Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

In connection with its acquisitions, the Company applied ASC 805, using the acquisition method of accounting. In connection with the Rasmussen Acquisition, the Company recorded $217.4 million of goodwill, representing the excess of the purchase price over the fair value of assets acquired and liabilities assumed, including identifiable intangible assets. The Company previously recorded goodwill in the amount of $38.6 million in connection with its acquisition of HCN, and later recorded impairment charges reducing the carrying value of our goodwill to $26.6 million. There was no goodwill recorded in connection with the acquisition of GSUSA.

The following table summarizes the changes in the carrying amount of goodwill by reportable segment as of March 31, 2022 (in thousands):


	RU Segment		HCN Segment		Total Goodwill
	(Unaudited)
Goodwill as of December 31, 2021	$	216,923	$	26,563	$	243,486
Goodwill acquired	—		—		—
Impairment	—		—		—
Adjustments	507		—		507
Goodwill as of March 31, 2022	$	217,430	$	26,563	$	243,993

In addition to goodwill, in connection with the acquisitions of RU and HCN, the Company recorded identified intangible assets with an indefinite useful life in the aggregate amount of $51.0 million and $3.7 million, respectively, which includes trade name, accreditation, licensing and Title IV, and affiliate agreements. There were no indefinite useful life intangible assets identified as a result of the GSUSA Acquisition. The Company recorded $35.5 million, $4.4 million and $1.0 million, respectively, of identified intangible assets with a definite useful life in connection with the acquisitions of RU, HCN and GSUSA. Amortization expense related to definite lived intangibles assets was approximately $4.0 million for the three months ended March 31, 2022.

The following table represents the balance of the Company’s intangible assets as of March 31, 2022 (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(Unaudited)
Finite-lived intangible assets
Student roster	$	20,000	5,833		14,167
Curricula	14,563		3,140		11,423
Student and customer contracts and relationships	4,614		3,944		670
Lead conversions	1,500		438		1,062
Non-compete agreements	86		86		—
Tradename	35		9		26
Accreditation and licenses	28		3		25
Total finite-lived intangible assets	$	40,826	$	13,453	$	27,373
Indefinite-lived intangible assets
Trade name	28,498		—		28,498
Accreditation, licensing and Title IV	26,186		—		26,186
Affiliation agreements	37		—		37
Total indefinite-lived intangible assets	54,721		—		54,721
Total intangible assets	$	95,547	$	13,453	$	82,094

The following table represents the balance of the Company’s intangible assets as of December 31, 2021 (in thousands):


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-lived intangible assets
Student roster	$	20,000	3,333		16,667
Curricula	14,405		1,961		12,444
Student contracts and relationships	3,870		3,870		—
Lead conversions	1,500		250		1,250
Non-compete agreements	86		86		—
Total finite-lived intangible assets	$	39,861	$	9,500	$	30,361
Indefinite-lived intangible assets
Trade name	28,498		—		28,498
Accreditation, licensing and Title IV	26,186		—		26,186
Affiliation agreements	37		—		37
Total indefinite-lived intangible assets	54,721		—		54,721
Total intangible assets	$	94,582	$	9,500	$	85,082

The Company evaluated events and circumstances related to the valuation of goodwill and intangibles, recorded within our RU and HCN Segments, through March 31, 2022 and 2021, respectively, to determine if there were indicators of impairment. This evaluation included consideration of enrollment trends and financial performance, as well as industry and market conditions, and the impact of the COVID-19 pandemic. These evaluations concluded there were no indicators of impairment during the three months ended March 31, 2022 and 2021, and consequently, there was no impairment of goodwill or intangible assets during those periods.

Determining fair value of goodwill and intangible assets requires judgment and the use of significant estimates and assumptions, including, but not limited to, fluctuations in enrollments, revenue growth rates, operating margins, discount rates, and future market conditions. Given the current competitive and regulatory environment, the impact of COVID-19, and the uncertainties regarding the related impact on the business, there can be no assurance that the estimates and assumptions made for purposes of the Company’s interim and annual goodwill impairment tests will prove to be accurate predictions of the future. If the Company’s assumptions are not realized, the Company may record goodwill impairment charges in future periods. It is

not possible at this time to determine if any such future impairment charge would result or whether such charge would be material.

For additional information on goodwill and intangible assets, see the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Annual Report.