10.

SEGMENTS

The for-profit education industry has been impacted by numerous regulatory changes, a changing economy and an onslaught of negative media attention. As a result of these challenges, student populations have declined and operating costs have increased. Over the past few years, the Company has closed over ten locations and exited its online business.

In August 2018, the Company decided to cease operations, effective December 31, 2018, of its Lincoln College of New England (“LCNE”) campus at Southington, Connecticut. LCNE results, which was previously reported in the HOPS segment, is now included in the Transitional segment for all periods presented. The Company completed the teach-out and exited the LCNE campus on December 31, 2018. LCNE results, which was previously reported in the HOPS segment, is now included in the Transitional segment for all periods presented.

In the past, we offered any combination of programs at any campus. We have shifted our focus to program offerings that create greater differentiation among campuses and promote attainment of excellence to attract more students and gain market share. Also, strategically, we began offering continuing education training to select employers who hire our graduates and this is best achieved at campuses focused on the applicable profession.

As a result of the regulatory environment, market forces and our strategic decisions, we now operate our business in three reportable segments: (a) the Transportation and Skilled Trades segment; (b) the Healthcare and Other Professions segment; and (c) the Transitional segment. Our reportable segments have been determined based on a method by which we now evaluate performance and allocate resources. Each reportable segment represents a group of post-secondary education providers that offer a variety of degree and non-degree academic programs. These segments are organized by key market segments to enhance operational alignment within each segment to more effectively execute our strategic plan. Each of the Company’s schools is a reporting unit and an operating segment. Our operating segments are described below.

Transportation and Skilled Trades – The Transportation and Skilled Trades segment offers academic programs mainly in the career-oriented disciplines of transportation and skilled trades (e.g. automotive, diesel, HVAC, welding and manufacturing).

Healthcare and Other Professions – The Healthcare and Other Professions segment offers academic programs in the career-oriented disciplines of health sciences, hospitality and business and information technology (e.g. dental assistant, medical assistant, practical nursing, culinary arts and cosmetology).

Transitional – The Transitional segment refers to campuses that are being taught-out and closed and operations that are being phased out. The schools in the Transitional segment employ a gradual teach-out process that enables the schools to continue to operate to allow their current students to complete their course of study. These schools are no longer enrolling new students.

The Company continually evaluates each campus for profitability, earning potential, and customer satisfaction. This evaluation takes several factors into consideration, including the campus’s geographic location and program offerings, as well as skillsets required of our students by their potential employers. The purpose of this evaluation is to ensure that our programs provide our students with the best possible opportunity to succeed in the marketplace with the goals of attracting more students to our programs and, ultimately, to provide our shareholders with the maximum return on their investment. Campuses in the Transitional segment have been subject to this process and have been strategically identified for closure.

We evaluate segment performance based on operating results. Adjustments to reconcile segment results to consolidated results are included under the caption “Corporate,” which primarily includes unallocated corporate activity.

Summary financial information by reporting segment is as follows:

	For the Three Months Ended June 30,
	Revenue										Operating Income (Loss)
	2019		% of Total			2018		% of Total			2019			2018
Transportation and Skilled Trades	$	44,028		69.3	%	$	42,085		68.9	%	$	2,484		$	1,740
Healthcare and Other Professions		19,541		30.7	%		17,562		28.7	%		1,839			1,542
Transitional		-		0.0	%		1,473		2.4	%		-			(899	)
Corporate		-		0.0	%		-		0.0	%		(6,416	)		(5,906	)
Total	$	63,569		100.0	%	$	61,120		100.0	%	$	(2,093	)	$	(3,523	)

	For the Six Months Ended June 30,
	Revenue										Operating Income (Loss)
	2019		% of Total			2018		% of Total			2019			2018
Transportation and Skilled Trades	$	88,354		69.7	%	$	84,832		69.0	%	$	4,300		$	2,416
Healthcare and Other Professions		38,479		30.3	%		34,303		27.9	%		2,811			1,918
Transitional		-		0.0	%		3,874		3.1	%		-			(1,031	)
Corporate		-		0.0	%		-		0.0	%		(14,069	)		(13,088	)
Total	$	126,833		100.0	%	$	123,009		100.0	%	$	(6,958	)	$	(9,785	)

	Total Assets
	June 30, 2019		December 31, 2018
Transportation and Skilled Trades	$	108,428	$	92,070
Healthcare and Other Professions		27,984		14,078
Transitional		-		527
Corporate		18,486		39,363
Total	$	154,898	$	146,038