 | 86 |
Net Carrying Amount | 0 | $ 0 |
Tradename | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 35 | |
Accumulated Amortization | 9 | |
Net Carrying Amount | 26 | |
Accreditation and licenses | ||
Finite-lived intangible assets | ||
Gross Carrying Amount | 28 | |
Accumulated Amortization | 3 | |
Net Carrying Amount | $ 25 |
Net Income Per Common Share - S
Net Income Per Common Share - Schedule of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding (in shares) | 18,805 | 16,211 |
Effect of dilutive restricted stock (in shares) | 74 | 211 |
Diluted weighted average shares outstanding (in shares) | 18,879 | 16,422 |
Net Income Per Common Share - A
Net Income Per Common Share - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive stock options (in shares) | 276 | 21 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive stock options (in shares) | 103 | 18 |
Restricted Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive stock options (in shares) | 173 | 3 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | |
Debt Instrument, Redemption [Line Items] | |||
Principal amount | $ 600,000 | ||
Long-term debt | $ 158,962,000 | ||
Maximum total net leverage ratio | 2 | ||
Interest Rate Cap | |||
Debt Instrument, Redemption [Line Items] | |||
Derivative notional amount | $ 87,500,000 | ||
Derivative asset, fair value | $ 2,300,000 | ||
Unrealized gain on derivative | 1,800,000 | ||
Interest Rate Cap | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument, Redemption [Line Items] | |||
Spread on derivative instrument | 2.00% | ||
Line of Credit | Revolving Credit Facility | |||
Debt Instrument, Redemption [Line Items] | |||
Current borrowing capacity | 20,000,000 | ||
Deferred financing fees | 500,000 | ||
Long-term debt | 0 | $ 0 | |
Senior Secured Term Loan Facility | Secured Debt | |||
Debt Instrument, Redemption [Line Items] | |||
Principal amount of debt | 175,000,000 | ||
Debt issuance costs net | 13,100,000 | ||
Deferred financing fees | $ 11,663,000 | ||
Floor interest rate | 0.75% | ||
Applicable interest rate | 5.50% | ||
Variable rate | 2.00% | ||
Commitment fee percentage | 0.50% | ||
Principal payment amount | $ 2,200,000 | ||
Subfacility For Swing Line Loans | Line of Credit | Revolving Credit Facility | |||
Debt Instrument, Redemption [Line Items] | |||
Principal amount | $ 5,000,000 |
Long-Term Debt - Long term debt
Long-Term Debt - Long term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Total debt | $ 158,962 | |
Less: Current portion | (8,750) | $ (8,750) |
Long-Term Debt | 150,212 | $ 151,771 |
Senior Secured Term Loan Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Credit agreement | 170,625 | |
Deferred financing fees | $ (11,663) |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of long term debt (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Debt Disclosure [Abstract] | |
2022 (remaining) | $ 6,562 |
2023 | 8,750 |
2024 | 8,750 |
2025 | 8,750 |
2026 | 8,750 |
2027 | 129,063 |
Total | $ 170,625 |
Segment Information - Narrative
Segment Information - Narrative (Details) - segment | 3 Months Ended | 6 Months Ended |
Mar. 31, 2022 | Jun. 30, 2021 | |
Segment Reporting [Abstract] | ||
Number of reportable segments | 3 | 2 |
Segment Information - Summary o
Segment Information - Summary of Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue: | ||
Total Revenue | $ 154,747 | $ 88,541 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 8,148 | 2,651 |
Income (loss) from operations before interest and income taxes: | ||
Total income from operations before interest and income taxes | 5,200 | 10,637 |
Interest (expense) income: | ||
Total Interest (expense) income | (3,355) | 114 |
Income tax expense (benefit): | ||
Total Income tax expense | 1,040 | 2,639 |
Capital expenditures: | ||
Corporate and Other | 2,965 | 1,528 |
Corporate and Other | ||
Revenue: | ||
Total Revenue | 3,017 | (67) |
Depreciation and amortization: | ||
Total Depreciation and amortization | 146 | 10 |
Income (loss) from operations before interest and income taxes: | ||
Total income from operations before interest and income taxes | (7,878) | (4,177) |
Interest (expense) income: | ||
Total Interest (expense) income | (3,399) | 21 |
Income tax expense (benefit): | ||
Total Income tax expense | (3,624) | (1,333) |
Capital expenditures: | ||
Corporate and Other | 100 | 0 |
APUS Segment | Operating Segments | ||
Revenue: | ||
Total Revenue | 73,090 | 77,476 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 1,701 | 2,493 |
Income (loss) from operations before interest and income taxes: | ||
Total income from operations before interest and income taxes | 13,182 | 14,031 |
Interest (expense) income: | ||
Total Interest (expense) income | 39 | 91 |
Income tax expense (benefit): | ||
Total Income tax expense | 4,674 | 3,767 |
Capital expenditures: | ||
Corporate and Other | 441 | 971 |
RU Segment | Operating Segments | ||
Revenue: | ||
Total Revenue | 67,099 | 0 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 6,079 | 0 |
Income (loss) from operations before interest and income taxes: | ||
Total income from operations before interest and income taxes | 891 | 0 |
Interest (expense) income: | ||
Total Interest (expense) income | 3 | 0 |
Income tax expense (benefit): | ||
Total Income tax expense | 306 | 0 |
Capital expenditures: | ||
Corporate and Other | 1,924 | 0 |
HCN Segment | Operating Segments | ||
Revenue: | ||
Total Revenue | 11,541 | 11,132 |
Depreciation and amortization: | ||
Total Depreciation and amortization | 222 | 148 |
Income (loss) from operations before interest and income taxes: | ||
Total income from operations before interest and income taxes | (995) | 783 |
Interest (expense) income: | ||
Total Interest (expense) income | 2 | 2 |
Income tax expense (benefit): | ||
Total Income tax expense | (316) | 205 |
Capital expenditures: | ||
Corporate and Other | $ 500 | $ 557 |
Segment Information - Summary_2
Segment Information - Summary of Consolidated Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Total Assets | $ 771,410 | $ 725,608 |
Corporate and Other | ||
Assets: | ||
Total Assets | 157,961 | 117,447 |
APUS Segment | Operating Segments | ||
Assets: | ||
Total Assets | 136,573 | 126,926 |
RU Segment | Operating Segments | ||
Assets: | ||
Total Assets | 426,073 | 429,299 |
HCN Segment | Operating Segments | ||
Assets: | ||
Total Assets | $ 50,803 | $ 51,936 |
Concentration - Summary of Segm
Concentration - Summary of Segment Revenue Derived from Students by Primary Funding Source (Details) - Customer Concentration Risk - Revenue | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
APUS Segment | DoD tuition assistance programs | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 48.00% | 45.00% |
APUS Segment | VA education benefits | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 21.00% | 21.00% |
APUS Segment | Title IV programs | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 18.00% | 20.00% |
APUS Segment | Cash and other sources | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 13.00% | 14.00% |
RU Segment | VA education benefits | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 2.00% | 2.00% |
RU Segment | Title IV programs | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 74.00% | 76.00% |
RU Segment | Cash and other sources | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 24.00% | 22.00% |
HCN Segment | VA education benefits | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 2.00% | 1.00% |
HCN Segment | Title IV programs | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 79.00% | 81.00% |
HCN Segment | Cash and other sources | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 19.00% | 18.00% |