8-K/A: Perdoceo Education Corp. Completes Acquisition of University of St. Augustine Parent Corp.; Files Pro Forma Financials

Sentiment:

8-K/A Filing 18 February 2025 4:25 PM

📋All filings for Perdoceo Education CORP

Perdoceo Education Corporation finalizes its acquisition of University of St. Augustine Parent Corp. and releases pro forma financial statements reflecting the combined entity.

Worse than expectedThe company recognized a $88,327 impairment charge to its trade name and a $153,285 impairment charge to its goodwill for the nine months ended September 30, 2024.The company had a net loss of $(179,731) for the nine months ended September 30, 2024.

Summary

Perdoceo Education Corporation completed the acquisition of University of St. Augustine Parent Corp. (USAPC) on December 2, 2024, for an aggregate cash purchase price of $137.8 million, subject to post-closing adjustments.
This amendment to the initial Form 8-K provides the required financial statements and pro forma financial information related to the acquisition.
Audited consolidated financial statements of University of St. Augustine Intermediate Corp. as of December 31, 2023 and 2022, and unaudited interim consolidated financial statements as of September 30, 2024 and 2023 are included.
Unaudited pro forma condensed combined statements of income for the year ended December 31, 2023, and the nine months ended September 30, 2024, giving effect to the acquisition, are also provided.
The pro forma combined statement of income for the year ended December 31, 2023, shows total revenue of $880.455 million and net income of $161.972 million.
The pro forma combined statement of income for the nine months ended September 30, 2024, shows total revenue of $618.593 million and net income of $118.140 million.

Sentiment

Score: 5

Explanation: The document is neutral. It primarily presents financial data related to an acquisition. While there are positive aspects like increased revenue, there are also negative aspects like impairment charges and net losses.

Positives

The acquisition expands Perdoceo's presence in the healthcare education market.
The pro forma statements provide insight into the potential financial performance of the combined entity.
The company recognized an income tax benefit of $62,818 for the nine months ended September 30, 2024.

Negatives

The company recognized a $88,327 impairment charge to its trade name and a $153,285 impairment charge to its goodwill for the nine months ended September 30, 2024.
The company had a net loss of $(179,731) for the nine months ended September 30, 2024.

Risks

The pro forma financial information is not necessarily indicative of future results.
The integration of the acquired company may present challenges.
The financial aid and assistance programs are subject to political and budgetary considerations.

Future Outlook

The pro forma financial information provides an estimate of the combined company's potential performance, but actual results may vary.

Industry Context

The acquisition reflects a trend of consolidation in the for-profit education sector, particularly in specialized areas like healthcare education.

Comparison to Industry Standards

It is difficult to compare the results to global benchmarks without knowing the specific financial metrics of comparable companies in the for-profit education sector.
However, key competitors in the for-profit education space include companies such as Adtalem Global Education and Strategic Education, Inc.
Analyzing their financial performance and growth strategies could provide a broader context for evaluating Perdoceo's acquisition.

Legal Proceedings

Certain former students of USA have filed borrower defense to repayment (BDR) claims with the DOE seeking discharge of their federal student loans.

Stakeholder Impact

Shareholders will be interested in the financial performance of the combined entity.
Employees of both companies may experience changes as a result of the integration.
Students of the University of St. Augustine for Health Sciences may see changes in programs or services.

Next Steps

Finalize post-closing adjustments to the purchase price.
Integrate University of St. Augustine Parent Corp. into Perdoceo's operations.
Monitor the performance of the combined entity and identify potential synergies.

Key Dates

Date	Description
February 1, 2019	University of St. Augustine Acquisition Corp. acquired 100% of the ownership and voting rights of USA.
October 31, 2019	The Company entered into an interest rate swap agreement (the Swap) on $138,056 of the Initial Term Loan outstanding balance.
October 2020	The Company acquired a property in St. Augustine, FL, with the intention of subsequently selling the property to a developer under a sale-leaseback transaction to build out a new USA St. Augustine campus.
January 1, 2022	The Company adopted ASC 842 Leases (ASC 842) using the cumulative-effect transition method and applied the standard to all existing leases.
December 30, 2022	The Initial Term Loan and related Swap agreements were amended to have their interest rate pegged to the Secured Overnight Financing Rate (SOFR) instead of LIBOR.
April 2023	The DOE required USA to establish an LOC in the amount of $100, or 25% of Title IV refunds made to the DOE during the prior fiscal year.
April 2023	The sale-leaseback transaction closed with construction of the new campus beginning shortly thereafter.
April 2023	Upon construction commencement of the new St. Augustine campus, the Company determined that it was the deemed owner during the construction period.
July 28, 2023	Certain former students of USA have filed borrower defense to repayment (BDR) claims with the DOE seeking discharge of their federal student loans.
August 28, 2023	Certain former students of USA have filed borrower defense to repayment (BDR) claims with the DOE seeking discharge of their federal student loans.
October 31, 2023	The fair value of the Swap is carried as a $1,428 asset on the balance sheet as of December 31, 2022, and expired on October 31, 2023.
July 15, 2024	Perdoceo Education Corporation, a Delaware corporation (Perdoceo), entered into an Agreement and Plan of Merger (the Merger Agreement) with Lighthouse Merger Sub, Inc., a Delaware corporation and a wholly-owned direct subsidiary of Perdoceo (Merger Sub), the Company, and APH GP LP, an Ontario limited partnership, solely in its capacity as seller representative, providing for the merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger as a wholly-owned direct subsidiary of Perdoceo, all subject to the terms and conditions set forth therein.
December 2, 2024	Perdoceo completed the acquisition of USAHS and pursuant to the terms of the purchase agreement, USAHS become a wholly owned subsidiary of Perdoceo.

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