stra-20230331

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

☐ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File No. 0-21039

Strategic Education, Inc.

(Exact name of registrant as specified in this charter)


Maryland		52-1975978
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2303 Dulles Station Boulevard
Herndon,	VA	20171
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (703) 561-1600

Securities Registered Pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

STRA

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 14, 2023, there were outstanding 24,591,375 shares of Common Stock, par value $0.01 per share, of the Registrant.

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STRATEGIC EDUCATION, INC.

INDEX

FORM 10-Q



PART I — FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Unaudited Condensed Consolidated Balance Sheets at December 31, 202 2 and March 3 1 , 20 23	3

		Unaudited Condensed Consolidated Statements of Income (Loss) for the three months ended March 3 1 , 202 2 and 20 23	4

		Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 3 1 , 202 2 and 20 23	4

		Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 3 1 , 202 2 and 20 23	5

		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 3 1 , 202 2 and 20 23	6

		Notes to Unaudited Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

	Item 4.	Controls and Procedures	34

PART II — OTHER INFORMATION

	Item 1.	Legal Proceedings	35

	Item 1A.	Risk Factors	35

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

	Item 3.	Defaults Upon Senior Securities	36

	Item 4.	Mine Safety Disclosures	36

	Item 5.	Other Information	36

	Item 6.	Exhibits	38

SIGNATURES			39

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	December 31, 2022		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	213,667	$	202,824
Marketable securities	9,156		24,490
Tuition receivable, net	62,953		71,860
Assets held for sale	—		3,793
Other current assets	43,285		54,046
Total current assets	329,061		357,013
Property and equipment, net	132,845		124,298
Right-of-use lease assets	125,248		120,533
Marketable securities, non-current	13,123		12,699
Intangible assets, net	260,541		256,715
Goodwill	1,251,277		1,243,330
Other assets	49,652		51,180
Total assets	$	2,161,747	$	2,165,768

LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	90,588	$	93,147
Income taxes payable	6,989		2,371
Contract liabilities	88,488		122,984
Lease liabilities	23,879		23,207
Total current liabilities	209,944		241,709
Long-term debt	101,396		101,344
Deferred income tax liabilities	34,605		36,338
Lease liabilities, non-current	134,006		131,908
Other long-term liabilities	46,006		44,040
Total liabilities	525,957		555,339
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 24,402,891 and 24,591,375 shares issued and outstanding at December 31, 2022 and March 31, 2023, respectively	244		246
Additional paid-in capital	1,510,924		1,511,590
Accumulated other comprehensive loss	(35,068)		(44,300)
Retained earnings	159,690		142,893
Total stockholders’ equity	1,635,790		1,610,429
Total liabilities and stockholders’ equity	$	2,161,747	$	2,165,768

The accompanying notes are an integral part of these condensed consolidated financial statements.

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STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share data)


	For the three months ended March 31,
	2022		2023
Revenues	$	258,855	$	256,606
Costs and expenses:
Instructional and support costs	144,624		152,938
General and administration	94,784		95,465
Amortization of intangible assets	3,738		3,532
Merger and integration costs	410		425
Restructuring costs	1,858		5,595
Total costs and expenses	245,414		257,955
Income (loss) from operations	13,441		(1,349)
Other income (expense)	(1,171)		398
Income (loss) before income taxes	12,270		(951)
Provision for income taxes	5,241		1,077
Net income (loss)	$	7,029	$	(2,028)
Earnings (loss) per share:
Basic	$	0.29	$	(0.09)
Diluted	$	0.29	$	(0.09)
Weighted average shares outstanding:
Basic	23,948		23,430
Diluted	24,114		23,430

STRATEGIC EDUCATION, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)


	For the three months ended March 31,
	2022		2023
Net income (loss)	$	7,029	$	(2,028)