Perdoceo Education Corporation completes its previously announced acquisition of University of St. Augustine for Health Sciences, LLC

Rhea-AI Summary

Perdoceo Education (NASDAQ: PRDO) has completed its acquisition of University of St. Augustine for Health Sciences (USAHS) for approximately $138M in cash. USAHS, founded in 1979, is a leading provider of graduate health sciences degrees with campuses across California, Florida, and Texas. For the nine months ended September 30, 2024, USAHS reported unaudited revenues of $114M, operating income of $10.5M, and served about 4,100 students. The acquisition is expected to be accretive to Perdoceo's adjusted operating income starting in 2025. Perdoceo maintains its 2024 adjusted operating income outlook of $188-191M.

Positive

• Cash acquisition worth $138M of USAHS with $114M in revenue
• USAHS reports $10.5M operating income and $25M adjusted operating income
• Expected to be immediately accretive to adjusted operating income in 2025
• Strong student base of 4,100 graduate and post-graduate students
• Maintains positive outlook for 2024 with $188-191M adjusted operating income

Negative

• None.

Insights

Financial Analyst

This strategic $138M acquisition of USAHS represents a significant expansion into the lucrative healthcare education sector. With USAHS generating $114M in revenue and $25M in adjusted operating income over nine months, the purchase price appears reasonable at approximately 4.1x annualized adjusted operating income.

The deal's immediate accretive nature to Perdoceo's adjusted operating income in 2025 suggests strong financial synergies. USAHS's 4,100 student base and specialized focus on high-demand healthcare disciplines like physical therapy and nursing provides Perdoceo with stable revenue streams and growth potential in the expanding healthcare education market.

The transaction strengthens Perdoceo's market position while diversifying its educational portfolio into premium healthcare programs. The company's maintained 2024 guidance of $188-191M adjusted operating income indicates confidence in near-term performance and integration capabilities.

Education Market Analyst

The acquisition positions Perdoceo strategically in the high-growth healthcare education segment. USAHS's specialized focus on graduate health sciences programs, particularly in physical therapy and occupational therapy, taps into critical healthcare workforce shortages. The institution's presence across five major markets (San Marcos, St. Augustine, Miami, Austin and Dallas) provides geographical diversification and growth potential.

The multi-campus plus online delivery model offers operational flexibility and scalability. USAHS's WASC accreditation and established reputation since 1979 reduce regulatory risks and provide a strong foundation for expansion. The focus on graduate and post-graduate programs typically yields higher revenue per student and better retention rates compared to undergraduate programs.

SCHAUMBURG, Ill.--(BUSINESS WIRE)-- Perdoceo Education Corporation (“Perdoceo” or the “Company”) (NASDAQ: PRDO), a provider of postsecondary education, today completed its previously announced acquisition of University of St. Augustine for Health Sciences, LLC (USAHS). The Company paid a cash consideration of approximately $138M (net of cash acquired), which is subject to customary post-closing adjustments and escrow arrangements.

USAHS is one of the nation’s leading universities offering graduate health sciences degrees, primarily in physical therapy, occupational therapy, speech language therapy, nursing, as well as continuing-education programs. Founded in 1979, USAHS educates students through its network of campuses in San Marcos, California; St. Augustine and Miami, Florida; and Austin and Dallas, Texas; and through its online programs. USAHS is accredited by the WASC Senior College and University Commission.

• For the nine months ended September 30, 2024, USAHS had unaudited revenues of approximately $114M, unaudited operating income of approximately $10.5 million and served approximately 4,100 graduate and post-graduate students across multiple health sciences disciplines.
• For the nine months ended September 30, 2024, USAHS had approximately $25M of unaudited adjusted operating income. Adjusted operating income is a non-GAAP financial measure and is calculated by adding approximately $14.5M of depreciation and amortization to the operating income of $10.5 million.
• Perdoceo expects the transaction to be accretive to the Company’s adjusted operating income immediately beginning in 2025 and the transaction to provide further growth in adjusted operating income in 2026.

Affirming Outlook for Fiscal Year 2024

Perdoceo remains on track to achieve its full year adjusted operating income outlook of $188 million to $191 million, as disclosed in the Company’s previous quarterly earnings release, subject to the assumptions and factors set forth therein.

ABOUT PERDOCEO EDUCATION CORPORATION

Perdoceo’s accredited academic institutions offer a quality postsecondary education primarily online to a diverse student population, along with campus-based and blended learning programs. The Company’s academic institutions – Colorado Technical University (“CTU”), the American InterContinental University System (“AIUS” or “AIU System”) and USAHS – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Perdoceo’s academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU, AIUS and USAHS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. Perdoceo is committed to providing quality education that closes the gap between learners who seek to advance their careers and employers needing a qualified workforce. For more information, please visit www.perdoceoed.com.

Except for the historical and present factual information contained herein, the matters set forth in this release, including statements regarding the impact of the acquisition of USAHS on Perdoceo’s adjusted operating income and other statements identified by words such as “believe,” “will,” “expect,” “continue,” “outlook,” “remain,” “focused on,” “should” and similar expressions, are forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on information currently available to us and are subject to various assumptions, risks, uncertainties and other factors that could cause our results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update or revise such factors or any of the forward-looking statements contained herein to reflect future events, developments or changed circumstances, or for any other reason. These risks and uncertainties, the outcomes of which could materially and adversely affect our financial condition and operations, include, but are not limited to, the following: Perdoceo being unable to achieve the anticipated benefits of the transaction; the acquired business not performing as expected; Perdoceo assuming unexpected risks, liabilities and obligations of the acquired business; significant transaction costs associated with the transaction; the risk that disruptions from the transaction will harm the parties’ businesses, including current plans and operations; the ability of the parties to retain and hire key personnel; potential adverse reactions or changes to business relationships resulting from the announcement of the completion of the proposed transaction; and other factors relating to Perdoceo’s operations and financial performance discussed in its filings with the Securities and Exchange Commission. Further information about these and other relevant risks and uncertainties may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and its subsequent filings with the Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241202135619/en/

Alpha IR

Sam Gibbons

(312) 445-2870

PRDO@alpha-ir.com

Source: Perdoceo Education Corporation

FAQ

How much did Perdoceo (PRDO) pay for the University of St. Augustine acquisition?

Perdoceo paid approximately $138 million in cash consideration (net of cash acquired) for the acquisition of University of St. Augustine for Health Sciences.

What are USAHS's financial metrics before the Perdoceo (PRDO) acquisition?

For the nine months ended September 30, 2024, USAHS reported unaudited revenues of $114M, operating income of $10.5M, and adjusted operating income of $25M.

When will the USAHS acquisition become accretive to Perdoceo's (PRDO) earnings?

The acquisition is expected to be accretive to Perdoceo's adjusted operating income immediately beginning in 2025, with further growth expected in 2026.

What is Perdoceo's (PRDO) adjusted operating income outlook for 2024?

Perdoceo maintains its full year 2024 adjusted operating income outlook of $188 million to $191 million.