10-Q: Perdoceo Education Q3 Revenue Jumps 24.8% on USAHS Acquisition

Perdoceo Education Corporation reported a significant 24.8% revenue increase in Q3 2025, primarily driven by the USAHS acquisition and strong enrollment growth at CTU.

Summary

• Total revenue for the third quarter of 2025 increased by 24.8% to $211.9 million, compared to $169.8 million in the prior year quarter.
• Year-to-date revenue increased by 25.7% to $634.5 million, up from $504.8 million in the same period last year.
• Net income for Q3 2025 was $39.9 million, a 4.2% increase from $38.3 million in Q3 2024.
• Year-to-date net income reached $124.6 million, a 7.3% increase from $116.1 million in the prior year period.
• Diluted earnings per share (EPS) for Q3 2025 was $0.60, up from $0.57 in Q3 2024.
• Year-to-date diluted EPS was $1.87, compared to $1.73 in the prior year period.
• Total student enrollments increased by 15.1% to 46,520 as of September 30, 2025, compared to 40,400 as of September 30, 2024.
• Colorado Technical University (CTU) enrollments increased by 6.7%, while American InterContinental University System (AIUS) enrollments decreased by 2.9%.
• University of St. Augustine for Health Sciences (USAHS) contributed 4,420 students to total enrollments.
• Operating income for Q3 2025 increased by 13.8% to $51.0 million, from $44.8 million in Q3 2024.
• Adjusted operating income for Q3 2025 was $61.0 million, compared to $47.8 million for the prior year quarter.
• Cash, cash equivalents, restricted cash, and short-term investments totaled $668.6 million as of September 30, 2025.
• Net cash provided by operating activities year-to-date was $185.1 million, an increase from $144.0 million in the prior year period.
• A new stock repurchase program for up to $75.0 million was approved on July 31, 2025, replacing the previous program.
• Repurchased 2.3 million shares of common stock for $66.7 million year-to-date September 30, 2025.
• A quarterly dividend of $0.15 per share was declared on October 31, 2025.

Sentiment

Score: 8

Explanation: The company delivered strong financial performance with significant revenue and earnings growth, driven by a successful acquisition and organic enrollment. A robust cash position and commitment to shareholder returns through dividends and share repurchases are positive. However, notable regulatory uncertainties in the for-profit education sector and ongoing legal proceedings introduce material risks that temper the overall sentiment.

Positives

• Revenue increased significantly by 24.8% in Q3 2025 and 25.7% year-to-date, primarily driven by the USAHS acquisition and strong performance at CTU.
• Net income grew by 4.2% in Q3 2025 to $39.9 million and 7.3% year-to-date to $124.6 million.
• Diluted EPS increased to $0.60 in Q3 2025 and $1.87 year-to-date, demonstrating improved profitability per share.
• Total student enrollments rose by 15.1% to 46,520, with CTU showing a healthy 6.7% increase, indicating strong student interest and retention.
• Operating income increased by 13.8% in Q3 2025 to $51.0 million, reflecting effective management of operating expenses relative to revenue growth.
• Adjusted operating income for Q3 2025 was $61.0 million, up from $47.8 million in the prior year quarter, highlighting core business strength.
• The company maintains a strong liquidity position with $668.6 million in cash, cash equivalents, restricted cash, and short-term investments.
• Net cash provided by operating activities increased by $41.1 million year-to-date to $185.1 million, indicating robust cash generation from core operations.
• A new $75.0 million stock repurchase program was approved, and $66.7 million in shares were repurchased year-to-date, signaling commitment to shareholder returns.
• A quarterly dividend of $0.15 per share was declared, reinforcing confidence in future cash flows and shareholder value creation.
• Bad debt expense decreased by 9.4% in Q3 and 2.0% year-to-date, primarily due to improvements at AIUS, indicating better collection efficiency.

Negatives

• AIUS total student enrollments decreased by 2.9% in Q3 2025, partly attributed to its academic calendar resulting in fewer enrollment days.
• USAHS reported an operating loss of approximately $2.0 million year-to-date, although it achieved breakeven results in Q3 2025.
• Depreciation and amortization expense significantly increased by 228.0% in Q3 2025 and 249.9% year-to-date, largely due to the USAHS acquisition and finance leases.
• Interest expense rose substantially from $82 thousand in Q3 2024 to $1.6 million in Q3 2025, and from $529 thousand to $4.9 million year-to-date.
• The company is involved in ongoing legal proceedings, including False Claims Act allegations and a DOJ Civil Investigative Demand, which introduce uncertainty and potential liabilities.
• Regulatory changes, such as the phasing out of the Grad PLUS loan program for new students after July 1, 2026, could impact USAHS graduate students' federal funding.
• Uncertainty exists regarding the Department of Education's final definition of 'professional programs' and the implementation of a new universally applicable earnings-premium standard, which could affect Title IV loan eligibility.

Risks

• Declines in enrollment or interest in programs, or the ability to attract or connect with prospective students.
• Continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, including new 90-10, gainful employment, financial responsibility, and administrative capability standards.
• The impact of various versions of borrower defense to repayment regulations and the final outcome of legal challenges to the Department's loan discharge and forgiveness efforts.
• Rulemaking or changing interpretations of existing regulations, guidance, or historical practices by the Department of Education, state, or accreditors, and increased focus or negative publicity on for-profit education institutions.
• The impact of any federal budget reconciliation or other legislative process on the availability of current levels of federal student aid or the conditions associated with participating in such aid programs.
• The ability to pay dividends on common stock and execute the stock repurchase program.
• Increased competition in the postsecondary education sector.
• The impact of management changes.
• Changes in the overall U.S. economy.
• Legal proceedings: United States of America, ex rel. Fiorisce LLC v. Perdoceo Education Corporation, Colorado Technical University, Inc. and American InterContinental University, Inc., alleging False Claims Act violations related to federal financial aid credit hour requirements. The relator filed a second amended complaint on May 19, 2025, to re-include Perdoceo Education Corporation as a defendant. The outcome is uncertain, and a range of potential loss cannot be reasonably estimated.
• Legal proceedings: A Civil Investigative Demand (CID) received from the DOJ on September 7, 2024, requesting information from CTU regarding its compensation practices for admissions staff and discussions about its Fast Track credit program. The outcome is uncertain, and a range of potential loss cannot be reasonably estimated.
• Uncertainty regarding the Department of Education's final determination concerning which programs will be eligible for higher federal loan funding under the new targeted funding framework, potentially requiring USAHS students to rely on private lending sources after July 1, 2026.
• A loss or material reduction in eligible Title IV programs due to either the new universally applicable earnings-premium standard or the existing Gainful Employment (GE) rule would materially impact student enrollments and profitability.

Future Outlook

The company expects high levels of student retention, engagement, and prospective student interest to continue through the remainder of 2025. Full year revenue for 2025 is projected to be higher, primarily due to the USAHS acquisition and anticipated growth in total student enrollments. Capital expenditures for the full year 2025 are expected to be approximately 1.5% of revenue, and the effective tax rate is forecast to be between 26.0% and 26.5%. The company anticipates satisfying its cash requirements for working capital, capital expenditures, lease commitments, share repurchases, and quarterly dividends for at least the next 12 months using cash generated from operations and existing balances. Quarterly dividend payments are expected to be an integral and growing part of its capital allocation strategy.

Management Comments

• Our academic institutions remained focused on furthering their goal of changing lives through education and preparing learners for essential skills needed in today's job market.
• CTU and AIUS provide diverse, career-focused degree programs designed to help students excel in a rapidly changing job market, while USAHS develops professionals to serve communities across the country with quality healthcare services.
• During the current quarter, we experienced total enrollment growth, supported by continued momentum in student retention and engagement as well as increased interest from prospective students looking to pursue a degree at our academic institutions.
• We also continued to invest in student technology and student support processes that we believe further enhance student experiences and academic outcomes.
• We continued to refine our marketing and admissions spending strategies, including integrating artificial intelligence to help identify and engage with prospective students who, we believe, are more likely to succeed at one of our academic institutions.
• We expect the high levels of student retention and student engagement we experienced over the past few quarters, as well as the prospective student interest experienced, to continue through the remainder of 2025.
• We believe it is useful to present non-GAAP financial measures which exclude certain non-cash items as a means to better understand the performance of our core business.
• We will continue to support responsible student borrowing of federal financial aid prior to consideration of alternative sources of private lending for those that may need to borrow to pursue their programs of study.
• Ultimately, our goal is to deploy resources in a way that drives long term stockholder value while supporting and enhancing the academic value of our institutions.

Industry Context

The for-profit education industry continues to face intense scrutiny from policymakers, government agencies, and interest groups, with ongoing discussions regarding student debt and outcomes. The recent federal elections and new administration may lead to changes in Title IV regulations or new interpretations of existing rules, requiring the company to adapt. The Department of Education is actively engaged in negotiated rulemaking through committees like RISE and AHEAD to implement statutory changes to federal student loan programs and a new universally applicable earnings-premium standard. The phasing out of the Grad PLUS loan program for new students after July 1, 2026, and the new targeted funding framework could significantly impact graduate students, particularly at USAHS, depending on the final definition of 'professional programs.' The new earnings-premium standard, while potentially less restrictive than the existing Gainful Employment rule, introduces further regulatory complexity and uncertainty for program eligibility.

Comparison to Industry Standards

• Student Title IV borrowing at AIUS and CTU has generally been within the new loan levels and limits contemplated by the Act, suggesting compliance with evolving federal standards.
• Based on historical borrowing patterns, most USAHS graduate students' borrowing has generally been within the levels and limits established for professional programs, if the company's programs ultimately qualify as such under the Department of Education's final regulations.

Legal Proceedings

• United States of America, ex rel. Fiorisce LLC v. Perdoceo Education Corporation, Colorado Technical University, Inc. and American InterContinental University, Inc.: An amended complaint filed on May 19, 2023, alleges False Claims Act violations related to federal financial aid credit hour requirements. The DOJ declined to intervene, but the relator is pursuing litigation. The court initially dismissed Perdoceo and AIU, but the relator filed a second amended complaint on May 19, 2025, to re-include Perdoceo. The outcome is uncertain, and a range of potential loss cannot be reasonably estimated.
• September 24 CID: On September 7, 2024, the company received a new Civil Investigative Demand (CID) from the DOJ, requesting information from CTU regarding its compensation practices for admissions staff and discussions about its Fast Track credit program (covering November 13, 2017, to present). The company is cooperating, but the outcome is uncertain, and a range of potential loss cannot be reasonably estimated.
• The company is subject to a variety of other claims, lawsuits, arbitrations, and investigations, including alleged violations of the Telephone Consumer Protection Act and employment matters. While management believes these will not have a material adverse impact, they are subject to inherent uncertainties.

Related Party Transactions

• Periodic operating maintenance payments are made to an equity affiliate. Total fees recorded were $471 thousand for the quarter ended September 30, 2025, and $1,351 thousand for the year-to-date ended September 30, 2025.

Stakeholder Impact

• Shareholders: Positive impact from strong financial performance (revenue, net income, EPS growth), stock repurchase program, and declared dividends. Potential negative impact from regulatory risks and ongoing legal proceedings.
• Students: Continued investment in technology and support processes aims to enhance educational experiences. Potential negative impact from changes in federal student aid eligibility or funding limits, particularly for USAHS graduate students.
• Employees: No direct impact on employment mentioned, but share-based compensation is a component of overall compensation.
• Customers (Employers/Communities): Academic institutions are committed to providing quality education to meet workforce needs.
• Creditors: Strong cash position and operating cash flows indicate a good ability to meet financial obligations.

Next Steps

• Monitor the Department of Education's negotiated rulemaking committees (RISE and AHEAD) regarding federal student loan programs and the new earnings-premium standard.
• Evaluate the impact of the Department's final definition of 'professional programs' on USAHS students' federal funding eligibility after July 1, 2026.
• Actively engage in conversations with private lending institutions to expand loan programs for students who may need alternative funding sources.
• Continue to cooperate with the DOJ regarding the False Claims Act allegations and the new Civil Investigative Demand.
• Continue to invest in student technology and support processes to enhance student experiences and academic outcomes.
• Execute the new $75.0 million stock repurchase program.
• Pay the declared quarterly dividend of $0.15 per share on December 12, 2025.

Key Dates

Recommendation

Perdoceo Education Corporation delivered strong financial results, with significant revenue and earnings growth driven by the USAHS acquisition and robust enrollment at CTU. The company's healthy cash position, ongoing share repurchase program, and consistent dividend payments demonstrate a commitment to shareholder value. However, the education sector, especially for-profit institutions, faces substantial regulatory headwinds. The uncertainties surrounding federal student loan programs (Grad PLUS phase-out, new earnings-premium standard) and ongoing legal challenges (False Claims Act, DOJ CID) introduce considerable risk. While current performance is strong, these regulatory and legal issues could materially impact future operations and profitability. A 'Hold' recommendation reflects the balance between solid current performance and significant, unresolved external risks.

Keywords

Education, Postsecondary education, Online learning, Higher education, CTU, AIUS, USAHS, SEC filing, 10-Q, Financial results, Enrollment, Student retention, Acquisition, Stock repurchase, Dividends, Regulatory risk, False Claims Act, Department of Education, Title IV, Gainful Employment