Perdoceo Education Corporation (PRDO) has established itself as a leading provider of quality postsecondary education, serving a diverse student population across its accredited academic institutions. The company's commitment to innovation, academic excellence, and student-centric approaches has positioned it as a prominent player in the dynamic landscape of higher education.
Business Overview and History
Perdoceo's history can be traced back to its inception in 1994, when it was founded as a provider of postsecondary education programs. Over the years, the company has undergone strategic transformations, culminating in its current identity as Perdoceo Education Corporation. The company has faced significant regulatory scrutiny and challenges in the for-profit postsecondary education sector. In 2019, Perdoceo entered into an agreement with the Federal Trade Commission to resolve an inquiry, which required the company to enhance its compliance processes related to prospective student recruitment. Additionally, Perdoceo has responded to various requests for information and reviews from state attorneys general, federal agencies, and accreditors regarding its institutions and student outcomes.
In 2022, Perdoceo made two strategic acquisitions to expand its academic offerings. It acquired Coding Dojo, which provided additional computer science and technology-focused programs at Colorado Technical University (CTU). Perdoceo also acquired CalSouthern, which was integrated into the American InterContinental University System (AIUS) segment. These acquisitions allowed Perdoceo to diversify its program portfolio and serve a wider range of students.
In 2024, Perdoceo made a significant move by acquiring the University of St. Augustine for Health Sciences (USAHS), a reputable institution offering graduate degrees in healthcare fields such as physical therapy, occupational therapy, speech-language therapy, and nursing. This acquisition allowed Perdoceo to diversify its academic offerings and expand its reach in the growing healthcare education sector.
Perdoceo's academic institutions, which include Colorado Technical University (CTU), the American InterContinental University System (AIUS), and the University of St. Augustine for Health Sciences (USAHS), provide a wide range of degree programs, from associate to doctoral levels, as well as non-degree and professional development programs. These institutions cater to the needs of both traditional and non-traditional students, offering flexible learning options, including fully online, campus-based, and hybrid formats.
Financial Performance and Ratios
Perdoceo's financial performance has been resilient, showcasing its ability to navigate the dynamic landscape of the higher education industry. For the fiscal year ended December 31, 2024, the company reported total revenue of $681.26 million, a slight decrease of 4.0% compared to the prior year. This decline was primarily attributed to the lag impact from operational changes at AIUS and the simplification of professional development offerings at CTU.
Despite the revenue decline, Perdoceo's profitability remained strong, with operating income increasing by 15.8% to $174.3 million. The company's adjusted operating income, which excludes certain significant and non-cash items, grew by 9.9% to $192.2 million. This performance was driven by effective cost management, improved operational efficiency, and the successful integration of the USAHS acquisition.
For the fourth quarter of 2024, Perdoceo reported revenue of $176.43 million, representing a 12.5% increase compared to the same period in the previous year. This growth was driven by strong student retention and engagement across CTU and AIUS. Net income for the quarter stood at $31.46 million.
Financials
Perdoceo's financial ratios further demonstrate its financial stability and liquidity. As of December 31, 2024, the company's current ratio stood at 4.84, indicating a robust ability to meet its short-term obligations. The quick ratio, which measures the company's ability to cover its current liabilities with its most liquid assets, was 4.82, further underscoring Perdoceo's strong financial position.
The company's debt-to-equity ratio as of December 31, 2024, was 0.08, reflecting a conservative capital structure with minimal reliance on debt financing. This low leverage provides Perdoceo with financial flexibility and reduces its exposure to interest rate fluctuations.
For the fiscal year 2024, Perdoceo generated net income of $147.59 million, translating to earnings per diluted share of $2.19. The company's adjusted earnings per diluted share for the year were $2.29, an improvement from $2.10 in the previous year. Operating cash flow for 2024 was $161.59 million, while free cash flow stood at $156.97 million, demonstrating the company's ability to generate substantial cash from its operations.
Liquidity
The company's strong liquidity position is evidenced by its healthy cash flow and balance sheet. As of December 31, 2024, Perdoceo reported cash, cash equivalents, restricted cash, and short-term investments totaling $591.55 million. This robust cash position provides a solid foundation for future growth and strategic initiatives.
In July 2024, Perdoceo terminated its $125 million credit facility with Wintrust Bank. This decision was made in light of the company's strong cash position and to avoid uncertainty associated with new Title IV financial responsibility requirements.
Enrollment Trends and Student Experiences
Perdoceo's focus on student experiences and academic outcomes has been a key driver of its success. As of December 31, 2024, the company reported a total student enrollment of 41,400, representing a 20.0% increase compared to the prior year. This growth was primarily driven by an 8.1% increase at CTU and an 11.8% increase at AIUS, as the institutions reverted to normalized operations following the impact of the COVID-19 pandemic.
Perdoceo's institutions have implemented various initiatives to enhance student engagement, retention, and academic success. These efforts include personalized learning technologies, data analytics, and a cross-functional approach to student onboarding and advising. The company's commitment to delivering quality education and fostering positive student experiences has contributed to its ability to attract and retain a diverse student population.
Regulatory Environment and Compliance
As an education provider participating in federal student aid programs, Perdoceo operates in a highly regulated industry. The company's academic institutions are subject to extensive laws and regulations at the federal, state, and accrediting agency levels. Compliance with these requirements is a top priority for Perdoceo, as non-compliance could result in significant penalties, including the loss of federal funding and the ability to operate.
Perdoceo has a robust compliance program in place, with dedicated teams monitoring regulatory changes and ensuring adherence to all applicable standards. The company's proactive approach to compliance has enabled it to navigate the evolving regulatory landscape and maintain the accreditation and certifications necessary to operate its academic institutions.
Strategic Initiatives and Outlook
Looking ahead, Perdoceo remains focused on driving sustainable growth and enhancing its position in the postsecondary education market. The company's strategic initiatives include continued investments in student-centric technologies, data analytics, and academic program development. The acquisition of USAHS has also presented Perdoceo with opportunities to diversify its academic offerings and expand its reach in the growing healthcare education sector.
For the fiscal year 2025, Perdoceo expects total revenue and total enrollments to increase compared to 2024. The company anticipates that the strong levels of student retention and engagement, coupled with sustained improvements in prospective student interest, will offset any potential headwinds from changes in federal student aid initiatives. Perdoceo's adjusted operating income is expected to range between $215 million and $235 million, while adjusted earnings per diluted share are projected to be between $2.31 and $2.51.
For the first quarter of 2025, Perdoceo anticipates adjusted operating income to be in the range of $61 million to $63 million, compared to $14.5 million in the prior year quarter. Adjusted earnings per diluted share for Q1 2025 are expected to range between $0.64 and $0.67, compared to $0.60 in Q1 2024.
Segment Performance
Perdoceo operates through three reporting segments: Colorado Technical University (CTU), American InterContinental University System (AIUS), and University of St. Augustine for Health Sciences (USAHS).
The CTU segment, which represented approximately 68% of Perdoceo's total student enrollments as of December 31, 2024, focuses on providing industry-relevant higher education to a diverse student population, including non-traditional adult learners and the military community. CTU offers programs in career-oriented disciplines such as business and management, nursing, healthcare management, computer science, engineering, information systems and technology, project management, cybersecurity, and criminal justice. For the year ended December 31, 2024, CTU generated revenue of $456.90 million and operating income of $171.26 million, representing 67.1% and 98.3% of Perdoceo's total revenue and operating income, respectively.
The AIUS segment, accounting for approximately 23% of total student enrollments, is committed to providing industry-relevant higher education opportunities for a diverse student population. AIUS offers programs in career-oriented disciplines like business studies, information technologies, education, behavioral sciences, and criminal justice. In 2024, AIUS generated revenue of $213.55 million and operating income of $36.18 million, representing 31.4% and 20.8% of Perdoceo's total revenue and operating income, respectively.
The USAHS segment, which was acquired on December 2, 2024, represented approximately 9% of total student enrollments. USAHS focuses on offering graduate education opportunities in health sciences, primarily in physical therapy, occupational therapy, speech-language therapy, and nursing, along with continuing education programs. For the partial year included in Perdoceo's consolidated results, USAHS generated revenue of $10.04 million and operating income of $2.64 million.
Conclusion
Perdoceo Education Corporation has established itself as a leader in the postsecondary education industry, providing quality academic programs and prioritizing student experiences and outcomes. The company's strategic acquisitions, ongoing investments in technology and academic initiatives, and dedication to regulatory compliance have positioned it for continued growth and success. As Perdoceo navigates the evolving higher education landscape, its focus on innovation, academic excellence, and student-centric approaches will be crucial in empowering learners and meeting the changing demands of the job market.