Leases

12 Months Ended

Dec. 31, 2024

The Company has operating leases for office space and campus facilities and finance leases for certain copiers and printers.

Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease:

•the lease transfers ownership of the asset at the end of the lease;

•the lease grants an option to purchase the asset which the lessee is expected to exercise;

•the lease term reflects a major part of the asset’s economic life;

•the present value of the lease payments equals or exceeds the fair value of the asset; or

•the asset is specialized with no alternative use to the lessor at the end of the term.

Operating Leases

The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company leases corporate office space in Florida, under an operating lease that expires in January 2026. The RU Segment leases administrative office space in Minneapolis, Minnesota, and leases 20 campuses located in six states under operating leases that expire through March 2034. The HCN Segment leases administrative office space in suburban Columbus,

Ohio, and leases eight campuses located in three states under operating leases that expire through December 2034. GSUSA leases classroom and administrative office space in Washington, D.C. and Honolulu, Hawaii under operating leases that expire through September 2036.

Operating lease assets are ROU assets, which represent the right to use an underlying asset for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in the Operating lease assets, net, and Operating lease liabilities, current and long-term on the Consolidated Balance Sheets. These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments. The ROU asset includes all lease payments and excludes lease incentives.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. There are no variable lease payments. Lease expense for the years ended December 31, 2022, 2023, and 2024, was approximately $19.9 million, $20.7 million, and $18.9 million, respectively. These costs are primarily related to long-term operating leases, but also include amounts for short-term leases with terms greater than 30 days that are not material. Cash paid for amounts included in the present value of operating lease liabilities during the years ended December 31, 2022, 2023, and 2024, was $19.5 million, $20.2 million, and $18.5 million, respectively, and is included in operating cash flows.

Loss on leases

During the first quarter of 2024, the Company elected to terminate its RU Segment lease for a planned Dallas, Texas campus. The Company paid a lease termination fee of $2.2 million and recorded a loss of $2.1 million as a result of this lease termination. Additionally, during the second quarter of 2024, the Company paid a lease termination fee of $1.2 million related to the consolidation of two RU campuses in Minnesota.

In May 2024, RU notified the Wisconsin Educational Approval Program that it intends to voluntarily close two Wisconsin campuses, effective December 31, 2025, and 2026, respectively. As a result, the Company recorded a lease impairment of $0.4 million during the second quarter of 2024.

The total loss on leases during the year ended December 31, 2024, was $3.7 million and is included in Loss on leases in the Consolidated Statements of Income.

Finance Leases

The Company leases copiers and printers for RU and GSUSA, pursuant to leases that are classified as finance leases and that expire in 2027. The Company pledged the assets financed to secure the outstanding lease obligations. As of December 31, 2024, the total finance lease liability was $0.4 million with an average interest rate of 7.00%. The ROU assets are recorded within Property and equipment, net on the Consolidated Balance Sheets. Lease amortization expense associated with the Company’s finance leases was approximately $0.1 million, $0.1 million, and $0.2 million for the years ended December 31, 2022, 2023, and 2024, respectively, and is recorded within Depreciation and amortization expense on the Consolidated Statements of Income.

The following tables present information about the amount and timing of cash flows arising from the Company’s operating and finance leases as of December 31, 2024 (dollars in thousands):


Maturity of Lease Liabilities	Operating Leases		Finance Leases
2025	$	18,951	$	213
2026	17,911		213
2027	17,021		36
2028	15,699		—
2029	13,602		—
2030 and beyond	53,110		—
Total future minimum lease payments	$	136,294	$	462
Less: imputed interest	(29,524)		(34)
Present value of operating lease liabilities	$	106,770	$	428
Less: lease liabilities, current	(13,364)		(189)
Lease liabilities, long-term	$	93,406	$	239


Balance Sheet Classification
Current
Operating lease liabilities, current	$	13,364
Finance lease liabilities, current	189
Long-term
Operating lease liabilities, long-term	93,406
Finance lease liabilities, long-term	239
Total lease liabilities	$	107,198


Other Information
Weighted average remaining lease term (in years)
Operating leases	8.09
Finance leases	2.16
Weighted average discount rate
Operating leases	5.5	%
Finance leases	7.0	%