Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 15, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-21039 | |
Entity Registrant Name | Strategic Education, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 52-1975978 | |
Entity Address, Address Line One | 2303 Dulles Station Boulevard | |
Entity Address, City or Town | Herndon, | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20171 | |
City Area Code | 703 | |
Local Phone Number | 561-1600 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | STRA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 21,952,433 | |
Entity Central Index Key | 0001013934 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 375,515 | $ 311,732 |
Marketable securities | 39,288 | 37,121 |
Tuition receivable, net | 47,340 | 55,694 |
Income taxes receivable | 10,518 | 0 |
Other current assets | 17,660 | 15,814 |
Total current assets | 490,321 | 420,361 |
Property and equipment, net | 118,462 | 122,677 |
Right-of-use lease assets | 97,484 | |
Marketable securities, non-current | 25,737 | 37,678 |
Intangible assets, net | 300,678 | 328,344 |
Goodwill | 732,104 | 732,540 |
Other assets | 19,784 | 19,429 |
Total assets | 1,784,570 | 1,661,029 |
Current liabilities: | ||
Accounts payable and accrued expenses | 86,066 | 85,979 |
Income taxes payable | 0 | 419 |
Contract liabilities | 40,919 | 38,733 |
Lease liabilities | 26,834 | |
Total current liabilities | 153,819 | 125,131 |
Deferred income tax liabilities | 66,323 | 59,358 |
Lease liabilities, non-current | 86,998 | |
Other long-term liabilities | 39,554 | 51,316 |
Total liabilities | 346,694 | 235,805 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,948,563 shares issued and outstanding at December 31, 2018 and June 30, 2019, respectively | 219 | 217 |
Additional paid-in capital | 1,305,148 | 1,306,653 |
Accumulated other comprehensive income | 449 | 32 |
Retained earnings | 132,060 | 118,322 |
Total stockholders’ equity | 1,437,876 | 1,425,224 |
Total liabilities and stockholders’ equity | $ 1,784,570 | $ 1,661,029 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 32,000,000 | 32,000,000 |
Common stock, shares issued | 21,948,563 | 21,743,498 |
Common stock, shares outstanding | 21,948,563 | 21,743,498 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 245,110 | $ 114,668 | $ 491,618 | $ 231,137 |
Costs and expenses: | ||||
Instructional and support costs | 130,704 | 69,299 | 264,754 | 137,751 |
General and administration | 68,374 | 32,176 | 132,513 | 63,518 |
Amortization of intangible assets | 15,417 | 0 | 30,834 | 0 |
Merger and integration costs | 3,019 | 2,824 | 10,198 | 8,171 |
Impairment of intangible assets | 0 | 6,185 | 0 | 6,185 |
Total costs and expenses | 217,514 | 110,484 | 438,299 | 215,625 |
Income from operations | 27,596 | 4,184 | 53,319 | 15,512 |
Other income | 4,125 | 447 | 7,452 | 736 |
Income before income taxes | 31,721 | 4,631 | 60,771 | 16,248 |
Provision (benefit) for income taxes | 7,312 | (557) | 24,862 | 1,593 |
Net income | $ 24,409 | $ 5,188 | $ 35,909 | $ 14,655 |
Earnings per share: | ||||
Basic (In Dollars per Share) | $ 1.12 | $ 0.48 | $ 1.66 | $ 1.36 |
Diluted (In Dollars per Share) | $ 1.10 | $ 0.46 | $ 1.63 | $ 1.29 |
Weighted average shares outstanding: | ||||
Basic (In Shares) | 21,777 | 10,879 | 21,638 | 10,812 |
Diluted (In Shares) | 22,109 | 11,380 | 22,079 | 11,346 |
Cash dividend declared per share (in dollars per share) | $ 0.50 | $ 0.25 | $ 1 | $ 0.50 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 24,409 | $ 5,188 | $ 35,909 | $ 14,655 |
Other comprehensive income: | ||||
Unrealized gains on marketable securities, net of tax | 183 | 0 | 417 | 0 |
Comprehensive income | $ 24,592 | $ 5,188 | $ 36,326 | $ 14,655 |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income |
Beginning balance, shares at Dec. 31, 2017 | 11,167,425 | ||||
Beginning balance at Dec. 31, 2017 | $ 209,197 | $ 112 | $ 47,079 | $ 162,006 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 5,937 | 5,937 | |||
Issuance of restricted stock, net (in shares) | 139,102 | ||||
Issuance of restricted stock, net | $ 1 | (1) | |||
Common stock dividends | (5,778) | (5,778) | |||
Unrealized gains on marketable securities, net of tax | 0 | ||||
Net income | 14,655 | 14,655 | |||
Ending balance, shares at Jun. 30, 2018 | 11,306,527 | ||||
Ending balance at Jun. 30, 2018 | 223,840 | $ 113 | 53,015 | 170,712 | 0 |
Beginning balance, shares at Mar. 31, 2018 | 11,300,671 | ||||
Beginning balance at Mar. 31, 2018 | 218,292 | $ 113 | 49,766 | 168,413 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 3,249 | 3,249 | |||
Issuance of restricted stock, net (in shares) | 5,856 | ||||
Common stock dividends | (2,889) | (2,889) | |||
Unrealized gains on marketable securities, net of tax | 0 | ||||
Net income | 5,188 | 5,188 | |||
Ending balance, shares at Jun. 30, 2018 | 11,306,527 | ||||
Ending balance at Jun. 30, 2018 | 223,840 | $ 113 | 53,015 | 170,712 | 0 |
Beginning balance, shares at Dec. 31, 2018 | 21,743,498 | ||||
Beginning balance at Dec. 31, 2018 | 1,425,224 | $ 217 | 1,306,653 | 118,322 | 32 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 6,008 | 5,926 | 82 | ||
Exercise of stock options, net (in shares) | 90,569 | ||||
Exercise of stock options, net | (208) | $ 1 | (209) | ||
Issuance of restricted stock, net (in shares) | 114,496 | ||||
Issuance of restricted stock, net | (7,221) | $ 1 | (7,222) | ||
Common stock dividends | (22,253) | (22,253) | |||
Unrealized gains on marketable securities, net of tax | 417 | 417 | |||
Net income | 35,909 | 35,909 | |||
Ending balance, shares at Jun. 30, 2019 | 21,948,563 | ||||
Ending balance at Jun. 30, 2019 | 1,437,876 | $ 219 | 1,305,148 | 132,060 | 449 |
Beginning balance, shares at Mar. 31, 2019 | 21,923,800 | ||||
Beginning balance at Mar. 31, 2019 | 1,423,438 | $ 219 | 1,304,170 | 118,783 | 266 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 3,155 | 3,155 | |||
Exercise of stock options, net (in shares) | 38,680 | ||||
Exercise of stock options, net | 1,491 | 1,491 | |||
Issuance of restricted stock, net (in shares) | (13,917) | ||||
Issuance of restricted stock, net | (3,668) | (3,668) | |||
Common stock dividends | (11,132) | (11,132) | |||
Unrealized gains on marketable securities, net of tax | 183 | 183 | |||
Net income | 24,409 | 24,409 | |||
Ending balance, shares at Jun. 30, 2019 | 21,948,563 | ||||
Ending balance at Jun. 30, 2019 | $ 1,437,876 | $ 219 | $ 1,305,148 | $ 132,060 | $ 449 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 35,909 | $ 14,655 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs | 167 | 131 |
Amortization of investment discount/premium | 220 | 0 |
Depreciation and amortization | 52,497 | 9,915 |
Deferred income taxes | 9,909 | (1,581) |
Stock-based compensation | 6,576 | 5,937 |
Impairment of intangible assets | 0 | 6,185 |
Changes in assets and liabilities: | ||
Tuition receivable, net | 5,777 | (2,916) |
Other current assets | (1,304) | 96 |
Other assets | 64 | (824) |
Accounts payable and accrued expenses | 229 | 1,363 |
Income taxes payable and income taxes receivable | (10,673) | (3,447) |
Contract liabilities | 4,778 | 2,768 |
Other long-term liabilities | (1,086) | (2,256) |
Net cash provided by operating activities | 103,063 | 30,026 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (18,859) | (8,596) |
Purchases of marketable securities | (12,443) | 0 |
Maturities of marketable securities | 22,560 | 0 |
Other investments | (740) | 0 |
Net cash used in investing activities | (9,482) | (8,596) |
Cash flows from financing activities: | ||
Common dividends paid | (22,194) | (5,778) |
Taxes paid for stock awards | (7,607) | 0 |
Net cash used in financing activities | (29,801) | (5,778) |
Net increase in cash, cash equivalents, and restricted cash | 63,780 | 15,652 |
Cash, cash equivalents, and restricted cash — beginning of period | 312,237 | 156,448 |
Cash, cash equivalents, and restricted cash — end of period | 376,017 | 172,100 |
Noncash transactions: | ||
Purchases of property and equipment included in accounts payable | $ 840 | $ 1,252 |
Nature of Operations
Nature of Operations | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Strategic Education, Inc. (“Strategic Education” or the “Company”), a Maryland corporation formerly known as Strayer Education, Inc., is a national leader in education innovation, dedicated to enabling economic mobility for working adults through education. As further discussed in Note 2 and Note 3, the Company completed its merger with Capella Education Company (“CEC”) on August 1, 2018. The accompanying condensed consolidated financial statements and footnotes include the results of the Company’s three reportable segments: Strayer University, Capella University and Non-Degree Programs. The Company’s reportable segments are discussed further in Note 15. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. On August 1, 2018, the Company completed its merger with CEC, whereby the Company was deemed the acquirer in the business combination for accounting purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Therefore, Strayer Education, Inc. is considered Strategic Education’s predecessor, and its historical financial statements prior to the merger date are reflected in this Quarterly Report on Form 10-Q as the historical financial statements of the Company. Accordingly, the financial results of the Company as of and for any periods ended prior to August 1, 2018 do not include the financial results of CEC and therefore are not directly comparable. All information as of June 30, 2018 and 2019 , and for the three and six months ended June 30, 2018 and 2019 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company. The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year. Certain amounts in the prior period financial statements have been reclassified to conform to the current period's presentation. Effective during the first quarter of 2019, the Company made changes in its presentation of operating expenses and reclassified prior periods to conform to the current presentation. The Company determined that these changes aligned with its organizational structure and will improve comparability with several of its peer companies. There were no changes to total operating expenses or operating income as a result of these reclassifications. Below is a description of the nature of the costs included in the Company’s operating expense categories. Instructional and support costs ("I&SC") generally contain items of expense directly attributable to activities of Strayer University and Capella University (the "Universities") that support students and learners. This expense category includes salaries and benefits of faculty and academic administrators, as well as admissions and administrative personnel who support and serve student interests. Instructional and support costs also include course development costs and costs associated with delivering course content, including educational supplies, facilities, and all other physical plant and occupancy costs, with the exception of costs attributable to the corporate offices. Bad debt expense incurred on delinquent student account balances is also included in instructional and support costs. General and administration ("G&A") expenses include salaries and benefits of management and employees engaged in finance, human resources, legal, regulatory compliance, marketing and other corporate functions. Also included are the costs of advertising and production of marketing materials. General and administration expense also includes the facilities occupancy and other related costs attributable to such functions. The following table presents the Company's operating expenses as previously reported and as reclassified on its unaudited condensed consolidated statements of income for the three months ended (in thousands): New Classification March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Prior Classification I&SC G&A I&SC G&A I&SC G&A I&SC G&A Instruction and educational support $ 63,776 $ — $ 64,690 $ — $ 93,290 $ — $ 118,320 $ — Admissions advisory 4,676 — 4,609 — 9,789 — 12,392 — Marketing — 20,124 — 21,113 — 46,165 — 49,577 General and administration — 11,218 — 11,063 — 15,811 — 18,964 Total reclassified costs and expenses (1) $ 68,452 $ 31,342 $ 69,299 $ 32,176 $ 103,079 $ 61,976 $ 130,712 $ 68,541 _________________________________________ (1) This amount excludes the amortization of intangible assets, merger and integration costs, and impairment of intangible assets expense line items on the condensed consolidated statements of income as those expense line items were not impacted by the operating expense reclassification. Restricted Cash A significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from the Universities during the academic term. The Company had approximately $5,000 and $2,000 of these unpaid obligations as of December 31, 2018 and June 30, 2019 , respectively, which are recorded as restricted cash and included in other current assets in the unaudited condensed consolidated balance sheets. As part of commencing operations in Pennsylvania in 2003, the Company is required to maintain a “minimum protective endowment” of at least $0.5 million in an interest-bearing account as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account which is included in other assets. The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows as of June 30, 2018 and 2019 (in thousands): As of June 30, 2018 2019 Cash and cash equivalents $ 171,600 $ 375,515 Restricted cash included in other current assets — 2 Restricted cash included in other assets 500 500 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 172,100 $ 376,017 Tuition Receivable and Allowance for Doubtful Accounts The Company records tuition receivable and contract liabilities for its students upon the start of the academic term or program. Therefore, at the end of the quarter (and academic term), tuition receivable generally represents amounts due from students for educational services already provided and contract liabilities generally represents advance payments from students for academic services to be provided in the future. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the Universities' student bases and through the participation of the majority of the students in federally funded financial aid programs. An allowance for doubtful accounts is established primarily based upon historical collection rates by age of receivable, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status and likelihood of future enrollment. The Company periodically assesses its methodologies for estimating bad debts in consideration of actual experience. The Company’s tuition receivable and allowance for doubtful accounts were as follows as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Tuition receivable $ 84,151 $ 78,073 Allowance for doubtful accounts (28,457 ) (30,733 ) Tuition receivable, net $ 55,694 $ 47,340 Approximately $1.1 million and $1.2 million of tuition receivable are included in other assets as of December 31, 2018 and June 30, 2019 , respectively, because these amounts are expected to be collected after 12 months. The following table illustrates changes in the Company’s allowance for doubtful accounts for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended For the six months ended 2018 2019 2018 2019 Allowance for doubtful accounts, beginning of period $ 13,775 $ 29,387 $ 12,687 $ 28,457 Additions charged to expense 6,596 11,462 12,987 23,782 Adjustment to value of acquired receivables — 2,207 — 2,207 Write-offs, net of recoveries (5,323 ) (12,323 ) (10,626 ) (23,713 ) Allowance for doubtful accounts, end of period $ 15,048 $ 30,733 $ 15,048 $ 30,733 Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases with a term longer than 12 months. ASU 2016-02 also requires additional quantitative and qualitative disclosures surrounding the amount, timing, and uncertainty of cash flows arising from leases. During 2018 and 2019, the FASB issued additional ASUs amending certain aspects of ASU 2016-02. On January 1, 2019, the Company adopted the new accounting standard and all the related amendments ("ASC 842") using the modified retrospective method. The Company applied ASU 2016-02 to all leases that had commenced as of January 1, 2019. In addition, as permitted by ASU 2016-02, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under ASU 2016-02, which allowed the Company to not reassess prior conclusions regarding lease identification, lease classification, and initial direct costs under the new standard. As a result of adopting the new standard, the Company recognized a lease liability of $123 million and a right-of-use ("ROU") lease asset of $107 million on January 1, 2019. The standard did not materially impact the Company's condensed consolidated statements of income and cash flows. The Company determines if an arrangement is a lease at inception. Leases with an initial term longer than 12 months are included in right-of-use lease assets, current lease liabilities, and non-current lease liabilities on the Company's condensed consolidated balance sheets. The Company combines lease and non-lease components for all leases. ROU lease assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU lease assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the implicit interest rates for most of the Company's leases cannot be readily determined, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term for operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company subleases certain building space to third parties and sublease income is recognized on a straight-line basis over the lease term. See Note 7 for additional information. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets, which include trade names, are recorded at fair value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets are assessed at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible asset below its carrying amount. Finite-lived intangible assets that are acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the asset. Finite-lived intangible assets consist of student relationships. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. Authorized Stock The Company has authorized 32,000,000 shares of common stock, par value $0.01 , of which 21,743,498 and 21,948,563 shares were issued and outstanding as of December 31, 2018 and June 30, 2019 , respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which is issued or outstanding. Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. In May 2019, the Company’s Board of Directors declared a regular, quarterly cash dividend of $0.50 per share of common stock. The dividend was paid on June 10, 2019. Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock, and restricted stock units. The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, all of the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options, and (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company. Stock options are not included in the computation of diluted earnings per share when the stock option exercise price of an individual grant exceeds the average market price for the period. Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended For the six months ended 2018 2019 2018 2019 Weighted average shares outstanding used to compute basic earnings per share 10,879 21,777 10,812 21,638 Incremental shares issuable upon the assumed exercise of stock options 51 58 48 75 Unvested restricted stock and restricted stock units 450 274 486 366 Shares used to compute diluted earnings per share 11,380 22,109 11,346 22,079 During the three and six months ended June 30, 2019 , the Company had approximately 0 and 29,000 shares of restricted stock, respectively, excluded from the diluted earnings per share calculation because the effect would have been antidilutive. During the three and six months ended June 30, 2018 , the Company had no issued and outstanding awards that were excluded from the calculation. Comprehensive Income Comprehensive income includes net income and all changes in the Company’s equity during a period from non-owner sources, which for the Company consists of unrealized gains and losses on available-for-sale marketable securities, net of tax. As of December 31, 2018 and June 30, 2019 , the balance of accumulated other comprehensive income was $32,000 , net of tax of $10,000 and $449,000 , net of tax of $156,000 , respectively. There were no reclassifications out of accumulated other comprehensive income to net income for the three and six months ended June 30, 2019 . Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates include allowances for doubtful accounts, useful lives of property and equipment and intangible assets, fair value of future contractual operating lease obligations, incremental borrowing rates, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill and intangible assets, and the provision for income taxes. Actual results could differ from those estimates. Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) : Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which simplifies the accounting for share-based payments granted to nonemployees for goods and services. ASU 2018-07 aligns guidance on share-based payments to nonemployees with the requirements for share-based payments granted to employees, including determination of the measurement date and accounting for performance conditions and for share-based payments after vesting. The Company adopted this guidance as of January 1, 2019 with no material impact on its unaudited condensed consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments . The new guidance revises the accounting requirements related to the measurement of credit losses and will require organizations to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable and supportable forecasts about collectibility. Assets must be presented in the financial statements at the net amount expected to be collected. During 2019, the FASB issued additional ASUs amending certain aspects of ASU 2016-13. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2020, with early adoption permitted. The Company is evaluating the impact this standard will have on its financial condition, results of operations, and disclosures. Other ASUs issued by the FASB but not yet effective are not expected to have a material effect on the Company’s consolidated financial statements. |
Merger with Capella Education C
Merger with Capella Education Company | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Merger with Capella Education Company | Merger with Capella Education Company On August 1, 2018, the Company completed its merger with CEC and its wholly-owned subsidiaries, pursuant to a merger agreement dated October 29, 2017. The merger enabled the Company to become a national leader in education innovation that improves affordability and enhances career outcomes by offering complementary programs and sharing academic and technological best practices, through a best-in-class corporate platform supporting two independent universities. Pursuant to the merger agreement, the Company issued 0.875 shares of the Company’s common stock for each issued and outstanding share of CEC common stock. Outstanding equity awards held by existing CEC employees and certain non-employee directors of CEC were assumed by the Company and converted into comparable Company awards at the exchange ratio. Outstanding equity awards held by CEC non-employee directors who did not serve as directors of the Company after completion of the merger were converted to Company awards and settled. Outstanding equity awards held by former CEC employees were settled upon completion of the merger in exchange for cash payments as specified in the merger agreement. The following table summarizes the components of the aggregate consideration transferred for the acquisition of CEC (in thousands): Fair value of Company common stock issued in exchange for CEC outstanding shares (1) $ 1,209,483 Fair value of Company equity-based awards issued in exchange for CEC equity-based awards 27,478 Total fair value of consideration transferred $ 1,236,961 _________________________________________ (1) The Company issued 10,263,775 common shares at a market price of $117.84 in exchange for each issued and outstanding share of CEC common stock. The Company applied the acquisition method of accounting to CEC’s business, 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 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 merger has been provisionally allocated to the Strayer University and Capella University reportable segments in the amount of $330.6 million and $394.7 million , respectively, and is not deductible for tax purposes. To date, the Company has incurred $20.1 million of acquisition-related costs which have been recognized in Merger and integration costs in the unaudited condensed consolidated statements of income. Issuance costs of $0.1 million were recognized in additional paid-in capital in the unaudited condensed consolidated balance sheets. The preliminary opening balance sheet is subject to adjustment based on final assessment of the fair values of certain acquired assets and liabilities, primarily intangible assets and income taxes. As the Company finalizes its assessment of the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company reflects measurement period adjustments, if any, in the period in which the adjustments occur. During the six months ended June 30, 2019 , the Company recorded measurement period adjustments that reduced deferred income taxes and current assets by $3.4 million and $1.9 million , respectively, and increased current liabilities and long term liabilities by $1.0 million and $0.1 million , respectively. These adjustments resulted in a $0.4 million decrease to goodwill recognized in connection with the CEC merger. The preliminary fair value of assets acquired and liabilities assumed, as well as a reconciliation to consideration transferred, is presented in the table below (in thousands): Cash and cash equivalents $ 167,859 Marketable securities 31,419 Tuition receivable 36,716 Income taxes receivable 163 Other current assets 9,041 Marketable securities, non-current 34,700 Property and equipment, net 53,182 Other assets 14,556 Intangible assets 349,800 Goodwill 725,304 Total assets acquired 1,422,740 Accounts payable and accrued expenses (47,763 ) Contract liabilities (39,000 ) Deferred income taxes (96,689 ) Other long term liabilities (2,327 ) Total liabilities assumed (185,779 ) Total consideration $ 1,236,961 The table below presents a summary of intangible assets acquired (in thousands) and the weighted average useful lives of these assets: Fair Value Weighted Average Useful Life in Years Trade names $ 183,800 Indefinite Student relationships 166,000 3 $ 349,800 The Company determined the fair value of assets acquired and liabilities assumed based on assumptions that reasonable market participants would use while employing the concept of highest and best use of the assets and liabilities. The Company utilized the following assumptions, some of which include significant unobservable inputs which would qualify the valuations as Level 3 measurements, and valuation methodologies to determine fair value: • Intangible assets - To determine the fair value of the trade name, the Company used the relief from royalty approach. The excess earnings method was used to estimate the fair value of student relationships. • Property and equipment - Included in property and equipment is course content of $14.0 million , valued using the relief from royalty approach, and internally developed software of $5.0 million , valued using the cost approach. Each will be amortized over three years . All other property and equipment was valued at estimated cost. • Contract liabilities - The Company estimated the fair value of contract liabilities using the cost build-up method, which represents the cost to deliver the services plus a normal profit margin. • Other current and noncurrent assets and liabilities - The carrying value of all other assets and liabilities approximated fair value at the time of acquisition. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company’s revenues primarily consist of tuition revenue arising from educational services provided in the form of classroom instruction and online courses. Tuition revenue is deferred and recognized ratably over the period of instruction, which varies depending on the course format and chosen program of study. Strayer University’s educational programs and Capella University’s GuidedPath classes typically are offered on a quarterly basis and such periods coincide with the Company’s quarterly financial reporting periods, while Capella University’s FlexPath courses are delivered over a twelve-week subscription period. The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended June 30, For the six months ended June 30, 2018 2019 2018 2019 Strayer University Segment Tuition, net of discounts, grants and scholarships $ 109,744 $ 124,402 $ 220,704 $ 247,917 Other (1) 4,159 4,509 8,470 9,052 Total Strayer University Segment 113,903 128,911 229,174 256,969 Capella University Segment Tuition, net of discounts, grants and scholarships — 107,066 — 216,533 Other (1) — 5,105 — 10,336 Total Capella University Segment — 112,171 — 226,869 Non-Degree Programs Segment (2) 765 4,028 1,963 7,780 Consolidated revenue $ 114,668 $ 245,110 $ 231,137 $ 491,618 _________________________________________ (1) Other revenue is primarily comprised of academic fees, sales of course materials, and other revenue streams. (2) Non-Degree Programs revenue is primarily comprised of tuition revenue and placement fee revenue. Revenues are recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to receive in exchange for those goods and services. The Company applies the five-step revenue model under ASC 606 to determine when revenue is earned and recognized. Arrangements with students may have multiple performance obligations. For such arrangements, the Company allocates net tuition revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on the prices charged to customers and observable market prices. The standalone selling price of material rights to receive free classes in the future is estimated based on class tuition prices and likelihood of redemption based on historical student attendance and completion behavior. At the start of each academic term or program, a liability (contract liability) is recorded for academic services to be provided and a tuition receivable is recorded for the portion of the tuition not paid in advance. Any cash received prior to the start of an academic term or program is recorded as a contract liability. Some students may be eligible for scholarship awards, the estimated value of which will be realized in the future and is deducted from revenue when earned, based on historical student attendance and completion behavior. Contract liabilities are recorded as a current or long-term liability in the unaudited condensed consolidated balance sheets based on when the benefit is expected to be realized. Course materials available through Capella University enable students to access electronically all required materials for courses in which they enroll during the quarter. Revenue derived from course materials is recognized ratably over the duration of the course as the Company provides the student with continuous access to these materials during the term. For sales of certain other course materials, the Company is considered the agent in the transaction, and as such, the Company recognizes revenue net of amounts owed to the vendor at the time of sale. Revenues also include certain academic fees recognized within the quarter of instruction, and certificate revenue and licensing revenue, which are recognized as the services are provided. Contract Liabilities – Graduation Fund In 2013, Strayer University introduced the Graduation Fund, which allows new undergraduate students to earn tuition credits that are redeemable in the final year of a student’s course of study if he or she successfully remains in the program. New students registering in credit-bearing courses in any undergraduate program receive one free course for every three courses that are successfully completed. Students must meet all of Strayer University’s admission requirements and must be enrolled in a bachelor’s degree program. The Company’s employees and their dependents are not eligible for the program. Students who have more than one consecutive term of non-attendance lose any Graduation Fund credits earned to date, but may earn and accumulate new credits if the student is reinstated or readmitted by Strayer University in the future. Revenue from students participating in the Graduation Fund is recorded in accordance with ASC 606. The Company defers the value of the related performance obligation associated with the credits estimated to be redeemed in the future based on the underlying revenue transactions that result in progress by the student toward earning the benefit. The Company’s estimate of the benefits that will be redeemed in the future is based on its historical experience of student persistence toward completion of a course of study within this program and similar programs. Each quarter, the Company assesses its methodologies and assumptions underlying these estimates, and to date, any adjustments to the estimates have not been material. The amount estimated to be redeemed in the next 12 months is $20.9 million and is included as a current contract liability in the unaudited condensed consolidated balance sheets. The remainder is expected to be redeemed within two to four years . The table below presents activity in the contract liability related to the Graduation Fund for the six months ended June 30, 2018 and 2019 (in thousands): As of June 30, 2018 2019 Balance at beginning of period $ 37,400 $ 43,329 Revenue deferred 12,917 14,787 Benefit redeemed (10,497 ) (12,025 ) Balance at end of period $ 39,820 $ 46,091 Unbilled receivables – Student tuition Academic materials may be shipped to certain students in advance of the term of enrollment. Under ASC 606, the materials represent a performance obligation to which the Company allocates revenue based on the fair value of the materials relative to the total fair value of all performance obligations in the arrangement with the student. When control of the materials passes to the student in advance of the term of enrollment, an unbilled receivable and related revenue is recorded. The balance of unbilled receivables related to such materials was $1.3 million as of June 30, 2019 , and is included in tuition receivable. |
Restructuring and Related Charg
Restructuring and Related Charges | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Charges | Restructuring and Related Charges In October 2013, the Company implemented a restructuring to better align the Company’s resources with student enrollments at the time. This restructuring included the closing of 20 physical locations and reductions in the number of campus-based and corporate employees. At the time of this restructuring, a liability for lease obligations, some of which continue through 2022, was recorded and measured at fair value using a discounted cash flow approach encompassing significant unobservable inputs (Level 3). The estimation of future cash flows included non-cancelable contractual lease costs over the remaining terms of the leases discounted at the Company’s marginal borrowing rate of 4.5% , partially offset by estimated future sublease rental income discounted at credit-adjusted rates. In addition, the Company has incurred personnel-related restructuring charges due to cost reduction efforts and management changes. These changes are primarily intended to integrate CEC successfully and establish an efficient ongoing cost structure for the Company. The following details the changes in the Company’s restructuring liability during the six months ended June 30, 2018 and 2019 (in thousands): Lease and Related Costs, Net Severance and Other Employee Separation Costs Total Balance at December 31, 2017 $ 8,781 $ — $ 8,781 Restructuring and other charges (1) — — — Payments (1,401 ) — (1,401 ) Adjustments (2) 74 — 74 Balance at June 30, 2018 $ 7,454 $ — $ 7,454 Balance at December 31, 2018 (3) $ 6,540 $ 14,347 $ 20,887 Restructuring and other charges (1) — 2,086 2,086 Payments — (5,764 ) (5,764 ) Adjustments (2) (6,540 ) — (6,540 ) Balance at June 30, 2019 (3) $ — $ 10,669 $ 10,669 _____________________________________ (1) Restructuring and other charges of $0.2 million and $2.1 million for the three and six months ended June 30, 2019 , respectively, are included in Merger and integration costs on the unaudited condensed consolidated statements of income. There were no restructuring and other charges for the three and six months ended June 30, 2018 . (2) For the three and six months ended June 30, 2018 , adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from subleases. For the three and six months ended June 30, 2019 , adjustments represent the impact of adopting ASC 842 on January 1, 2019. In accordance with ASC 842, the lease related restructuring liability balance as of December 31, 2018 was netted against the initial ROU lease asset recognized upon adoption. Asset retirement obligations related to these restructured properties are also included in the adjustments amount. (3) The current portion of restructuring liabilities was $9.8 million and $6.8 million as of December 31, 2018 and June 30, 2019 , respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable Securities The following is a summary of available-for-sale securities as of June 30, 2019 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Corporate debt securities $ 43,852 $ 191 $ (17 ) $ 44,026 Tax-exempt municipal securities 15,272 129 (2 ) 15,399 Variable rate demand notes 5,600 — — 5,600 Total $ 64,724 $ 320 $ (19 ) $ 65,025 The following is a summary of available-for-sale securities as of December 31, 2018 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Corporate debt securities $ 48,202 $ 12 $ (284 ) $ 47,930 Tax-exempt municipal securities 22,858 45 (34 ) 22,869 Variable rate demand notes 4,000 — — 4,000 Total $ 75,060 $ 57 $ (318 ) $ 74,799 The unrealized gains and losses on the Company’s investments in municipal and corporate debt securities as of December 31, 2018 and June 30, 2019 were caused by changes in market values primarily due to interest rate changes. As of June 30, 2019 , the fair value of the Company’s securities which were in an unrealized loss position for a period longer than twelve months was $9.2 million . The Company does not intend to sell these securities, and it is not more likely than not that the Company will be required to sell these securities prior to the recovery of their amortized cost basis, which may be at maturity. No other-than-temporary impairment charges were recorded during the three and six months ended June 30, 2018 and 2019 . The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Due within one year $ 37,121 $ 39,288 Due after one year through five years 37,678 25,737 Total $ 74,799 $ 65,025 Amounts due within one year in the table above included $5.6 million of variable rate demand notes, which have contractual maturities ranging from 18 years to 27 years as of June 30, 2019 . The variable rate demand notes are floating rate municipal bonds with embedded put options that allow the Company to sell the security at par plus accrued interest on a settlement basis ranging from one day to seven days . The Company has classified these securities based on their effective maturity dates, which ranges from one day to seven days from the balance sheet date. The Company received $9.7 million and $22.6 million of proceeds from the maturities of available-for-sale securities during the three and six months ended June 30, 2019 , respectively. The Company did not record any gross realized gains or gross realized losses in net income during the three and six months ended June 30, 2018 and 2019 . Additionally, there were no proceeds from sales of marketable securities prior to maturity during the three and six months ended June 30, 2018 and 2019 . |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company has long-term, non-cancelable operating leases for campuses and other administrative facilities. These leases generally range from one to 10 years and may include renewal options to extend the lease term. In addition, the leases commonly include lease incentives in the form of rent abatements and tenant improvement allowances ("TIAs"). The Company subleases certain portions of unused building space to third parties. During the three and six months ended June 30, 2019 , the Company recognized $6.9 million and $14.5 million of lease costs, respectively. The components of lease costs were as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2019 2019 Lease cost: Operating lease cost $ 7,414 $ 15,498 Short-term lease cost 207 440 Sublease income (725 ) (1,447 ) Total lease costs $ 6,896 $ 14,491 As of June 30, 2019 Lease term and discount rate: Weighted-average remaining lease term (years) 5.7 Weighted-average discount rate 4.25 % For the six months ended June 30, 2019 Other information (in thousands): Cash paid for amounts included in the measurement of lease liabilities $ 14,345 Right-of-use assets obtained in exchange for operating lease liabilities $ 2,298 Leasehold improvements obtained in exchange for TIAs paid directly to third parties $ 1,738 Maturities of lease liabilities (in thousands): Year Ending June 30, 2020 $ 31,185 2021 26,474 2022 19,440 2023 12,524 2024 10,539 Thereafter 28,753 Total lease payments (1) $ 128,915 Less: interest (15,083 ) Present value of lease liabilities $ 113,832 __________________________________________________________ (1) Operating lease payments exclude $2.0 million of legally binding minimum payments for leases signed but not yet commenced. The minimum rental commitments for the Company as of December 31, 2018 were as follows (in thousands): Minimum Rental Commitments (1) 2019 $ 33,600 2020 28,399 2021 23,485 2022 13,770 2023 10,316 Thereafter 32,745 Total $ 142,315 __________________________________________________________ (1) Amounts are based on the accounting guidance in ASC 840, Leases, that was superseded upon the Company's adoption of ASC 842 on January 1, 2019. |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement Assets and liabilities measured at fair value on a recurring basis consist of the following as of June 30, 2019 (in thousands): Fair Value Measurements at Reporting Date Using June 30, 2019 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds $ 36,315 $ 36,315 $ — $ — Marketable securities: Corporate debt securities 44,026 — 44,026 — Tax-exempt municipal securities 15,399 — 15,399 — Variable rate demand notes 5,600 — 5,600 — Total assets at fair value on a recurring basis $ 101,340 $ 36,315 $ 65,025 $ — Liabilities: Deferred payments $ 3,664 $ — $ — $ 3,664 Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2018 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2018 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds $ 1,791 $ 1,791 $ — $ — Marketable securities: Corporate debt securities 48,430 — 48,430 — Tax-exempt municipal securities 22,869 — 22,869 — Variable rate demand notes 4,000 — 4,000 — Total assets at fair value on a recurring basis $ 77,090 $ 1,791 $ 75,299 $ — Liabilities: Deferred payments $ 4,120 $ — $ — $ 4,120 The Company measures the above items on a recurring basis at fair value as follows: • Money market funds – Classified in Level 1 is excess cash the Company holds in both taxable and tax-exempt money market funds, which are included in cash and cash equivalents in the accompanying unaudited condensed consolidated balance sheets. The Company records any net unrealized gains and losses for changes in fair value as a component of accumulated other comprehensive income in stockholders' equity. The Company's cash and cash equivalents held at December 31, 2018 and June 30, 2019 approximate fair value and are not disclosed in the above tables because of the short-term nature of the financial instruments. • Marketable securities – Classified in Level 2 and valued using readily available pricing sources for comparable instruments utilizing observable inputs from active markets. The Company does not hold securities in inactive markets. • Deferred payments – The Company acquired certain assets and entered into deferred payment arrangements with the sellers in transactions that occurred in 2011 and 2016. The deferred payments are classified within Level 3 as there is no liquid market for similarly priced instruments and are valued using discounted cash flow models that encompass significant unobservable inputs. The assumptions used to prepare the discounted cash flows include estimates for interest rates, enrollment growth, retention rates, and pricing strategies. These assumptions are subject to change as the underlying data sources evolve and the programs mature. The short-term portion of deferred payments was $0.8 million as of June 30, 2019 and is included in accounts payable and accrued expense. The Company did not change its valuation techniques associated with recurring fair value measurements from prior periods and did not transfer assets or liabilities between levels of the fair value hierarchy during the six months ended June 30, 2018 or 2019 . Changes in the fair value of the Company’s Level 3 liabilities during the six months ended June 30, 2018 and 2019 are as follows (in thousands): As of June 30, 2018 2019 Balance as of the beginning of period $ 4,514 $ 4,120 Amounts paid (656 ) (751 ) Other adjustments to fair value 738 295 Balance at end of period $ 4,596 $ 3,664 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The following table summarizes the changes in the carrying amount of goodwill by segment as of June 30, 2019 (in thousands): Strayer University Capella University Non-Degree Programs Total Balance as of December 31, 2018 $ 337,381 $ 395,159 $ — $ 732,540 Additions — — — — Impairments — — — — Adjustments — (436 ) — (436 ) Balance as of June 30, 2019 $ 337,381 $ 394,723 $ — $ 732,104 During the six months ended June 30, 2019 , the Company recorded $0.4 million net measurement period adjustments, as discussed in Note 3. The Company assesses goodwill at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit below its carrying amount. No events or circumstances occurred in the three and six months ended June 30, 2019 to indicate an impairment to goodwill. Accordingly, there were no impairment charges related to goodwill recorded during the three and six months ended June 30, 2019 . During the three and six months ended June 30, 2018 , the Company recorded a $2.8 million goodwill impairment charge related to its New York Code and Design Academy ("NYCDA") reporting unit (which, following the merger, is included in the Non-Degree Programs segment) based on a quantitative impairment analysis performed. The goodwill impairment charge represented the excess of the carrying value of the net assets of the NYCDA reporting unit over its estimated fair value and is reflected within the Impairment of intangible assets line in the unaudited condensed consolidated statements of income. Intangible Assets The following table represents the balance of the Company’s intangible assets as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Gross Carrying Amount Accumulated Net Gross Carrying Amount Accumulated Amortization Net Subject to amortization Student relationships $ 166,000 $ (23,056 ) $ 142,944 $ 166,000 $ (50,722 ) $ 115,278 Not subject to amortization Trade names 185,400 — 185,400 185,400 — 185,400 Total $ 351,400 $ (23,056 ) $ 328,344 $ 351,400 $ (50,722 ) $ 300,678 The Company’s finite-lived intangible assets are comprised of student relationships, which are being amortized on a straight-line basis over a three -year useful life. Straight-line amortization expense for finite-lived intangible assets reflects the pattern in which the assets' economic benefits are consumed over their estimated useful lives. Amortization expense related to finite-lived intangible assets was $13.8 million and $27.7 million for the three and six months ended June 30, 2019 , respectively. Indefinite-lived intangible assets not subject to amortization consist of trade names. The Company assigned an indefinite useful life to its trade name intangible assets, as it is believed these assets have the ability to generate cash flows indefinitely. In addition, there are no legal, regulatory, contractual, economic or other factors to limit the useful life of the trade name intangibles. The Company assesses indefinite-lived intangible assets at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective asset below its carrying amount. No events or circumstances occurred in the three and six months ended June 30, 2019 to indicate an impairment to indefinite-lived intangible assets. Accordingly, there were no impairment charges related to indefinite-lived intangible assets recorded during the three and six months ended June 30, 2019 . During the three and six months ended June 30, 2018 , the Company recorded a $3.4 million impairment charge related to the NYCDA trade name based on a quantitative impairment analysis performed. The indefinite-lived intangible asset impairment charge represented the excess of the carrying value of the |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt On August 1, 2018, the Company entered into an amended credit facility (the “Amended Credit Facility”), which provides for a senior secured revolving credit facility (the “Revolver”) in an aggregate principal amount of up to $250 million . The Amended Credit Facility provides the Company with an option, under certain conditions, to increase the commitments under the Revolver or establish one or more incremental term loans (each, an “Incremental Facility”) in an amount up to the sum of (x) $150 million and (y) if such Incremental Facility is incurred in connection with a permitted acquisition, any amount so long as the Company’s leverage ratio (calculated on a trailing four-quarter basis) on a pro forma basis will be no greater than 1.75 :1.00. The maturity date of the Amended Credit Facility is August 1, 2023. The Company paid approximately $1.2 million in debt financing costs associated with the Amended Credit Facility, and these costs are being amortized on a straight-line basis over the five -year term of the Amended Credit Facility. Borrowings under the Revolver will bear interest at a per annum rate equal to, at the Company’s election, LIBOR or a base rate, plus a margin ranging from 1.50% to 2.00% depending on the Company’s leverage ratio. The Company also is subject to a quarterly unused commitment fee ranging from 0.20% to 0.30% per annum depending on the Company’s leverage ratio, times the daily unused amount under the Revolver. The Amended Credit Facility is guaranteed by all domestic subsidiaries, subject to certain exceptions, and secured by substantially all of the assets of the Company and its subsidiary guarantors. The Amended Credit Facility contains customary affirmative and negative covenants, representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Amended Credit Facility. In addition, the Amended Credit Facility requires that the Company satisfy certain financial maintenance covenants, including: • A leverage ratio of not greater than 2 to 1. Leverage ratio is defined as the ratio of total debt to trailing four-quarter EBITDA (earnings before interest, taxes, depreciation, amortization, and noncash charges, such as stock-based compensation). • A coverage ratio of not less than 1.75 to 1. Coverage ratio is defined as the ratio of trailing four-quarter EBITDA and rent expense to trailing four-quarter interest and rent expense. • A U.S. Department of Education (“Department” or "Department of Education") Financial Responsibility Composite Score of not less than 1.5 . The Company was in compliance with all the terms of the Amended Credit Facility and had no borrowings outstanding under the Revolver as of June 30, 2019 . |
Other Long-Term Liabilities
Other Long-Term Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities, Noncurrent [Abstract] | |
Other Long-Term Liabilities | Other Long-Term Liabilities Other long-term liabilities consist of the following as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Contract liabilities, net of current portion $ 23,880 $ 26,352 Deferred payments related to acquisitions 5,904 5,433 Employee separation costs 6,800 3,907 Deferred rent and other facility costs 6,837 1,885 Loss on facilities not in use 4,332 — Lease incentives 2,300 — Other 1,263 1,977 Other long-term liabilities $ 51,316 $ 39,554 Contract Liabilities As discussed in Note 4, in connection with its student tuition contracts, the Company has an obligation to provide free classes in the future should certain eligibility conditions be maintained (the Graduation Fund). Long-term contract liabilities represent the amount of revenue under these arrangements that the Company expects will be realized after one year. Employee Separation Costs Severance and other employee separation costs to be paid after one year. Deferred Rent and Other Facility Costs and Loss on Facilities Not in Use Prior to the adoption of ASC 842 on January 1, 2019, the Company recorded a liability for lease costs of campus and non-campus facilities that are not currently in use (see Note 5). For facilities still in use, the Company recorded rent expense on a straight-line basis over the initial term of a lease. The difference between the rent payment and the straight-line rent expense was recorded as a liability. Upon adoption of ASC 842, these liability balances were netted against the ROU asset recognized on January 1, 2019. As such, there are no long-term liability balances for deferred rent and loss on facilities not in use as of June 30, 2019 . At both December 31, 2018 and June 30, 2019 , the Company had $1.9 million included in the deferred rent and other facility costs balances, which relate to asset retirement obligations for lease agreements requiring the leased premises to be returned in a predetermined condition. Deferred Payments Related to Acquisitions In connection with previous acquisitions, the Company acquired certain assets and entered into deferred payment arrangements with the sellers. The deferred payment arrangements are valued at approximately $3.1 million and $2.6 million as of December 31, 2018 and June 30, 2019 , respectively. In addition, one of the sellers contributed $2.8 million to the Company representing the seller’s continuing interest in the assets acquired. Lease Incentives In conjunction with the opening of new campuses or renovating existing ones, the Company, in some instances, was reimbursed by the lessors for improvements made to the leased properties. Prior to the adoption of ASC 842 on January 1, 2019, the underlying assets were capitalized as leasehold improvements and a liability was established for the reimbursements in accordance with ASC 840-20. The leasehold improvements and the liability are amortized on a straight-line basis over the corresponding lease terms, which generally range from five to 10 years . Upon adoption of ASC 842, the liability balance associated with the reimbursement was netted against the ROU asset recognized on January 1, 2019. As such, there is no lease incentive long-term liability balance as of June 30, 2019 . |
Equity Awards
Equity Awards | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity Awards | Equity Awards The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended For the six months ended 2018 2019 2018 2019 Instructional and support costs $ 499 $ 1,017 $ 1,118 $ 1,875 General and administration 2,751 2,138 4,819 3,811 Merger and integration costs — 411 — 890 Stock-based compensation expense included in operating expense 3,250 3,566 5,937 6,576 Tax benefit 894 923 1,646 1,682 Stock-based compensation expense, net of tax $ 2,356 $ 2,643 $ 4,291 $ 4,894 During the six months ended June 30, 2018 and 2019 , the Company recognized a tax windfall related to share-based payment arrangements of approximately $2.0 million and $3.5 million , respectively, which was recorded as an adjustment to the provision for income taxes. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded income tax expense of $1.6 million and $24.9 million during the six months ended June 30, 2018 and 2019 , reflecting an effective tax rate of 9.8% and 40.9% , respectively. In February 2019, to align compensation and benefit plans after completion of the merger with CEC, the Compensation Committee of the Company’s Board of Directors took action to terminate all deferred compensation arrangements, including for employees already participating in such arrangements. These changes affect the tax deductibility of certain arrangements, which resulted in a first quarter discrete item reducing the Company’s deferred tax assets by $11.5 million , and increasing the Company’s 2019 effective tax rate and future cash tax payments. The Company had no unrecognized tax benefits as of June 30, 2018 and $1.4 million of unrecognized tax benefits as of June 30, 2019 . Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the unaudited condensed consolidated statements of income. The Company incurred no expense related to interest and penalties during the six months ended June 30, 2018 and $0.1 million during the six months ended June 30, 2019 . The Company paid $6.7 million and $24.7 million in income taxes during the six months ended June 30, 2018 and 2019 , respectively. The tax years since 2015 remain open for Federal tax examination and the tax years since 2014 remain open to examination by state and local taxing jurisdictions in which the Company is subject. |
Other Investments
Other Investments | 6 Months Ended |
Jun. 30, 2019 | |
Other Investments [Abstract] | |
Other Investments | Other Investments At June 30, 2019 , the Company held $14.5 million in investments in certain limited partnerships that invest in various innovative companies in the health care and education-related technology fields. The Company has commitments to invest up to an additional $2.2 million across these partnerships through 2027. The Company's investments range from 3% - 5% of any partnership’s interest and are accounted for under the equity method. During the six months ended June 30, 2019 , the Company made investments totaling $0.5 million and received cash distributions totaling $1.0 million related to these partnerships. Additionally, during the three and six months ended June 30, 2019 , the Company recorded income of $0.6 million and $1.6 million , respectively, related to these partnerships, which was recognized in Other income in the unaudited condensed consolidated statements of income. At December 31, 2018 , the Company's investment in limited partnerships was $13.4 million . |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting Strategic Education is an educational services company that provides access to high-quality education through campus-based and online post-secondary education offerings, as well as through programs to develop job-ready skills for high-demand markets. Strategic Education’s portfolio of companies is dedicated to closing the skills gap by placing adults on the most direct path between learning and employment. Two of the Company’s operating segments that meet the quantitative thresholds to qualify as reportable segments are the Strayer University and Capella University segments. The Strayer University segment is comprised of Strayer University, including its programs offered through the Jack Welch Management Institute; the Capella University segment consists of Capella University. None of the Company’s other operating segments individually meet the quantitative thresholds to qualify as reportable segments; therefore, these other operating segments are combined and presented below as Non-Degree Programs. The Non-Degree Programs reportable segment is comprised of the DevMountain, LLC (“DevMountain”), Hackbright Academy, Inc. (“Hackbright”), NYCDA, and Sophia Learning, LLC businesses. Revenue and operating expenses are generally directly attributable to the segments. Inter-segment revenues are not presented separately, as these amounts are immaterial. The Company’s Chief Operating Decision Maker does not evaluate operating segments using asset information. A summary of financial information by reportable segment for the three and six months ended June 30, 2018 and 2019 is presented in the following table (in thousands): For the three months ended June 30, For the six months ended June 30, 2018 2019 2018 2019 Revenues Strayer University $ 113,903 $ 128,911 $ 229,174 $ 256,969 Capella University — 112,171 — 226,869 Non-Degree Programs 765 4,028 1,963 7,780 Consolidated revenues $ 114,668 $ 245,110 $ 231,137 $ 491,618 Income (loss) from operations Strayer University $ 14,320 $ 24,606 $ 32,312 $ 49,579 Capella University — 21,122 — 45,275 Non-Degree Programs (1,127 ) 304 (2,444 ) (503 ) Amortization of intangible assets — (15,417 ) — (30,834 ) Merger and integration costs (2,824 ) (3,019 ) (8,171 ) (10,198 ) Impairment of intangible assets (6,185 ) — (6,185 ) — Consolidated income from operations $ 4,184 $ 27,596 $ 15,512 $ 53,319 |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation The Company is involved in litigation and other legal proceedings arising out of the ordinary course of its business. From time to time, certain matters may arise that are other than ordinary and routine. The outcome of such matters is uncertain and the Company may incur costs in the future to defend, settle, or otherwise resolve them. The Company currently believes that the ultimate outcome of such matters will not, individually or in the aggregate, have a material adverse effect on its consolidated financial position, results of operations or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could materially affect future results of operations in a particular period. |
Regulation
Regulation | 6 Months Ended |
Jun. 30, 2019 | |
Regulation [Abstract] | |
Regulation | Regulation The Company, the Universities, Hackbright, DevMountain and NYCDA are subject to significant state regulatory oversight, as well as accreditor and federal regulatory oversight, in the case of the Company and the Universities. Gainful Employment Under the Higher Education Act of 1965, as amended ("HEA"), a proprietary institution offering programs of study other than a baccalaureate degree in liberal arts (for which there is a limited statutory exception) must prepare students for gainful employment in a recognized occupation. The Department of Education published final regulations related to gainful employment that went into effect on July 1, 2015 (the "2015 Regulations"), with the exception of new disclosure requirements, which generally went into effect January 1, 2017, but which were delayed, to some extent, until July 1, 2019. The 2015 Regulations include two debt-to-earnings measures, consisting of an annual income rate and a discretionary income rate. The annual income rate measures student debt in relation to earnings, and the discretionary income rate measures student debt in relation to discretionary income. A program passes if the program’s graduates: • have an annual income rate that does not exceed 8% ; or • have a discretionary income rate that does not exceed 20% . In addition, a program that does not pass either of the debt-to-earnings metrics and has an annual income rate between 8% and 12% , or a discretionary income rate between 20% and 30% , is considered to be in a warning zone. A program fails if the program’s graduates have an annual income rate of 12% or greater and a discretionary income rate of 30% or greater. A program becomes Title IV-ineligible for three years if it fails both metrics for two out of three consecutive years, or fails to pass at least one metric for four consecutive award years. The regulations provide a means by which an institution may challenge the Department’s calculation of any of the debt metrics prior to loss of Title IV eligibility. On January 8, 2017, Strayer University and Capella University received final 2015 debt-to-earnings measures. None of Strayer University or Capella University programs failed the debt-to-earnings metrics. Two active Strayer University programs, the Associate in Arts in Accounting and Associate in Arts in Business Administration, and one active Capella University program, the Master of Science in Marriage and Family Counseling/Therapy, were “in the zone,” which means each of those three programs remains fully eligible unless (1) the program has a combination of zone and failing designations for four consecutive years, in which case it would become Title IV-ineligible in the fifth year; or (2) the program fails the metrics for two out of three consecutive years, in which case the program could become ineligible for the following award year. The Department has not yet released any subsequent debt-to-earnings measures, and the Department has announced that because it no longer has a data-sharing agreement with the U.S. Social Security Administration to receive earnings data, the Department is unable to calculate the debt-to-earnings measures under the gainful employment regulations in 2019. If the Secretary of Education notifies an institution that a program could become ineligible, based on its final rates, for the next award year: • The institution must provide a warning with respect to the program to students and prospective students indicating, among other things, that students may not be able to use Title IV funds to attend or continue in the program; and • The institution must not enroll, register or enter into a financial commitment with a prospective student until a specified time after providing the warning to the prospective student. The 2015 Regulations require institutions annually to report certain student- and program-level data to the Department of Education, and comply with additional disclosure requirements. The 2015 Regulations also require an institution to use a template designed by the Department of Education to disclose to prospective students, with respect to each gainful employment program, occupations that the program prepares students to enter, total cost of the program, on-time graduation rate, job placement rate, if applicable, and the median loan debt of program completers for the most recently completed award year. The 2015 Regulations expanded upon existing disclosure requirements, and institutions were required to update their disclosure templates by July 1, 2017 and regularly in accordance with subsequent deadlines thereafter. In addition, the 2015 Regulations require institutions to certify, among other things, that each eligible gainful employment program is programmatically accredited if programmatic accreditation is required by a federal governmental entity or a state governmental entity of a state in which it is located or in which the institution is otherwise required to obtain state approval to offer the program in that state. Institutions also must certify that each eligible program satisfies the applicable educational prerequisites for professional licensure or certification requirements in each state in which it is located or is otherwise required to obtain state approval, so that a student who completes the program and seeks employment in that state qualifies to take any licensure or certification exam that is needed for the student to practice or find employment in an occupation that the program prepares students to enter. The Universities have timely made the required certification. Under the 2015 Regulations, an institution may establish a new program’s Title IV eligibility by updating the list of the institution’s programs maintained by the Department of Education. However, an institution may not update its list of eligible programs to include a failing or zone program that the institution voluntarily discontinued or became ineligible, or a gainful employment program that is substantially similar to such a program, until three years after the loss of eligibility or discontinuance. On June 16, 2017, the Department announced its intention to conduct negotiated rulemaking proceedings to revise the gainful employment regulations. Those proceedings began in December 2017 and concluded in March 2018. The negotiating committee did not reach a consensus, and as a result the Department was able to propose its own regulatory language with no obligation to use the language negotiated or agreed upon during the committee meetings. On August 14, 2018, the Department released draft rules which proposed to rescind the gainful employment regulations, including sanctions, appeals, and disclosure and certification requirements. The Department indicated its plans to update the College Scorecard, or similar web-based tool, to provide program-level outcomes for all higher education programs at all institutions that participate in the Title IV programs. The Department accepted public comments through September 13, 2018. On July 1, 2019, the Department of Education released final gainful employment regulations, which contain a full repeal of the 2015 Regulations, including all debt measures, reporting, disclosure, and certification requirements. Per the Department of Education's Master Calendar, these rules go into effect July 1, 2020. However, the Secretary used her authority under the HEA to allow institutions to implement the new rules early as of July 1, 2019. Those institutions that implement early are not required to report gainful employment data for the 2018-2019 award year, are not required to comply with gainful employment disclosure and template publication requirements, and are not required to comply with the regulation’s certification requirements. Both Capella University and Strayer University have elected to implement the July 2019 regulations early and have documented their decision to do so as required by the Department of Education. Borrower Defenses to Repayment Pursuant to the HEA and following negotiated rulemaking, on November 1, 2016, the Department published final regulations that, among other things, specify the acts or omissions of an institution that a borrower may assert as a defense to repayment of a loan made under the Federal Direct Loan Program (the “2016 BDTR Rule”). The 2016 BDTR Rule specifies the acts or omissions of an institution that a borrower may assert as a defense to repayment of a loan made under the Federal Direct Loan Program and the consequences of such borrower defenses for borrowers, institutions, and the Department. Under the 2016 BDTR Rule, for Direct Loans disbursed after July 1, 2017, a student borrower may assert a defense to repayment if: (1) the student borrower obtained a state or federal court judgment against the institution; (2) the institution failed to perform on a contract with the student; and/or (3) the institution committed a “substantial misrepresentation” on which the borrower reasonably relied to his or her detriment. Borrowers assert these defenses through claims submitted to the Department, and the Department has the authority to issue a final decision. In addition, the regulation permits the Department to grant relief to an individual or group of individuals, including individuals who have not applied to the Department seeking relief. If a defense is successfully raised, the Department has discretion to initiate action to collect from an institution the amount of losses incurred based on the borrower defense. The 2016 BDTR Rule also amends the rules concerning discharge of federal student loans when a school or campus closes and prohibits pre-dispute arbitration agreements and class action waivers for borrower defense-type claims. On January 19, 2017, the Department issued a final rule updating the hearing procedures for actions to establish liability against an institution of higher education and establishing procedures for recovery proceedings under the 2016 BDTR Rule. Although the 2016 BDTR Rule was scheduled to become effective on July 1, 2017, on June 16, 2017, the Department delayed indefinitely the effective date of selected provisions of the 2016 BDTR Rule and announced its intention to conduct negotiated rulemaking proceedings to revise the regulations. On October 24, 2017, the Department published an interim final rule to delay until July 1, 2018 the effective date of the selected provisions. Then, on February 14, 2018, the Department published a final rule to delay until July 1, 2019 the effective date of the selected provisions. On September 12, 2018, a federal judge ruled that the Department’s various delays of the 2016 BDTR Rule were contrary to law. On October 16, 2018, in a related case, the judge denied a request to delay implementation of portions of the 2016 BDTR Rule. As a result, the 2016 BDTR Rule came into effect. The Department engaged in negotiated rulemaking proceedings to revise the regulations between November 2017 and February 2018. The negotiating committee did not reach a consensus, and as a result the Department was able to propose its own regulatory language with no obligation to use language negotiated or agreed-upon during the committee meetings. On July 31, 2018, the Department published a notice of proposed rulemaking that, among other things, would establish a new federal standard for evaluating, and a process for adjudicating, borrower defenses to repayment of loans made under the Direct Loan Program on or after July 1, 2019. Under the proposed standard, an individual borrower could assert a defense to repayment based on the institution’s statement, act, or omission that is false, misleading, or deceptive. To be eligible for relief, the borrower would be required to demonstrate that the misrepresentation (1) was made with knowledge of its false, misleading, or deceptive nature or with a reckless disregard for the truth, (2) was relied upon by the borrower in making an enrollment decision, and (3) caused the student financial harm. The Department would have discretion to determine the appropriate amount of relief. The proposed regulations would make changes to the Department’s eligibility requirements for granting loan discharges to students who had enrolled at institutions or locations that subsequently close. The proposed regulations also would require that institutions that require students to enter into pre-dispute arbitration agreements or class action waivers as a condition of enrollment disclose those requirements in an easily accessible format. In addition, the proposed regulations would amend the Department’s financial responsibility provisions in several respects. The proposed rules would identify certain conditions or events that have or may have an adverse material effect on the institution’s financial condition, in response to which the Department would or could require that the institution submit some form of financial protection for the Department. The proposed rules would also update the Department’s composite score calculations to reflect recent changes in FASB accounting standards and provide a phase-in process to enable the Department to update its composite score regulations through additional negotiated rulemaking. The Department accepted public comments on the notice of proposed rulemaking and both Capella University and Strayer University provided public comments. The Department is currently finalizing BDTR rules, which it has indicated it will release by November 1, 2019, in order to become effective July 1, 2020. In the meantime, on March 15, 2019, the Department issued guidance about how to comply with selected provisions contained in the 2016 BDTR Rule. The Department subsequently issued additional guidance on May 20, 2019 and June 3, 2019, and it augmented its June 3, 2019 guidance on June 19, 2019. As described in the guidance, the Department will apply the federal standard for borrower defense to repayment applications set forth in the 2016 BDTR Rule for claims asserted as to Direct Loans first disbursed on or after July 1, 2017. In the guidance, the Department explained that institutions should handle reporting for events, actions, or conditions that occurred after July 1, 2017 by making required reports to the Department no later than May 14, 2019. The Department also indicated that institutions must implement the prohibitions related to dispute resolution, including by making any required modifications to enrollment agreements or by beginning to implement required notification procedures by May 14, 2019. The Company believes that the Universities are in compliance with these requirements. Current Negotiated Rulemaking On July 31, 2018, the Department announced its intention to establish a negotiated rulemaking committee to prepare proposed regulations for the Federal Student Aid programs authorized under Title IV of the HEA. As described in the July 31 announcement and further detailed in a subsequent announcement on October 15, the Department indicated the proposed topics for negotiation include: • Requirements for accrediting agencies in their oversight of member institutions and programs. • Criteria used by the Secretary to recognize accrediting agencies, emphasizing criteria that focus on educational quality and deemphasizing those that are anti-competitive. • Simplification of the Department’s recognition and review of accrediting agencies. • Clarification of the core oversight responsibilities amongst each entity in the regulatory triad, including accrediting agencies, States, and the Department to hold institutions accountable. • Clarification of the permissible arrangements between an institution of higher education and another organization to provide a portion of an education program (34 CFR 668.5). • The roles and responsibilities of institutions and accrediting agencies in the teach-out process (34 CFR 600.32(d) and 602.24). • Elimination of regulations related to programs that have not been funded in many years. • Needed technical changes and corrections to program regulations that have been identified by the Department. • Regulatory changes required to ensure equitable treatment of brick-and-mortar and distance education programs; enable expansion of direct assessment programs, distance education, and competency-based education; and clarify disclosure and other requirements of state authorization. • Protections to ensure that accreditors recognize and respect institutional mission, and evaluate an institution’s policies and educational programs based on that mission; and remove barriers to the eligibility of faith-based entities to participate in the Title IV, HEA programs. • Teacher Education Assistance for College and Higher Education (“TEACH”) Grant requirements and ways to reduce and correct the inadvertent conversion of grants to loans. The Department also announced its intent to convene three subcommittees: one addressing proposed regulations related to distance learning and educational innovation, one addressing TEACH Grant conversions, and one to make recommendations to the committee regarding revisions to the regulations regarding the eligibility of faith-based entities to participate in the Title IV programs. The Department convened the distance learning and educational innovation subcommittee to address, among other topics, simplification of state authorization requirements, the definition of “regular and substantive interaction”, the definition of the term “credit hour”, direct assessment programs and competency-based education, and barriers to innovation in post-secondary education. In connection with this negotiated rulemaking process, the Department convened three public hearings and accepted written comments through September 14, 2018. Strayer University and Capella University submitted written comments on September 14, and negotiations concluded in April 2019. On April 3, 2019, the Accreditation and Innovation negotiated rulemaking committee reached consensus on all topics being negotiated. This outcome means the Department, except in extraordinary circumstances, is bound to publish the consensus language as the notice of proposed rulemaking and accept public comment on that proposal. On June 12, 2019, the Department of Education published a notice of proposed rulemaking proposing to amend the regulations governing the recognition of accrediting agencies, certain student assistance provisions including state authorization rules, and institutional eligibility, as well as make various technical corrections. Public comments were accepted through July 12, 2019, and the Department of Education intends to publish final rules by November 1, 2019, in order to become effective July 1, 2020. In the Spring 2019 update to its Unified Agenda, the Department of Education indicated that it plans to release notices of proposed rulemaking with draft rules regarding distance education and innovation issues, eligibility of faith-based entities and activities and TEACH grant conversions in December 2019. Under the HEA, the Department must publish a final rule on or before November 1, 2019 in order for the regulations to be effective on July 1, 2020. Presumably, the Department would publish final rules on these topics by November 1, 2020, to become effective July 1, 2021. State Education Licensure – Licensure of Online Programs The increasing popularity and use of the internet and other technology for the delivery of education has led, and may continue to lead, to the adoption of new laws and regulatory practices in the United States or foreign countries or to the interpretation of existing laws and regulations to apply to such services. These new laws and interpretations may relate to issues such as the requirement that online education institutions be licensed as a school in one or more jurisdictions even where they have no physical location. New laws, regulations, or interpretations related to doing business over the internet could increase the Company’s cost of doing business, affect its ability to increase enrollments and revenues, or otherwise have a material adverse effect on our business. In April 2013, the Department announced that it would address state authorization of distance education through negotiated rulemaking. While four negotiated rulemaking sessions were conducted from February through May 2014, no consensus was reached. In June 2016, despite the lack of consensus at the negotiated rulemaking sessions, but as permitted by federal law, the Department issued a Notice of Proposed Rulemaking for public comment on the issue of state authorization for online programs. On December 19, 2016, the Department issued final regulations, which are described below and were scheduled to become effective on July 1, 2018. On May 25, 2018, the Department issued a Notice of Proposed Rulemaking to delay until July 1, 2020 the effective date of the state authorization of distance education provisions of those final regulations based on concerns that were raised by regulated parties and to provide adequate time to conduct negotiated rulemaking to reconsider those provisions and, as necessary, develop revised regulations. On July 3, 2018, the Department published a final rule, which was made effective retroactively to June 29, 2018, to delay until July 1, 2020 the effective date of the state authorization of distance education provisions. Certain other portions of the 2016 final regulations, which relate to authorization of foreign locations, went into effect on July 1, 2018. On April 26, 2019, in litigation brought to challenge the Department’s delayed implementation of the 2016 final regulations, a judge found that the delay was improper and ordered that the rules regarding state authorization of programs offered through distance education take effect on May 26, 2019. On June 24, 2019, the Department appealed the District Court’s decision to the U.S. Court of Appeals for the Ninth Circuit. The Department’s opening brief is due August 23, 2019. To date, the District Court’s order has not been stayed pending the Department’s appeal. Unless the order is stayed, the 2016 final regulations will remain in effect until any new final rules developed through negotiated rulemaking, described below, take effect. As now in effect, the 2016 final regulations, among other things, require an institution offering Title IV-eligible distance education or correspondence courses to be authorized by each state in which the institution enrolls students, if such authorization is required by the state. Institutions can obtain such authorization directly from the state or through a state authorization reciprocity agreement. A state authorization reciprocity agreement is defined as an agreement between two or more states that authorizes an institution located and legally authorized in a state covered by the agreement to provide post-secondary education through distance education or correspondence courses to students in other states covered by the agreement and does not prohibit a participating state from enforcing its own laws with respect to higher education. On March 6, 2015, Capella University was approved as an institution participant in the State Authorization Reciprocity Agreement (“SARA”). On December 2, 2016, Strayer University became a participant in SARA. As participants in SARA, Strayer University and Capella University may offer online courses and other forms of distance education to students in any participating SARA state in which they do not have a physical location or a physical presence, as defined by the state, without having to seek any new state institutional approval beyond the Universities’ home states (Washington, D.C. and Minnesota, respectively). There are currently 49 SARA member states - all but California. The 2016 final regulations also require institutions to document the state process for resolving complaints from students enrolled in programs offered through distance education or correspondence courses for each state in which such students reside. In addition, the 2016 final regulations require an institution to provide public and individualized disclosures to enrolled and prospective students regarding its programs offered solely through distance education or correspondence courses. The public disclosures include state authorization for the program or course, the process for submitting complaints to relevant states, any adverse actions by a state or accrediting agency related to the distance education program or correspondence course within the past five years , refund policies specific to the state, and applicable licensure or certification requirements for a career that the program prepares a student to enter. An institution is required to disclose directly to all prospective students if a distance education or correspondence course does not meet the licensure or certification requirements for a state. An institution is required to disclose to each current and prospective student an adverse action taken against a distance education or correspondence program and any determination that a program ceases to meet licensure or certification requirements. Under the 2016 final regulations, if an institution does not obtain or maintain state authorization for distance education or correspondence courses in any particular state that has authorization requirements, the institution may lose its ability to award Title IV funds for students in those programs who are residing in that state. On October 15, 2018, the Department announced its intention to establish a negotiated rulemaking committee to prepare proposed regulations on a variety of topics, including state authorization of distance education programs. The Department included state authorization of distance education programs in the Accreditation and Innovation negotiated rulemaking that took place in early 2019. The committee agreed to language that would retain the requirement that institutions are authorized - including the option to be authorized via a reciprocity agreement - to operate in any state in which a student is located for the purposes of Title IV eligibility. However, the consensus language removes many of the public and individualized disclosures to enrolled and prospective students regarding programs offered solely through distance education or correspondence courses. On June 12, 2019, the Department released a notice of proposed rulemaking reflecting the consensus language on this topic, with public comments accepted through July 12, 2019. The Department of Education intends to publish final rules by November 1, 2019, in order to become effective July 1, 2020. The Clery Act Strayer University and Capella University must comply with the campus safety and security reporting requirements as well as other requirements in the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act (the “Clery Act”), including changes made to the Clery Act by the Violence Against Women Reauthorization Act of 2013. On October 20, 2014, the Department promulgated regulations, effective July 1, 2015, implementing amendments to the Clery Act. In addition, the Department has interpreted Title IX to categorize sexual violence as a form of prohibited sex discrimination and to require institutions to follow certain disciplinary procedures with respect to such offenses. Failure by Strayer University or Capella University to comply with the Clery Act or Title IX requirements or regulations thereunder could result in action by the Department fining Strayer University or Capella University, or limiting or suspending participation in Title IV programs, could lead to litigation, and could harm Strayer University or Capella University’s reputation. The Company believes that Strayer University and Capella University are in compliance with these requirements. Compliance Reviews The Universities are subject to announced and unannounced compliance reviews and audits by various external agencies, including the Department, its Office of Inspector General, state licensing agencies, guaranty agencies, and accrediting agencies. In 2014, the Department conducted four campus-based program reviews of Strayer University locations in three states and the District of Columbia. The reviews covered federal financial aid years 2012-2013 and 2013-2014, and two of the reviews also covered compliance with the Clery Act, the Drug-Free Schools and Communities Act, and regulations related thereto. For three of the program reviews, Strayer University received correspondence from the Department in 2015 closing the program reviews with no further action required by Strayer University. For the other program review, in 2016, Strayer University received a Final Program Review Determination Letter identifying a payment of less than $500 due to the Department based on an underpayment on a return to Title IV calculation, and otherwise closing the review. Strayer University remitted payment, and received a letter from the Department indicating that no further action was required and that the matter was closed. In June 2019, the Department conducted an announced, on-site program review at Capella University, focused on Capella University’s FlexPath program. The review covered the 2017-2018 and 2018-2019 federal financial aid years. The program review has not concluded. In general, after the Department conducts its site visit and reviews data supplied by the institution, it sends the institution a program review report. The institution has the opportunity to respond to any findings in the report. The Department of Education then issues a Final Program Review Determination, which identifies any liabilities. The institution may appeal any monetary liabilities specified in the Final Program Review Determination. Program Participation Agreement Each institution participating in Title IV programs must enter into a Program Participation Agreement with the Department. Under the agreement, the institution agrees to follow the Department’s rules and regulations governing Title IV programs. On October 11, 2017, the Department and Strayer University executed a new Program Participation Agreement, approving Strayer University’s continued participation in Title IV programs with full certification through June 30, 2021. As a result of the August 1, 2018 merger, Capella University experienced a change of ownership, with the Company as its new owner. On January 18, 2019, consistent with standard procedure upon a Title IV institution’s change of ownership, the Department and Capella University executed a new Provisional Program Participation Agreement, approving Capella’s continued participation in Title IV programs with provisional certification through December 31, 2022. As is typical, the Provisional Program Participation Agreement subjects Capella University to certain requirements during the period of provisional certification, including that Capella must apply for and receive approval from the Department in connection with new locations or addition of new Title IV-eligible educational programs. NYCDA, Hackbright and DevMountain NYCDA currently provides instruction through B2B relationships in various locations. Hackbright Academy currently provides on-ground courses in the San Francisco Bay Area. DevMountain currently provides on-ground courses in Lehi, Utah; Dallas, Texas; and Phoenix, Arizona, and in 2017, introduced its first online program in Web Development. NYCDA, Hackbright Academy and DevMountain are not accredited, do not participate in state or federal student financial aid programs, and are not subject to the regulatory requirements applicable to accredited schools and schools that participate in financial aid programs such as those described above. Programs such as those offered by NYCDA, Hackbright Academy and DevMountain are regulated by each individual state. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. On August 1, 2018, the Company completed its merger with CEC, whereby the Company was deemed the acquirer in the business combination for accounting purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Therefore, Strayer Education, Inc. is considered Strategic Education’s predecessor, and its historical financial statements prior to the merger date are reflected in this Quarterly Report on Form 10-Q as the historical financial statements of the Company. Accordingly, the financial results of the Company as of and for any periods ended prior to August 1, 2018 do not include the financial results of CEC and therefore are not directly comparable. All information as of June 30, 2018 and 2019 , and for the three and six months ended June 30, 2018 and 2019 is unaudited but, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the condensed consolidated financial position, results of operations, and cash flows of the Company. The condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year. Certain amounts in the prior period financial statements have been reclassified to conform to the current period's presentation. Effective during the first quarter of 2019, the Company made changes in its presentation of operating expenses and reclassified prior periods to conform to the current presentation. The Company determined that these changes aligned with its organizational structure and will improve comparability with several of its peer companies. There were no changes to total operating expenses or operating income as a result of these reclassifications. Below is a description of the nature of the costs included in the Company’s operating expense categories. Instructional and support costs ("I&SC") generally contain items of expense directly attributable to activities of Strayer University and Capella University (the "Universities") that support students and learners. This expense category includes salaries and benefits of faculty and academic administrators, as well as admissions and administrative personnel who support and serve student interests. Instructional and support costs also include course development costs and costs associated with delivering course content, including educational supplies, facilities, and all other physical plant and occupancy costs, with the exception of costs attributable to the corporate offices. Bad debt expense incurred on delinquent student account balances is also included in instructional and support costs. General and administration ("G&A") expenses include salaries and benefits of management and employees engaged in finance, human resources, legal, regulatory compliance, marketing and other corporate functions. Also included are the costs of advertising and production of marketing materials. General and administration expense also includes the facilities occupancy and other related costs attributable to such functions. |
Restricted Cash | Restricted Cash A significant portion of the Company’s revenues are funded by various federal and state government programs. The Company generally does not receive funds from these programs prior to the start of the corresponding academic term. The Company may be required to return certain funds for students who withdraw from the Universities during the academic term. The Company had approximately $5,000 and $2,000 of these unpaid obligations as of December 31, 2018 and June 30, 2019 , respectively, which are recorded as restricted cash and included in other current assets in the unaudited condensed consolidated balance sheets. As part of commencing operations in Pennsylvania in 2003, the Company is required to maintain a “minimum protective endowment” of at least $0.5 million in an interest-bearing account as long as the Company operates its campuses in the state. The Company holds these funds in an interest-bearing account which is included in other assets. |
Tuition Receivable and Allowance for Doubtful Accounts | Tuition Receivable and Allowance for Doubtful Accounts The Company records tuition receivable and contract liabilities for its students upon the start of the academic term or program. Therefore, at the end of the quarter (and academic term), tuition receivable generally represents amounts due from students for educational services already provided and contract liabilities generally represents advance payments from students for academic services to be provided in the future. Tuition receivables are not collateralized; however, credit risk is minimized as a result of the diverse nature of the Universities' student bases and through the participation of the majority of the students in federally funded financial aid programs. An allowance for doubtful accounts is established primarily based upon historical collection rates by age of receivable, net of estimated recoveries. These collection rates incorporate historical performance based on a student’s current enrollment status and likelihood of future enrollment. The Company periodically assesses its methodologies for estimating bad debts in consideration of actual experience. |
Leases | Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases with a term longer than 12 months. ASU 2016-02 also requires additional quantitative and qualitative disclosures surrounding the amount, timing, and uncertainty of cash flows arising from leases. During 2018 and 2019, the FASB issued additional ASUs amending certain aspects of ASU 2016-02. On January 1, 2019, the Company adopted the new accounting standard and all the related amendments ("ASC 842") using the modified retrospective method. The Company applied ASU 2016-02 to all leases that had commenced as of January 1, 2019. In addition, as permitted by ASU 2016-02, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under ASU 2016-02, which allowed the Company to not reassess prior conclusions regarding lease identification, lease classification, and initial direct costs under the new standard. As a result of adopting the new standard, the Company recognized a lease liability of $123 million and a right-of-use ("ROU") lease asset of $107 million on January 1, 2019. The standard did not materially impact the Company's condensed consolidated statements of income and cash flows. The Company determines if an arrangement is a lease at inception. Leases with an initial term longer than 12 months are included in right-of-use lease assets, current lease liabilities, and non-current lease liabilities on the Company's condensed consolidated balance sheets. The Company combines lease and non-lease components for all leases. ROU lease assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU lease assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the implicit interest rates for most of the Company's leases cannot be readily determined, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term for operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company subleases certain building space to third parties and sublease income is recognized on a straight-line basis over the lease term. See Note 7 for additional information. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets, which include trade names, are recorded at fair value on their acquisition date. An indefinite life was assigned to the trade names because they have the continued ability to generate cash flows indefinitely. Goodwill and the indefinite-lived intangible assets are assessed at least annually for impairment during the fourth quarter, or more frequently if events occur or circumstances change between annual tests that would more likely than not reduce the fair value of the respective reporting unit or indefinite-lived intangible asset below its carrying amount. Finite-lived intangible assets that are acquired in business combinations are recorded at fair value on their acquisition dates and are amortized on a straight-line basis over the estimated useful life of the asset. Finite-lived intangible assets consist of student relationships. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. |
Authorized Stock | Authorized Stock The Company has authorized 32,000,000 shares of common stock, par value $0.01 , of which 21,743,498 and 21,948,563 shares were issued and outstanding as of December 31, 2018 and June 30, 2019 , respectively. The Company also has authorized 8,000,000 shares of preferred stock, none of which is issued or outstanding. Before any preferred stock may be issued in the future, the Board of Directors would need to establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and the terms or conditions of the redemption of the preferred stock. In May 2019, the Company’s Board of Directors declared a regular, quarterly cash dividend of $0.50 per share of common stock. The dividend was paid on June 10, 2019. |
Net Income Per Share | Net Income Per Share Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the periods. Diluted earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unexercised stock options, restricted stock, and restricted stock units. The dilutive effect of stock awards was determined using the treasury stock method. Under the treasury stock method, all of the following are assumed to be used to repurchase shares of the Company’s common stock: (1) the proceeds received from the exercise of stock options, and (2) the amount of compensation cost associated with the stock awards for future service not yet recognized by the Company. Stock options are not included in the computation of diluted earnings per share when the stock option exercise price of an individual grant exceeds the average market price for the period. |
Comprehensive Income | Comprehensive Income |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period reported. The most significant management estimates include allowances for doubtful accounts, useful lives of property and equipment and intangible assets, fair value of future contractual operating lease obligations, incremental borrowing rates, potential sublease income and vacancy periods, accrued expenses, forfeiture rates and the likelihood of achieving performance criteria for stock-based awards, value of free courses earned by students that will be redeemed in the future, valuation of goodwill and intangible assets, and the provision for income taxes. Actual results could differ from those estimates. |
Recently Adopted Accounting Standards And Not Yet Adopted | Recently Adopted Accounting Pronouncements In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) : Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which simplifies the accounting for share-based payments granted to nonemployees for goods and services. ASU 2018-07 aligns guidance on share-based payments to nonemployees with the requirements for share-based payments granted to employees, including determination of the measurement date and accounting for performance conditions and for share-based payments after vesting. The Company adopted this guidance as of January 1, 2019 with no material impact on its unaudited condensed consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments . The new guidance revises the accounting requirements related to the measurement of credit losses and will require organizations to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable and supportable forecasts about collectibility. Assets must be presented in the financial statements at the net amount expected to be collected. During 2019, the FASB issued additional ASUs amending certain aspects of ASU 2016-13. The guidance will be effective for the Company's annual and interim reporting periods beginning January 1, 2020, with early adoption permitted. The Company is evaluating the impact this standard will have on its financial condition, results of operations, and disclosures. Other ASUs issued by the FASB but not yet effective are not expected to have a material effect on the Company’s consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Operating expenses as previously reported and as reclassified | The following table presents the Company's operating expenses as previously reported and as reclassified on its unaudited condensed consolidated statements of income for the three months ended (in thousands): New Classification March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Prior Classification I&SC G&A I&SC G&A I&SC G&A I&SC G&A Instruction and educational support $ 63,776 $ — $ 64,690 $ — $ 93,290 $ — $ 118,320 $ — Admissions advisory 4,676 — 4,609 — 9,789 — 12,392 — Marketing — 20,124 — 21,113 — 46,165 — 49,577 General and administration — 11,218 — 11,063 — 15,811 — 18,964 Total reclassified costs and expenses (1) $ 68,452 $ 31,342 $ 69,299 $ 32,176 $ 103,079 $ 61,976 $ 130,712 $ 68,541 _________________________________________ (1) This amount excludes the amortization of intangible assets, merger and integration costs, and impairment of intangible assets expense line items on the condensed consolidated statements of income as those expense line items were not impacted by the operating expense reclassification. |
Schedule of cash, cash equivalents, and restricted cash | The following table illustrates the reconciliation of cash, cash equivalents, and restricted cash shown in the unaudited condensed consolidated statements of cash flows as of June 30, 2018 and 2019 (in thousands): As of June 30, 2018 2019 Cash and cash equivalents $ 171,600 $ 375,515 Restricted cash included in other current assets — 2 Restricted cash included in other assets 500 500 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 172,100 $ 376,017 |
Schedule of tuition receivable and allowance for doubtful accounts | The Company’s tuition receivable and allowance for doubtful accounts were as follows as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Tuition receivable $ 84,151 $ 78,073 Allowance for doubtful accounts (28,457 ) (30,733 ) Tuition receivable, net $ 55,694 $ 47,340 |
Schedule of allowance for doubtful accounts | The following table illustrates changes in the Company’s allowance for doubtful accounts for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended For the six months ended 2018 2019 2018 2019 Allowance for doubtful accounts, beginning of period $ 13,775 $ 29,387 $ 12,687 $ 28,457 Additions charged to expense 6,596 11,462 12,987 23,782 Adjustment to value of acquired receivables — 2,207 — 2,207 Write-offs, net of recoveries (5,323 ) (12,323 ) (10,626 ) (23,713 ) Allowance for doubtful accounts, end of period $ 15,048 $ 30,733 $ 15,048 $ 30,733 |
Schedule of reconciliation of shares used to calculate basic and diluted earnings per share | Set forth below is a reconciliation of shares used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended For the six months ended 2018 2019 2018 2019 Weighted average shares outstanding used to compute basic earnings per share 10,879 21,777 10,812 21,638 Incremental shares issuable upon the assumed exercise of stock options 51 58 48 75 Unvested restricted stock and restricted stock units 450 274 486 366 Shares used to compute diluted earnings per share 11,380 22,109 11,346 22,079 |
Merger with Capella Education_2
Merger with Capella Education Company (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of components of aggregate consideration transferred for acquisition | The following table summarizes the components of the aggregate consideration transferred for the acquisition of CEC (in thousands): Fair value of Company common stock issued in exchange for CEC outstanding shares (1) $ 1,209,483 Fair value of Company equity-based awards issued in exchange for CEC equity-based awards 27,478 Total fair value of consideration transferred $ 1,236,961 _________________________________________ (1) The Company issued 10,263,775 common shares at a market price of $117.84 in exchange for each issued and outstanding share of CEC common stock. |
Schedule of preliminary fair value of assets and liabilities assumed | The preliminary fair value of assets acquired and liabilities assumed, as well as a reconciliation to consideration transferred, is presented in the table below (in thousands): Cash and cash equivalents $ 167,859 Marketable securities 31,419 Tuition receivable 36,716 Income taxes receivable 163 Other current assets 9,041 Marketable securities, non-current 34,700 Property and equipment, net 53,182 Other assets 14,556 Intangible assets 349,800 Goodwill 725,304 Total assets acquired 1,422,740 Accounts payable and accrued expenses (47,763 ) Contract liabilities (39,000 ) Deferred income taxes (96,689 ) Other long term liabilities (2,327 ) Total liabilities assumed (185,779 ) Total consideration $ 1,236,961 |
Schedule of intangible assets acquired and weighted average useful lives | The table below presents a summary of intangible assets acquired (in thousands) and the weighted average useful lives of these assets: Fair Value Weighted Average Useful Life in Years Trade names $ 183,800 Indefinite Student relationships 166,000 3 $ 349,800 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Summary of disaggregation of revenue from contracts with customers | The following table presents the Company’s revenues from contracts with customers disaggregated by material revenue category for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended June 30, For the six months ended June 30, 2018 2019 2018 2019 Strayer University Segment Tuition, net of discounts, grants and scholarships $ 109,744 $ 124,402 $ 220,704 $ 247,917 Other (1) 4,159 4,509 8,470 9,052 Total Strayer University Segment 113,903 128,911 229,174 256,969 Capella University Segment Tuition, net of discounts, grants and scholarships — 107,066 — 216,533 Other (1) — 5,105 — 10,336 Total Capella University Segment — 112,171 — 226,869 Non-Degree Programs Segment (2) 765 4,028 1,963 7,780 Consolidated revenue $ 114,668 $ 245,110 $ 231,137 $ 491,618 _________________________________________ (1) Other revenue is primarily comprised of academic fees, sales of course materials, and other revenue streams. (2) Non-Degree Programs revenue is primarily comprised of tuition revenue and placement fee revenue. |
Schedule of Graduation Fund liability | The table below presents activity in the contract liability related to the Graduation Fund for the six months ended June 30, 2018 and 2019 (in thousands): As of June 30, 2018 2019 Balance at beginning of period $ 37,400 $ 43,329 Revenue deferred 12,917 14,787 Benefit redeemed (10,497 ) (12,025 ) Balance at end of period $ 39,820 $ 46,091 |
Restructuring and Related Cha_2
Restructuring and Related Charges (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring liability by type of cost | The following details the changes in the Company’s restructuring liability during the six months ended June 30, 2018 and 2019 (in thousands): Lease and Related Costs, Net Severance and Other Employee Separation Costs Total Balance at December 31, 2017 $ 8,781 $ — $ 8,781 Restructuring and other charges (1) — — — Payments (1,401 ) — (1,401 ) Adjustments (2) 74 — 74 Balance at June 30, 2018 $ 7,454 $ — $ 7,454 Balance at December 31, 2018 (3) $ 6,540 $ 14,347 $ 20,887 Restructuring and other charges (1) — 2,086 2,086 Payments — (5,764 ) (5,764 ) Adjustments (2) (6,540 ) — (6,540 ) Balance at June 30, 2019 (3) $ — $ 10,669 $ 10,669 _____________________________________ (1) Restructuring and other charges of $0.2 million and $2.1 million for the three and six months ended June 30, 2019 , respectively, are included in Merger and integration costs on the unaudited condensed consolidated statements of income. There were no restructuring and other charges for the three and six months ended June 30, 2018 . (2) For the three and six months ended June 30, 2018 , adjustments include accretion of interest on lease costs, partially offset by changes in the timing and expected income from subleases. For the three and six months ended June 30, 2019 , adjustments represent the impact of adopting ASC 842 on January 1, 2019. In accordance with ASC 842, the lease related restructuring liability balance as of December 31, 2018 was netted against the initial ROU lease asset recognized upon adoption. Asset retirement obligations related to these restructured properties are also included in the adjustments amount. (3) The current portion of restructuring liabilities was $9.8 million and $6.8 million as of December 31, 2018 and June 30, 2019 , respectively, which are included in accounts payable and accrued expenses. The long-term portion is included in other long-term liabilities. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule for Available-for-Sale Securities | The following is a summary of available-for-sale securities as of June 30, 2019 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Corporate debt securities $ 43,852 $ 191 $ (17 ) $ 44,026 Tax-exempt municipal securities 15,272 129 (2 ) 15,399 Variable rate demand notes 5,600 — — 5,600 Total $ 64,724 $ 320 $ (19 ) $ 65,025 The following is a summary of available-for-sale securities as of December 31, 2018 (in thousands): Amortized Cost Gross Unrealized Gain Gross Unrealized (Losses) Estimated Fair Value Corporate debt securities $ 48,202 $ 12 $ (284 ) $ 47,930 Tax-exempt municipal securities 22,858 45 (34 ) 22,869 Variable rate demand notes 4,000 — — 4,000 Total $ 75,060 $ 57 $ (318 ) $ 74,799 |
Schedule of Maturities of Marketable Securities | The following table summarizes the maturities of the Company’s marketable securities as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Due within one year $ 37,121 $ 39,288 Due after one year through five years 37,678 25,737 Total $ 74,799 $ 65,025 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Components of Lease Cost | The components of lease costs were as follows (in thousands): For the three months ended June 30, For the six months ended June 30, 2019 2019 Lease cost: Operating lease cost $ 7,414 $ 15,498 Short-term lease cost 207 440 Sublease income (725 ) (1,447 ) Total lease costs $ 6,896 $ 14,491 As of June 30, 2019 Lease term and discount rate: Weighted-average remaining lease term (years) 5.7 Weighted-average discount rate 4.25 % For the six months ended June 30, 2019 Other information (in thousands): Cash paid for amounts included in the measurement of lease liabilities $ 14,345 Right-of-use assets obtained in exchange for operating lease liabilities $ 2,298 Leasehold improvements obtained in exchange for TIAs paid directly to third parties $ 1,738 |
Maturities of Lease Liabilities | Maturities of lease liabilities (in thousands): Year Ending June 30, 2020 $ 31,185 2021 26,474 2022 19,440 2023 12,524 2024 10,539 Thereafter 28,753 Total lease payments (1) $ 128,915 Less: interest (15,083 ) Present value of lease liabilities $ 113,832 __________________________________________________________ (1) Operating lease payments exclude $2.0 million of legally binding minimum payments for leases signed but not yet commenced. |
Minimum Rental Commitments | The minimum rental commitments for the Company as of December 31, 2018 were as follows (in thousands): Minimum Rental Commitments (1) 2019 $ 33,600 2020 28,399 2021 23,485 2022 13,770 2023 10,316 Thereafter 32,745 Total $ 142,315 __________________________________________________________ (1) Amounts are based on the accounting guidance in ASC 840, Leases, that was superseded upon the Company's adoption of ASC 842 on January 1, 2019. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | Assets and liabilities measured at fair value on a recurring basis consist of the following as of June 30, 2019 (in thousands): Fair Value Measurements at Reporting Date Using June 30, 2019 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds $ 36,315 $ 36,315 $ — $ — Marketable securities: Corporate debt securities 44,026 — 44,026 — Tax-exempt municipal securities 15,399 — 15,399 — Variable rate demand notes 5,600 — 5,600 — Total assets at fair value on a recurring basis $ 101,340 $ 36,315 $ 65,025 $ — Liabilities: Deferred payments $ 3,664 $ — $ — $ 3,664 Assets and liabilities measured at fair value on a recurring basis consist of the following as of December 31, 2018 (in thousands): Fair Value Measurements at Reporting Date Using December 31, 2018 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds $ 1,791 $ 1,791 $ — $ — Marketable securities: Corporate debt securities 48,430 — 48,430 — Tax-exempt municipal securities 22,869 — 22,869 — Variable rate demand notes 4,000 — 4,000 — Total assets at fair value on a recurring basis $ 77,090 $ 1,791 $ 75,299 $ — Liabilities: Deferred payments $ 4,120 $ — $ — $ 4,120 |
Schedule of Changes in Fair Value of Level 3 Liability | Changes in the fair value of the Company’s Level 3 liabilities during the six months ended June 30, 2018 and 2019 are as follows (in thousands): As of June 30, 2018 2019 Balance as of the beginning of period $ 4,514 $ 4,120 Amounts paid (656 ) (751 ) Other adjustments to fair value 738 295 Balance at end of period $ 4,596 $ 3,664 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The following table summarizes the changes in the carrying amount of goodwill by segment as of June 30, 2019 (in thousands): Strayer University Capella University Non-Degree Programs Total Balance as of December 31, 2018 $ 337,381 $ 395,159 $ — $ 732,540 Additions — — — — Impairments — — — — Adjustments — (436 ) — (436 ) Balance as of June 30, 2019 $ 337,381 $ 394,723 $ — $ 732,104 |
Schedule of Intangible Assets | The following table represents the balance of the Company’s intangible assets as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Gross Carrying Amount Accumulated Net Gross Carrying Amount Accumulated Amortization Net Subject to amortization Student relationships $ 166,000 $ (23,056 ) $ 142,944 $ 166,000 $ (50,722 ) $ 115,278 Not subject to amortization Trade names 185,400 — 185,400 185,400 — 185,400 Total $ 351,400 $ (23,056 ) $ 328,344 $ 351,400 $ (50,722 ) $ 300,678 |
Other Long-Term Liabilities (Ta
Other Long-Term Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities, Noncurrent [Abstract] | |
Schedule of Other Long-Term Liabilities | Other long-term liabilities consist of the following as of December 31, 2018 and June 30, 2019 (in thousands): December 31, 2018 June 30, 2019 Contract liabilities, net of current portion $ 23,880 $ 26,352 Deferred payments related to acquisitions 5,904 5,433 Employee separation costs 6,800 3,907 Deferred rent and other facility costs 6,837 1,885 Loss on facilities not in use 4,332 — Lease incentives 2,300 — Other 1,263 1,977 Other long-term liabilities $ 51,316 $ 39,554 |
Equity Awards (Tables)
Equity Awards (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock-based compensation expense | The following table sets forth the amount of stock-based compensation expense recorded in each of the expense line items for the three and six months ended June 30, 2018 and 2019 (in thousands): For the three months ended For the six months ended 2018 2019 2018 2019 Instructional and support costs $ 499 $ 1,017 $ 1,118 $ 1,875 General and administration 2,751 2,138 4,819 3,811 Merger and integration costs — 411 — 890 Stock-based compensation expense included in operating expense 3,250 3,566 5,937 6,576 Tax benefit 894 923 1,646 1,682 Stock-based compensation expense, net of tax $ 2,356 $ 2,643 $ 4,291 $ 4,894 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Financial Information By Reportable Segment | A summary of financial information by reportable segment for the three and six months ended June 30, 2018 and 2019 is presented in the following table (in thousands): For the three months ended June 30, For the six months ended June 30, 2018 2019 2018 2019 Revenues Strayer University $ 113,903 $ 128,911 $ 229,174 $ 256,969 Capella University — 112,171 — 226,869 Non-Degree Programs 765 4,028 1,963 7,780 Consolidated revenues $ 114,668 $ 245,110 $ 231,137 $ 491,618 Income (loss) from operations Strayer University $ 14,320 $ 24,606 $ 32,312 $ 49,579 Capella University — 21,122 — 45,275 Non-Degree Programs (1,127 ) 304 (2,444 ) (503 ) Amortization of intangible assets — (15,417 ) — (30,834 ) Merger and integration costs (2,824 ) (3,019 ) (8,171 ) (10,198 ) Impairment of intangible assets (6,185 ) — (6,185 ) — Consolidated income from operations $ 4,184 $ 27,596 $ 15,512 $ 53,319 |
Nature of Operations - Additio
Nature of Operations - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2019segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reporting segments | 3 |
Significant Accounting Polici_4
Significant Accounting Policies - Reclassification of Operation Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
I&SC | $ 130,704 | $ 130,712 | $ 103,079 | $ 69,299 | $ 68,452 | $ 264,754 | $ 137,751 |
G&A | $ 68,374 | 68,541 | 61,976 | 32,176 | 31,342 | $ 132,513 | $ 63,518 |
Instruction and educational support | Previously Reported | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
I&SC | 118,320 | 93,290 | 64,690 | 63,776 | |||
G&A | 0 | 0 | 0 | 0 | |||
Admissions advisory | Previously Reported | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
I&SC | 12,392 | 9,789 | 4,609 | 4,676 | |||
G&A | 0 | 0 | 0 | 0 | |||
Marketing | Previously Reported | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
I&SC | 0 | 0 | 0 | 0 | |||
G&A | 49,577 | 46,165 | 21,113 | 20,124 | |||
General and administration | Previously Reported | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
I&SC | 0 | 0 | 0 | 0 | |||
G&A | $ 18,964 | $ 15,811 | $ 11,063 | $ 11,218 |
Significant Accounting Polici_5
Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Restricted cash | ||||
Cash and cash equivalents | $ 375,515 | $ 311,732 | $ 171,600 | |
Restricted cash included in other current assets | 2 | 5 | 0 | |
Restricted cash included in other assets | 500 | 500 | ||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 376,017 | $ 312,237 | $ 172,100 | $ 156,448 |
Significant Accounting Polici_6
Significant Accounting Policies - Tuition Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Tuition receivable | $ 78,073 | $ 84,151 |
Allowance for doubtful accounts | (30,733) | (28,457) |
Tuition receivable, net | $ 47,340 | $ 55,694 |
Significant Accounting Polici_7
Significant Accounting Policies - Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Allowance for doubtful accounts, beginning of period | $ 29,387 | $ 13,775 | $ 28,457 | $ 12,687 |
Additions charged to expense | 11,462 | 6,596 | 23,782 | 12,987 |
Adjustment to value of acquired receivables | 2,207 | 0 | 2,207 | 0 |
Write-offs, net of recoveries | (12,323) | (5,323) | (23,713) | (10,626) |
Allowance for doubtful accounts, end of period | $ 30,733 | $ 15,048 | $ 30,733 | $ 15,048 |
Significant Accounting Polici_8
Significant Accounting Policies - Net Income (Loss) Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Schedule of reconciliation of shares used to calculate basic and diluted earnings per share | ||||
Weighted average shares outstanding used to compute basic earnings per share | 21,777 | 10,879 | 21,638 | 10,812 |
Incremental shares issuable upon the assumed exercise of stock options | 58 | 51 | 75 | 48 |
Unvested restricted stock and restricted stock units | 274 | 450 | 366 | 486 |
Shares used to compute diluted earnings per share | 22,109 | 11,380 | 22,079 | 11,346 |
Significant Accounting Polici_9
Significant Accounting Policies - Additional Information (Details) - USD ($) | Jun. 10, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jan. 01, 2019 |
Accounting Policies [Abstract] | |||||||
Unpaid obligations record as restricted assets | $ 2,000 | $ 0 | $ 2,000 | $ 0 | $ 5,000 | ||
Minimum protective endowment held in an interest-bearing account | $ 500,000 | $ 500,000 | $ 500,000 | $ 500,000 | |||
Authorized shares of common stock | 32,000,000 | 32,000,000 | 32,000,000 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Issued shares of common stock | 21,948,563 | 21,948,563 | 21,743,498 | ||||
Outstanding shares of common stock | 21,948,563 | 21,948,563 | 21,743,498 | ||||
Authorized shares of preferred stock | 8,000,000 | 8,000,000 | 8,000,000 | ||||
Issued shares of preferred stock | 0 | 0 | 0 | ||||
Outstanding shares of preferred stock | 0 | 0 | 0 | ||||
Dividends paid per share (in dollars per share) | $ 0.50 | ||||||
Amount of antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 | 29,000 | 0 | |||
Accumulated other comprehensive income net of tax | $ 449,000 | $ 449,000 | $ 32,000 | ||||
Tax from unrealized gains and losses on marketable securities | 156,000 | 10,000 | |||||
Reclassifications from AOCI | 0 | 0 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Lease liability | 113,832,000 | 113,832,000 | |||||
Right-of-use asset | 97,484,000 | 97,484,000 | |||||
Other Assets | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Tuition receivable, noncurrent | $ 1,200,000 | $ 1,200,000 | $ 1,100,000 | ||||
Accounting Standards Update 2016-02 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Lease liability | $ 123,000,000 | ||||||
Right-of-use asset | $ 107,000,000 |
Merger with Capella Education_3
Merger with Capella Education Company - Fair Value of Consideration Transferred (Details) - Capella Merger $ / shares in Units, $ in Thousands | Aug. 01, 2018USD ($)$ / sharesshares |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |
Total fair value of consideration transferred | $ 1,236,961 |
Common Stock | |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |
Fair value | $ 1,209,483 |
Number of common shares issued | shares | 10,263,775 |
Market price (in dollars per share) | $ / shares | $ 117.84 |
Equity-based awards | |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |
Fair value | $ 27,478 |
Merger with Capella Education_4
Merger with Capella Education Company - Preliminary Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Aug. 01, 2018 |
Preliminary fair value of assets and liabilities | |||
Goodwill | $ 732,104 | $ 732,540 | |
Capella Merger | |||
Preliminary fair value of assets and liabilities | |||
Cash and cash equivalents | $ 167,859 | ||
Marketable securities, current | 31,419 | ||
Tuition receivable | 36,716 | ||
Income tax receivable | 163 | ||
Other current assets | 9,041 | ||
Marketable securities, non-current | 34,700 | ||
Property and equipment, net | 53,182 | ||
Other assets | 14,556 | ||
Intangible assets | 349,800 | ||
Goodwill | 725,304 | ||
Total assets acquired | 1,422,740 | ||
Accounts payable and accrued expenses | (47,763) | ||
Contract liabilities | (39,000) | ||
Deferred income taxes | (96,689) | ||
Other long term liabilities | (2,327) | ||
Total liabilities assumed | (185,779) | ||
Total consideration | $ 1,236,961 |
Merger with Capella Education_5
Merger with Capella Education Company - Intangible Assets Acquired (Details) - USD ($) $ in Thousands | Aug. 01, 2018 | Jun. 30, 2019 |
Student relationships | ||
Business Acquisition [Line Items] | ||
Weighted Average Useful Life in Years | 3 years | |
Capella Merger | ||
Business Acquisition [Line Items] | ||
Total intangible assets | $ 349,800 | |
Capella Merger | Student relationships | ||
Business Acquisition [Line Items] | ||
Finite-lived intangible assets, fair value | $ 166,000 | |
Weighted Average Useful Life in Years | 3 years | |
Capella Merger | Trade names | ||
Business Acquisition [Line Items] | ||
Indefinite lived intangible assets, fair value | $ 183,800 |
Merger with Capella Education_6
Merger with Capella Education Company - Additional Information (Details) $ in Thousands | Aug. 01, 2018USD ($)University | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||||||
Number of independent universities | University | 2 | ||||||
Goodwill | $ 732,104 | $ 732,104 | $ 732,104 | $ 732,540 | |||
Merger costs | 3,019 | $ 2,824 | 10,198 | $ 8,171 | |||
Goodwill measurement period adjustment | 436 | ||||||
Capella Merger | |||||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||||||
Share conversion ratio of common stock issued | 0.875 | ||||||
Goodwill | $ 725,304 | ||||||
Merger costs | 20,100 | ||||||
Issuance costs | 100 | ||||||
Reduction in deferred tax liabilities | 3,400 | ||||||
Reduction in current assets | 1,900 | ||||||
Increase in current liabilities | 1,000 | ||||||
Increase in noncurrent liabilities | 100 | ||||||
Goodwill measurement period adjustment | (400) | ||||||
Course content and internally developed software including in Property and Equipment | $ 53,182 | ||||||
Amortization period (in years) | 3 years | ||||||
Strayer University | |||||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||||||
Goodwill | $ 330,600 | 337,381 | 337,381 | 337,381 | 337,381 | ||
Goodwill measurement period adjustment | 0 | ||||||
Capella University | |||||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||||||
Goodwill | 394,700 | $ 394,723 | 394,723 | $ 394,723 | $ 395,159 | ||
Goodwill measurement period adjustment | $ 436 | ||||||
Relief From Royalty Approach Valuation Technique | Capella Merger | |||||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||||||
Course content and internally developed software including in Property and Equipment | 14,000 | ||||||
Valuation, Cost Approach | Capella Merger | |||||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||||||
Course content and internally developed software including in Property and Equipment | $ 5,000 |
Revenue Recognition - Disaggre
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 245,110 | $ 114,668 | $ 491,618 | $ 231,137 |
Strayer University Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 128,911 | 113,903 | 256,969 | 229,174 |
Strayer University Segment | Tuition, net of discounts, grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 124,402 | 109,744 | 247,917 | 220,704 |
Strayer University Segment | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,509 | 4,159 | 9,052 | 8,470 |
Capella University Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 112,171 | 0 | 226,869 | 0 |
Capella University Segment | Tuition, net of discounts, grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 107,066 | 0 | 216,533 | 0 |
Capella University Segment | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5,105 | 0 | 10,336 | 0 |
Non-Degree Programs Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 4,028 | $ 765 | $ 7,780 | $ 1,963 |
Revenue Recognition - Graduati
Revenue Recognition - Graduation Fund (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Balance at beginning of period | $ 43,329 | $ 37,400 |
Revenue deferred | 14,787 | 12,917 |
Benefit redeemed | (12,025) | (10,497) |
Balance at end of period | $ 46,091 | $ 39,820 |
Revenue Recognition - Addition
Revenue Recognition - Additional Information (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($)termCourse | |
Disaggregation of Revenue [Line Items] | |
Number of free courses | Course | 1 |
Number of successfully completed courses | Course | 3 |
Consecutive terms of non attendance in which Graduation Fund credits will be lost | term | 1 |
Expected collection period of current tuition receivable (in months) | 12 months |
Graduation fund estimated to be redeemed | $ | $ 20.9 |
Unbilled receivables | $ | $ 1.3 |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Expected collection period of noncurrent tuition receivable (in years) | 2 years |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Expected collection period of noncurrent tuition receivable (in years) | 4 years |
Restructuring and Related Cha_3
Restructuring and Related Charges - Additional Information (Details) | 1 Months Ended |
Oct. 31, 2013Location | |
Restructuring and Related Activities [Abstract] | |
Campus locations closed | 20 |
Marginal borrowing rate used to discount leases | 4.50% |
Restructuring and Related Cha_4
Restructuring and Related Charges - Restructuring liability (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Schedule of restructuring liability | |||||
Beginning balance | $ 20,887,000 | $ 8,781,000 | |||
Restructuring and other charges | $ 200,000 | $ 0 | 2,086,000 | 0 | |
Payments | (5,764,000) | (1,401,000) | |||
Adjustments | (6,540,000) | 74,000 | |||
Ending balance | 10,669,000 | 7,454,000 | 10,669,000 | 7,454,000 | |
Accounts payable and accrued expenses | |||||
Schedule of restructuring liability | |||||
Restructuring liabilities | 6,800,000 | 6,800,000 | $ 9,800,000 | ||
Lease and Related Costs, Net | |||||
Schedule of restructuring liability | |||||
Beginning balance | 6,540,000 | 8,781,000 | |||
Restructuring and other charges | 0 | 0 | |||
Payments | 0 | (1,401,000) | |||
Adjustments | (6,540,000) | 74,000 | |||
Ending balance | 0 | 7,454,000 | 0 | 7,454,000 | |
Severance and Other Employee Separation Costs | |||||
Schedule of restructuring liability | |||||
Beginning balance | 14,347,000 | 0 | |||
Restructuring and other charges | 2,086,000 | 0 | |||
Payments | (5,764,000) | 0 | |||
Adjustments | 0 | 0 | |||
Ending balance | $ 10,669,000 | $ 0 | $ 10,669,000 | $ 0 |
Marketable Securities - Availa
Marketable Securities - Available-For-Sale Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Available-For-Sale Securities | ||
Amortized Cost | $ 64,724 | $ 75,060 |
Gross Unrealized Gain | 320 | 57 |
Gross Unrealized (Losses) | (19) | (318) |
Estimated Fair Value | 65,025 | 74,799 |
Corporate debt securities | ||
Available-For-Sale Securities | ||
Amortized Cost | 43,852 | 48,202 |
Gross Unrealized Gain | 191 | 12 |
Gross Unrealized (Losses) | (17) | (284) |
Estimated Fair Value | 44,026 | 47,930 |
Tax-exempt municipal securities | ||
Available-For-Sale Securities | ||
Amortized Cost | 15,272 | 22,858 |
Gross Unrealized Gain | 129 | 45 |
Gross Unrealized (Losses) | (2) | (34) |
Estimated Fair Value | 15,399 | 22,869 |
Variable rate demand notes | ||
Available-For-Sale Securities | ||
Amortized Cost | 5,600 | 4,000 |
Gross Unrealized Gain | 0 | 0 |
Gross Unrealized (Losses) | 0 | 0 |
Estimated Fair Value | $ 5,600 | $ 4,000 |
Marketable Securities - Maturi
Marketable Securities - Maturities of Marketable Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Summary of maturities of marketable securities | ||
Due within one year | $ 39,288 | $ 37,121 |
Due after one year through five years | 25,737 | 37,678 |
Total | $ 65,025 | $ 74,799 |
Marketable Securities - Additi
Marketable Securities - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Debt Securities, Available-for-sale [Line Items] | |||||
Unrealized loss position for a period longer than twelve months | $ 9,200,000 | $ 9,200,000 | |||
Other-than-temporary impairment charges | 0 | $ 0 | 0 | $ 0 | |
Marketable securities, due within one year | 39,288,000 | 39,288,000 | $ 37,121,000 | ||
Proceeds from maturities of available-for-sale securities | 9,700,000 | 22,560,000 | 0 | ||
Proceeds from sale of marketable securities | 0 | $ 0 | 0 | $ 0 | |
Variable rate demand notes | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Marketable securities, due within one year | $ 5,600,000 | $ 5,600,000 | |||
Variable rate demand notes | Minimum | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Contractual maturities (in years) | 18 years | ||||
Settlement basis period (in days) | 1 day | ||||
Effective maturity period (in days) | 1 day | ||||
Variable rate demand notes | Maximum | |||||
Debt Securities, Available-for-sale [Line Items] | |||||
Contractual maturities (in years) | 27 years | ||||
Settlement basis period (in days) | 7 days | ||||
Effective maturity period (in days) | 7 days |
Leases - Additional Informatio
Leases - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Lease cost recognized | $ 6,896 | $ 14,491 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 1 year | 1 year |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lease term | 10 years | 10 years |
Leases - Components of Lease C
Leases - Components of Lease Cost (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Leases [Abstract] | ||
Operating lease cost | $ 7,414 | $ 15,498 |
Short-term lease cost | 207 | 440 |
Sublease income | (725) | (1,447) |
Total lease costs | $ 6,896 | $ 14,491 |
Weighted-average remaining lease term (years) | 5 years 8 months 12 days | 5 years 8 months 12 days |
Weighted-average discount rate | 4.25% | 4.25% |
Cash paid for amounts included in the measurement of lease liabilities | $ 14,345 | |
Right-of-use assets obtained in exchange for operating lease liabilities | 2,298 | |
Leasehold Improvements Reimbursed By Lessors As Lease Incentives | $ 1,738 |
Leases - Maturities of Lease L
Leases - Maturities of Lease Liability (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Operating Lease Liabilities Maturity - After Adoption of 842 | ||
2020 | $ 31,185 | |
2021 | 26,474 | |
2022 | 19,440 | |
2023 | 12,524 | |
2024 | 10,539 | |
Thereafter | 28,753 | |
Total lease payments | 128,915 | |
Less: interest | (15,083) | |
Present value of lease liabilities | 113,832 | |
Payments for lease agreements not yet commenced | $ 2,000 | |
Operating Lease Maturity - Before Adoption of 842 | ||
2019 | $ 33,600 | |
2020 | 28,399 | |
2021 | 23,485 | |
2022 | 13,770 | |
2023 | 10,316 | |
Thereafter | 32,745 | |
Total | $ 142,315 |
Fair Value Measurement - Assets
Fair Value Measurement - Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Assets: | |||
Money market funds | $ 375,515 | $ 311,732 | $ 171,600 |
Marketable securities: | 65,025 | 74,799 | |
Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 101,340 | 77,090 | |
Money market funds | Recurring | |||
Assets: | |||
Money market funds | 36,315 | 1,791 | |
Corporate debt securities | |||
Assets: | |||
Marketable securities: | 44,026 | 47,930 | |
Corporate debt securities | Recurring | |||
Assets: | |||
Marketable securities: | 44,026 | 48,430 | |
Tax-exempt municipal securities | |||
Assets: | |||
Marketable securities: | 15,399 | 22,869 | |
Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Marketable securities: | 15,399 | 22,869 | |
Variable rate demand notes | |||
Assets: | |||
Marketable securities: | 5,600 | 4,000 | |
Variable rate demand notes | Recurring | |||
Assets: | |||
Marketable securities: | 5,600 | 4,000 | |
Deferred payments | Recurring | |||
Liabilities: | |||
Deferred payments | 3,664 | 4,120 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 36,315 | 1,791 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Money market funds | Recurring | |||
Assets: | |||
Money market funds | 36,315 | 1,791 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Corporate debt securities | Recurring | |||
Assets: | |||
Marketable securities: | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Marketable securities: | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Variable rate demand notes | Recurring | |||
Assets: | |||
Marketable securities: | 0 | 0 | |
Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Deferred payments | Recurring | |||
Liabilities: | |||
Deferred payments | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 65,025 | 75,299 | |
Significant Other Observable Inputs (Level 2) | Money market funds | Recurring | |||
Assets: | |||
Money market funds | 0 | 0 | |
Significant Other Observable Inputs (Level 2) | Corporate debt securities | Recurring | |||
Assets: | |||
Marketable securities: | 44,026 | 48,430 | |
Significant Other Observable Inputs (Level 2) | Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Marketable securities: | 15,399 | 22,869 | |
Significant Other Observable Inputs (Level 2) | Variable rate demand notes | Recurring | |||
Assets: | |||
Marketable securities: | 5,600 | 4,000 | |
Significant Other Observable Inputs (Level 2) | Deferred payments | Recurring | |||
Liabilities: | |||
Deferred payments | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Recurring | |||
Assets: | |||
Total assets at fair value on a recurring basis | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Money market funds | Recurring | |||
Assets: | |||
Money market funds | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Corporate debt securities | Recurring | |||
Assets: | |||
Marketable securities: | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Tax-exempt municipal securities | Recurring | |||
Assets: | |||
Marketable securities: | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Variable rate demand notes | Recurring | |||
Assets: | |||
Marketable securities: | 0 | 0 | |
Significant Unobservable Inputs (Level 3) | Deferred payments | Recurring | |||
Liabilities: | |||
Deferred payments | $ 3,664 | $ 4,120 |
Fair Value Measurement - Addit
Fair Value Measurement - Additional Information (Details) $ in Millions | Jun. 30, 2019USD ($) |
Accounts Payable and Accrued Liabilities | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Short-term portion of deferred payments | $ 0.8 |
Fair Value Measurement - Chang
Fair Value Measurement - Change in Fair Value of Level 3 Liability (Details) - Deferred payments - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance as of the beginning of period | $ 4,120 | $ 4,514 |
Amounts paid | (751) | (656) |
Other adjustments to fair value | 295 | 738 |
Balance at end of period | $ 3,664 | $ 4,596 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill Roll Forward (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill [Roll Forward] | ||||
Balance, beginning of period | $ 732,540,000 | |||
Additions | 0 | |||
Impairments | $ 0 | $ (2,800,000) | 0 | $ (2,800,000) |
Adjustments | (436,000) | |||
Balance, end of period | 732,104,000 | 732,104,000 | ||
Strayer University | ||||
Goodwill [Roll Forward] | ||||
Balance, beginning of period | 337,381,000 | |||
Additions | 0 | |||
Impairments | 0 | |||
Adjustments | 0 | |||
Balance, end of period | 337,381,000 | 337,381,000 | ||
Capella University | ||||
Goodwill [Roll Forward] | ||||
Balance, beginning of period | 395,159,000 | |||
Additions | 0 | |||
Impairments | 0 | |||
Adjustments | (436,000) | |||
Balance, end of period | 394,723,000 | 394,723,000 | ||
Non-Degree Programs | ||||
Goodwill [Roll Forward] | ||||
Balance, beginning of period | 0 | |||
Additions | 0 | |||
Impairments | 0 | |||
Adjustments | 0 | |||
Balance, end of period | $ 0 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangibles Excluding Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Subject to amortization | ||
Accumulated Amortization | $ (50,722) | $ (23,056) |
Total | ||
Gross Carrying Amount | 351,400 | 351,400 |
Net | 300,678 | 328,344 |
Trade names | ||
Not subject to amortization | ||
Net | 185,400 | 185,400 |
Student relationships | ||
Subject to amortization | ||
Gross Carrying Amount | 166,000 | 166,000 |
Accumulated Amortization | (50,722) | (23,056) |
Net | $ 115,278 | $ 142,944 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Goodwill Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Measurement period adjustments | $ 436,000 | |||
Impairment loss on goodwill | $ 0 | $ 2,800,000 | $ 0 | $ 2,800,000 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Intangibles Excluding Goodwill Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||||
Amortization expenses | $ 15,417,000 | $ 0 | $ 30,834,000 | $ 0 |
Trade names | ||||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||||
Impairment of intangible assets | 0 | $ 3,400,000 | $ 0 | $ 3,400,000 |
Student relationships | ||||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||||
Useful life (in years) | 3 years | |||
Amortization expenses | $ 13,800,000 | $ 27,700,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - Revolving Credit Facility | Aug. 01, 2018USD ($) | Jun. 30, 2019USD ($) |
Debt Instrument [Line Items] | ||
Maximum leverage ratio allowed in order to increase obligation | 1.75 | |
Maximum total leverage ratio | 2 | |
Minimum coverage ratio | 1.75 | |
Minimum department of education financial composite score | 1.5 | |
Minimum | ||
Debt Instrument [Line Items] | ||
Margin rate | 1.50% | |
Unused commitment fee | 0.20% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Margin rate | 2.00% | |
Unused commitment fee | 0.30% | |
Amended Credit Facility | ||
Debt Instrument [Line Items] | ||
Revolving credit facility, value | $ 250,000,000 | |
Debt financing costs capitalized | $ 1,200,000 | |
Amortization period (in years) | 5 years | |
Revolving credit facility, outstanding | $ 0 | |
Prior Credit Facility | ||
Debt Instrument [Line Items] | ||
Revolving credit facility, value | $ 150,000,000 |
Other Long-Term Liabilities (De
Other Long-Term Liabilities (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Other Liabilities, Noncurrent [Abstract] | ||
Contract liabilities, net of current portion | $ 26,352,000 | $ 23,880,000 |
Deferred payments related to acquisitions | 5,433,000 | 5,904,000 |
Employee separation costs | 3,907,000 | 6,800,000 |
Deferred rent and other facility costs | 1,885,000 | 6,837,000 |
Loss on facilities not in use | 0 | 4,332,000 |
Lease incentives | 0 | 2,300,000 |
Other | 1,977,000 | 1,263,000 |
Other long-term liabilities | $ 39,554,000 | $ 51,316,000 |
Other Long-Term Liabilities - A
Other Long-Term Liabilities - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Other Liabilities, Noncurrent [Line Items] | ||
Deferred rent and other facility costs | $ 1,885,000 | $ 6,837,000 |
Deferred payment arrangements value | 2,600,000 | 3,100,000 |
Funds received from investor | 2,800,000 | |
Long-term lease incentive liability | $ 0 | 2,300,000 |
Minimum | ||
Other Liabilities, Noncurrent [Line Items] | ||
Leasehold improvements and long-term liability amortization period (in years) | 5 years | |
Maximum | ||
Other Liabilities, Noncurrent [Line Items] | ||
Leasehold improvements and long-term liability amortization period (in years) | 10 years | |
Asset Retirement Obligation | ||
Other Liabilities, Noncurrent [Line Items] | ||
Deferred rent and other facility costs | $ 1,900,000 | $ 1,900,000 |
Equity Awards - Stock-based co
Equity Awards - Stock-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | $ 3,566 | $ 3,250 | $ 6,576 | $ 5,937 |
Tax benefit | 923 | 894 | 1,682 | 1,646 |
Stock-based compensation expense, net of tax | 2,643 | 2,356 | 4,894 | 4,291 |
Instructional and support costs | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | 1,017 | 499 | 1,875 | 1,118 |
General and administration | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | 2,138 | 2,751 | 3,811 | 4,819 |
Merger and integration costs | ||||
Schedule of stock-based compensation expense | ||||
Stock-based compensation expense included in operating expense | $ 411 | $ 0 | $ 890 | $ 0 |
Equity Awards - Additional Inf
Equity Awards - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Tax windfall related to share-based payment arrangements | $ 3.5 | $ 2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 7,312,000 | $ (557,000) | $ 24,862,000 | $ 1,593,000 |
Effective income tax rate | 40.90% | 9.80% | ||
Deferred tax asset | $ 11,500,000 | |||
Unrecognized tax benefits | $ 1,400,000 | $ 0 | 1,400,000 | $ 0 |
Amount of interest and penalties | 100,000 | 0 | ||
Cash payments for income taxes | $ 24,700,000 | $ 6,700,000 |
Other Investments - Equity Meth
Other Investments - Equity Method Investments (Details) - USD ($) $ in Millions | Dec. 31, 2027 | Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Schedule of Equity Method Investments [Line Items] | ||||
Investment in certain limited partnerships | $ 14.5 | $ 14.5 | $ 13.4 | |
Investment in partnership interests | 0.5 | |||
Distribution received related to partnerships | 1 | |||
Income related to partnerships | $ 0.6 | $ 1.6 | ||
Scenario, Forecast | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Investment in partnership interests | $ 2.2 | |||
Minimum | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Partnership interest (as a percentage) | 3.00% | 3.00% | ||
Maximum | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Partnership interest (as a percentage) | 5.00% | 5.00% |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2019segment | |
Segment Reporting [Abstract] | |
Number of operating segments that meet threshold to qualify as reportable segments | 2 |
Segment Reporting - Financial I
Segment Reporting - Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | ||||
Revenues | $ 245,110 | $ 114,668 | $ 491,618 | $ 231,137 |
Income (loss) from operations | ||||
Income (loss) from operations | 27,596 | 4,184 | 53,319 | 15,512 |
Amortization of intangible assets | (15,417) | 0 | (30,834) | 0 |
Merger and integration costs | (3,019) | (2,824) | (10,198) | (8,171) |
Impairment of intangible assets | 0 | (6,185) | 0 | (6,185) |
Strayer University | ||||
Revenues | ||||
Revenues | 128,911 | 113,903 | 256,969 | 229,174 |
Income (loss) from operations | ||||
Income (loss) from operations | 24,606 | 14,320 | 49,579 | 32,312 |
Capella University | ||||
Revenues | ||||
Revenues | 112,171 | 0 | 226,869 | 0 |
Income (loss) from operations | ||||
Income (loss) from operations | 21,122 | 0 | 45,275 | 0 |
Non-Degree Programs | ||||
Revenues | ||||
Revenues | 4,028 | 765 | 7,780 | 1,963 |
Income (loss) from operations | ||||
Income (loss) from operations | $ 304 | $ (1,127) | $ (503) | $ (2,444) |
Regulation (Details)
Regulation (Details) | 4 Months Ended | 6 Months Ended | 12 Months Ended | |
May 31, 2014Rulemaking_Session | Jun. 30, 2019hearingSubcommitteemeasureProgramJurisdictionMetric | Dec. 31, 2016USD ($)State | Dec. 31, 2014ReviewState | |
Regulation [Line Items] | ||||
Number of debt-to-earnings measures | measure | 2 | |||
Number of ineligible years | 3 years | |||
Number of metrics that can't be failed for consecutive years | Metric | 1 | |||
Number of consecutive years program has to fail both metrics to become ineligible | 2 years | |||
Number of consecutive years | 3 years | |||
Number of consecutive years program has to fail one metric to become ineligible | 4 years | |||
Number of current associate degree programs in the Zone | Program | 3 | |||
Number of years needed with combination of zone and failing designations | 4 years | |||
Number of subcommittees | Subcommittee | 3 | |||
Number of department public hearings convened | hearing | 3 | |||
Number of sessions | Rulemaking_Session | 4 | |||
Minimum | ||||
Regulation [Line Items] | ||||
Licensed jurisdictions | Jurisdiction | 1 | |||
Number of states needed for state authorization reciprocity agreement | State | 2 | |||
Strayer University | ||||
Regulation [Line Items] | ||||
Number of years an adverse action must be disclosed | 5 years | |||
Number of states in which compliance reviews were conducted | State | 3 | |||
Number of conducted compliance reviews | Review | 2 | |||
Number of reviews in which no further action was required | Review | 3 | |||
Strayer University | Maximum | ||||
Regulation [Line Items] | ||||
Amount due to department of education | $ | $ 500 | |||
Capella University | Strayer University | ||||
Regulation [Line Items] | ||||
Number of current associate degree programs in the Zone | Program | 1 | |||
Strayer University | ||||
Regulation [Line Items] | ||||
Number of current associate degree programs in the Zone | Program | 2 | |||
Number of on-site reviews conducted | Review | 4 | |||
Passes | ||||
Regulation [Line Items] | ||||
Average of median discretionary percentage | 20.00% | |||
Passes | Maximum | ||||
Regulation [Line Items] | ||||
Average of median annual earning percentage | 8.00% | |||
Warning | Minimum | ||||
Regulation [Line Items] | ||||
Average of median annual earning percentage | 8.00% | |||
Average of median discretionary percentage | 20.00% | |||
Warning | Maximum | ||||
Regulation [Line Items] | ||||
Average of median annual earning percentage | 12.00% | |||
Average of median discretionary percentage | 30.00% | |||
Fails | Minimum | ||||
Regulation [Line Items] | ||||
Average of median annual earning percentage | 12.00% | |||
Average of median discretionary percentage | 30.00% |
Uncategorized Items - stra-2019
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (171,000) |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (171,000) |