UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 8.01. | Other Events. |
Recast Financial Statements
In this Current Report on Form 8-K, Strategic Education, Inc. (“SEI” or the “Company”) is recasting consolidated financial information for the years 2019 and 2020 to reflect changes in segment presentation that will commence when the Company reports its first quarter 2021 results on April 29, 2021. The previously announced new segment reporting will reflect changes to divisional operating structure that were made during the fourth quarter of 2020 for reporting beginning in 2021 and in the future, and which are detailed below in Exhibit 99.1. The updates do not represent a restatement of previously issued financial statements.
The disclosure in this Current Report on Form 8-K does not reflect events occurring after March 1, 2021, the date that SEI filed its 2020 Form 10-K, and does not modify or update the disclosures therein in any way, other than as required to give effect to the change in reportable segments. For information on developments regarding SEI since the filing of the 2020 Form 10-K, please refer to our Current Reports on Form 8-K.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit Number | Description | |||
| 99.1 | Segment Reporting | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| STRATEGIC EDUCATION, INC. | ||
| Date: April 6, 2021 | ||
| By: | /s/ Daniel W. Jackson | |
| Daniel W. Jackson | ||
| Executive Vice President and Chief Financial Officer | ||
EXHIBIT 99.1
Segment Reporting
In the fourth quarter of 2020, Strategic Education, Inc. (“SEI” or the “Company”) changed its organizational structure, which resulted in a change in the way management accounts for and reports financial information relied on by the Chief Operating Decision Maker (“CODM”) to evaluate performance and allocate the resources of the Company. The Company’s revised organizational structure includes three operating segments: U.S. Higher Education (“USHE”), Alternative Learning, and Australia/New Zealand (“ANZ”). Financial reporting under the new organizational structure began in the first quarter of 2021.
The USHE segment provides flexible and affordable certificate and degree programs to working adults primarily through Strayer University and Capella University, including the Jack Welch Management Institute MBA, which is a unit of Strayer University. USHE also operates non-degree web and mobile application development courses through Hackbright Academy and DevMountain, the latter being a unit of Strayer University.
The Alternative Learning segment is primarily focused on developing and maintaining relationships with large employers to build employee education benefits programs that provide employees with access to affordable and industry relevant training, certificate, and degree programs. The employer relationships developed by the Alternative Learning division are an important source of student enrollment for Capella University and Strayer University, and a portion of the revenue attributed to the Alternative Learning division is driven by the volume of enrollment derived from these employer relationships. Alternative Learning also generates revenue through similar payments from other Universities that participate in Workforce Edge, a platform which provides employers a full-service education benefits administration solution. Lastly, Alternative Learning generates revenue through Sophia Learning, a provider of low-cost online general education courses recommended by the American Council on Education for transfer credit to other colleges and Universities, and Digital Enablement Partnerships, which provide online course delivery and support capabilities to other higher education institutions.
The ANZ segment is comprised of Torrens University, Think Education and Media Design School in Australia and New Zealand, which collectively offer certificate and degree programs in business, design, education, hospitality, healthcare, and technology through campuses in Australia, New Zealand, and online.
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 CODM does not evaluate operating segments using asset information. A summary of quarterly enrollment and financial information by reportable segment for each three-month period and for the years ended December 31, 2019 and 2020 is presented in the following tables (dollar amounts in thousands):
Total Enrollment by Segment
As of March 31, | As of June 30, 2019 | As of September 30, 2019 | As of December 31, 2019 | Average for the year ended December 31, 2019 | ||||||||||||||||
| Total enrollment | ||||||||||||||||||||
| U.S. Higher Education | 89,586 | 89,692 | 88,081 | 95,032 | 90,598 | |||||||||||||||
| Australia/New Zealand | 15,378 | 14,799 | 15,581 | 16,396 | 15,539 | |||||||||||||||
| Total enrollment | 104,964 | 104,491 | 103,662 | 111,428 | 106,137 | |||||||||||||||
| Employer affiliated enrollments as a % of USHE | 16.1 | % | 16.2 | % | 16.2 | % | 16.0 | % | 16.1 | % | ||||||||||
As of March 31, | As of June 30, 2020 | As of September 30, 2020 | As of December 31, 2020 | Average for the year ended December 31, 2020 | ||||||||||||||||
| Total enrollment | ||||||||||||||||||||
| U.S. Higher Education | 96,537 | 93,123 | 89,042 | 91,846 | 92,637 | |||||||||||||||
| Australia/New Zealand | 19,192 | 18,592 | 18,985 | 19,507 | 19,069 | |||||||||||||||
| Total enrollment | 115,729 | 111,715 | 108,027 | 111,353 | 111,706 | |||||||||||||||
| Employer affiliated enrollments as a % of USHE | 17.0 | % | 17.2 | % | 18.3 | % | 18.8 | % | 17.8 | % | ||||||||||
Consolidated Revenues and Consolidated Income from Operations by Segment (1)
| Three months ended | Twelve months ended | |||||||||||||||||||
March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2019 | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| U.S. Higher Education | $ | 238,214 | $ | 236,622 | $ | 233,420 | $ | 254,796 | $ | 963,052 | ||||||||||
| Alternative Learning | 8,294 | 8,488 | 8,327 | 8,976 | 34,085 | |||||||||||||||
| Australia/New Zealand | - | - | - | - | - | |||||||||||||||
| Consolidated revenues | $ | 246,508 | $ | 245,110 | $ | 241,747 | $ | 263,772 | $ | 997,137 | ||||||||||
| Income from operations | ||||||||||||||||||||
| U.S. Higher Education | $ | 42,928 | $ | 40,678 | $ | 31,882 | $ | 57,401 | $ | 172,889 | ||||||||||
| Alternative Learning | 5,391 | 5,354 | 5,035 | 5,453 | 21,233 | |||||||||||||||
| Australia/New Zealand | - | - | - | - | - | |||||||||||||||
| Amortization of intangible assets | (15,417 | ) | (15,417 | ) | (15,417 | ) | (15,416 | ) | (61,667 | ) | ||||||||||
| Merger and integration costs | (7,179 | ) | (3,019 | ) | (1,500 | ) | (10,225 | ) | (21,923 | ) | ||||||||||
| Restructuring costs | - | - | - | - | - | |||||||||||||||
| Consolidated income from operations | $ | 25,723 | $ | 27,596 | $ | 20,000 | $ | 37,213 | $ | 110,532 | ||||||||||
| Three months ended | Twelve months ended | |||||||||||||||||||
March 31, 2020 | June 30, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2020 | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| U.S. Higher Education | $ | 255,513 | $ | 247,350 | $ | 230,311 | $ | 233,405 | $ | 966,579 | ||||||||||
| Alternative Learning | 9,789 | 8,481 | 8,715 | 10,708 | 37,693 | |||||||||||||||
| Australia/New Zealand | - | - | - | 23,381 | 23,381 | |||||||||||||||
| Consolidated revenues | $ | 265,302 | $ | 255,831 | $ | 239,026 | $ | 267,494 | $ | 1,027,653 | ||||||||||
| Income from operations | ||||||||||||||||||||
| U.S. Higher Education | $ | 56,743 | $ | 58,765 | $ | 33,672 | $ | 44,213 | $ | 193,393 | ||||||||||
| Alternative Learning | 6,397 | 4,221 | 4,111 | 4,914 | 19,643 | |||||||||||||||
| Australia/New Zealand | - | - | - | (13,275 | ) | (13,275 | ) | |||||||||||||
| Amortization of intangible assets | (15,417 | ) | (15,417 | ) | (15,417 | ) | (17,974 | ) | (64,225 | ) | ||||||||||
| Merger and integration costs | (3,764 | ) | (1,174 | ) | (2,920 | ) | (5,912 | ) | (13,770 | ) | ||||||||||
| Restructuring costs | - | - | (4,024 | ) | (8,358 | ) | (12,382 | ) | ||||||||||||
| Consolidated income from operations | $ | 43,959 | $ | 46,395 | $ | 15,422 | $ | 3,608 | $ | 109,384 | ||||||||||
| (1) | Consolidated revenues for the three and twelve months ended December 31, 2020 includes a purchase accounting adjustment to record acquired contract liabilities at fair value as a result of the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand which reduced reported revenue in the ANZ segment by $11.3 million. Consolidated income from operations for 2019 and 2020 also includes (1) amortization and depreciation expense related to intangible assets and software assets associated with the Company’s merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, (2) transaction and integration expenses associated with the Company's merger with Capella Education Company and the Company’s acquisition of Torrens University and associated assets in Australia and New Zealand, and (3) for the three months ended September 30, 2020 and the three and twelve months in the period ended December 31, 2020, severance costs and right-of-use lease asset impairment charges associated with the Company’s restructuring. Please see Item 7 of the Company’s 2020 Annual Report on Form 10-K, and Item 2 of the Company’s 2020 Quarterly Reports on Form 10-Q, for further discussion of these amounts. |
Cover |
Apr. 06, 2021 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Apr. 06, 2021 |
| Entity File Number | 0-21039 |
| Entity Registrant Name | Strategic Education, Inc. |
| Entity Central Index Key | 0001013934 |
| Entity Tax Identification Number | 52-1975978 |
| Entity Incorporation, State or Country Code | MD |
| 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 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, Par Value $0.01 per share |
| Trading Symbol | STRA |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |