10-K – 2026-02-19 – prdo-20251231.htm

Restrictions on Payment of Commissions, Bonuses and Other Incentive Payments
An institution participating in Title IV Programs cannot provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or awarding Title IV financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance. Regulations issued in October 2010 which became effective July 1, 2011, rescinded previously issued Department guidance and “safe harbors” relied upon by higher education institutions in making decisions about how they managed, compensated, and promoted individuals and their supervisors engaged in student recruiting and awarding of financial aid. The elimination of these “safe harbor” protections and guidance required us to terminate certain compensation payments to our affected employees and to implement changes in contractual and other arrangements with third parties to change structures formerly allowed under Department rules, and has had an impact on our ability to compensate, recruit, retain and motivate affected admissions and other affected employees, as well as on our business arrangements with third-party lead generators and other marketing vendors. The Department’s Office of Inspector General audit guide, applicable specifically to for-profit schools, requires an annual audit to review compliance with these incentive compensation restrictions.
Further, the Department provides very limited published guidance regarding this rule and does not establish clear criteria for compliance in many circumstances. If the Department determined that an institution’s compensation practices violated these standards, the Department could subject the institution to substantial monetary fines, penalties or other sanctions, and exposure to increased risk of action under the False Claims Act.
Substantial Misrepresentation
The HEA prohibits an institution participating in Title IV Programs from engaging in substantial misrepresentation of the nature of its educational programs, financial charges, graduate employability, or its relationship with the Department. Under the Department’s rules, a "misrepresentation" is any statement (made in writing, visually, orally or otherwise) made by the institution, any of its representatives or a third party that provides educational programs, marketing, advertising, recruiting, or admissions services to the institution, that is false, erroneous or has the likelihood or tendency to deceive, and a "substantial misrepresentation" is any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment. Considering the broad definition of “substantial misrepresentation,” it is possible that, despite our training efforts and compliance programs, our institutions' employees or service providers may make statements that could be construed as substantial misrepresentations. If the Department determines that one of our institutions has engaged in substantial misrepresentation, the Department may revoke the institution’s program participation agreement, deny applications from the institution for approval of new programs or locations or other matters, initiate proceedings under its BDR regulations, or fine, limit, suspend, or terminate its eligibility to participate in Title IV Programs. The impacted institution could also be exposed to increased risk of action under the Federal False Claims Act.
Fraudulent Applications for Enrollment and Financial Aid
Our institutions must maintain systems and processes to identify and prevent fraudulent applications for enrollment and financial aid. We continue to refine and strengthen our fraud detection capabilities to address the evolving fraudulent schemes affecting postsecondary institutions nationwide. We have implemented various controls throughout the enrollment process to prevent ineligible students from participating in and/or entering our contact systems. In addition, we have partnered with a third party who specializes in the detection of inconsistent personal identifying indicators and suspicious online behavior. In addition to the Department’s mandatory identity verification for certain records, we have incorporated our own identity verification measures for records flagged as suspicious. We have also established automated internal controls designed to detect red flag indicators and/or

27

 

suspicious behavior. In addition, the Trump Administration recently announced it is implementing enhanced fraud controls governing how institutions of higher education distribute financial assistance, including mandatory identity verification for certain first-time student applicants. For more information, see Item 1A, “ Risk Factors - Risks Related to the Highly Regulated Field in Which We Operate -- If our institutions fail to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institutions may lose the ability to participate in Title IV Programs, or have participation in these programs conditioned or limited.”
Compliance Reviews and Other Regulatory Investigations
In connection with its administration of Title IV Programs, the Department has broad powers to request information, conduct investigations, and review the books and records of participating institutions, including through program reviews, audits, and other oversight activities. The Department may initiate such reviews on a routine or risk-based basis, in response to complaints or referrals, or as a result of information shared with the Department by other federal or state agencies, accreditors, loan servicers, guaranty agencies, or law enforcement authorities pursuant to inter-agency information-sharing arrangements. The oversight of the Company by the Department and other governmental authorities, and future investigations, program reviews, audits, or information requests—whether initiated directly by the Department or arising from information shared by third parties—could result in additional compliance costs, management distraction, reputational risk, or adverse regulatory consequences, regardless of whether any findings ultimately result.

OTHER INFORMATION
Our website address is www.perdoceoed.com . We make available within the “Investor Relations” portion of our website under the caption “Annual Reports & SEC Filings,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, including any amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the U.S. Securities and Exchange Commission (“SEC”) . Also, the SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC. Information contained on our website is expressly not incorporated by reference into this Form 10-K.
 

28

 

Item 1 A. RISK FACTORS
Risks Related to the Highly Regulated Field in Which We Operate
Compliance with the extensive regulatory requirements applicable to our business can be costly and time consuming, and failure to comply could result in substantial financial penalties, severe restrictions on or closure of our operations, loss of federal and state financial aid funding for our students, or loss of our authorization to operate our institutions.
As a provider of postsecondary education and a participant in federal and state programs providing financial assistance to students, we are subject to extensive laws and regulations at both the federal and state levels, as well as by accrediting agencies. These requirements cover virtually all aspects of our business.
In particular, the Higher Education Act of 1965, as amended (“ HEA ”), authorizes participation in Title IV Programs and subjects participants to extensive regulations by the Department, state education authorizing agencies, and accrediting agencies. Our institutions’ participation in education assistance programs administered by the Departments of Defense and Veterans Affairs also subjects us to oversight by those agencies. In addition, other federal agencies such as the Consumer Financial Protection Bureau (“ CFPB ”) and the Federal Trade Commission (“ FTC ”) and various state agencies and state attorneys general enforce a broad range of consumer protection and other laws applicable to activities of postsecondary educational institutions, such as recruiting, marketing, the protection of personal information, student financing and payment servicing.
Because of these regulatory requirements, we are subject to compliance reviews and audits, as well as claims of noncompliance and lawsuits by government agencies based on claims by current and former students or employees and other third parties. These matters often require the expenditure of substantial time and resources to address and, additionally, they may damage our reputation, even if such actions are eventually determined to be without merit. For example, the Department has broad powers to request information and review records of an institution participating in Title IV Programs. These requests can be open-ended and do not necessarily relate to any specific allegations of wrongdoing or assert any compliance failures of any kind. We received such a request from the Department in December 2021. The inquiry was subsequently closed in January 2025 without any findings. Due process safeguards and protections for institutions subjected to this type of information request are limited to the Department’s interpretation of the boundaries of its authority over institutions participating in Title IV Programs.
The Department, under the Biden Administration, took an ever-expanding view on its authority over the administration of Title IV Programs, institutions, and loans, including overruling or ignoring a number of historical precedents and due process safeguards. The Department partnered with advocacy groups critical of the for-profit education sector in numerous aspects of its agenda, which have lobbied for targeting the sector and our schools. The postsecondary education regulatory environment has changed as a result of the U.S. federal election in November 2024.
In July 2025, President Trump signed into law a reconciliation bill, H.R. 1 (P.L. 1119-21), sometimes referred to as the One Big Beautiful Bill Act (the “ Reconciliation Act ”), that made broad changes to many areas of federal spending. The Reconciliation Act includes a number of changes to federal student aid programs under the HEA, including eliminating Grad PLUS loans for new graduate and professional students, imposing new annual and lifetime borrowing limits across multiple loan programs, establishing an earnings-based accountability requirement for federal loans that applies equally to all higher education institutions, and adopting new loan repayment options. The changes generally take effect beginning July 1, 2026, and apply prospectively to new borrowers, however some of the changes require regulations to be promulgated by the Department.
For more information, see Item 1, “Business – Student Financial Aid and Related Federal Regulation” for more information on changes to federal student aid programs .
In addition to responding to compliance reviews, audits and other informational requests, we have settled significant matters pending against us in the past which have resulted in the payment of significant amounts and our agreement to ongoing compliance and operational oversight. See Item 1, “Business – Accreditation, State Regulation and Other Compliance Matters – Other Compliance Matters,” for discussion of agreements undertaken in connection with several matters resolved in recent years.
Compliance with reviews, audits and applicable laws, regulations, standards or policies may impose significant burdens and a failure to comply could result in substantial financial penalties, severe restrictions on or closure of our operations, loss of federal and state financial aid funding for our students, or loss of authorization to operate our institutions, which could have a material adverse effect on our business, financial condition and results of operations.
Accountability regulations may subject us to significant disclosures and limitations, including program closures, which could materially reduce the enrollments and revenue at our institutions and negatively impact our future growth.
Federal accountability regulations governing eligibility for Title IV student financial aid impose program-level accountability standards and disclosure obligations that could result in required warnings to students, limitations, or loss of federal aid eligibility, or required program closures. These requirements include: the existing Gainful Employment (“ GE ”) rule, which applies only to proprietary institutions and to certain non-degree programs at other institutions; a statutory earnings premium measure that applies to

29

 

all degree programs at all institutions; and a proposed revision to the GE rule that would apply the statutory earnings premium as the sole GE measure. Collectively, these requirements could materially and adversely affect programs offered by AIUS, CTU and USAHS, and our enrollments, revenues, operating results and growth prospects.
For a discussion of the Department’s October 2023 GE and Financial Value Transparency (“ FVT ”) regulations, see Item 1, “Business - Student Financial Aid and Related Federal Regulation - Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations - Gainful Employment and Financial Value Transparency.”
The Reconciliation Act established an earnings premium measure that applies to all degree programs at all institutions that participate in the Direct Loan Program. Through the Accountability in Higher Education and Access through Demand-driven Workforce Pell (“ AHEAD ”) rulemaking, the Department has proposed regulations to implement that statutory earnings premium measure and to harmonize the existing GE framework with that statutory earnings premium measure, including by eliminating the current debt-to-earnings metric. Under the proposal, covered programs at participating institutions would be evaluated under an earnings-premium measure that compares program-level median earnings to statutory benchmarks, rather than under the existing GE rule’s dual metrics applicable to proprietary institutions. Programs that repeatedly fail the statutory measure or the new GE requirements would lose eligibility to participate in the Direct Loan Program, but, unlike the current GE rule, this failure would not generally by itself terminate Pell Grant eligibility.
To implement the statutory approach, the Department’s proposal would: (i) eliminate the debt-to-earnings metric in the GE rule; (ii) establish earnings premium thresholds based on reference to statutory benchmarks; and (iii) narrow institutional reporting obligations to data needed to calculate the earnings-premium measure and produce required net-price disclosures. In addition, the proposal would shorten the period of ineligibility for programs that fail the earnings-premium measure from three years to two years and revise required student warning requirements to track statutory notice language. Finally, the Department would expand its administrative capability authority for institutions with persistent low-earning program outcomes. An institution would be deemed administratively incapable if, in two of three consecutive award years, at least half of its Title IV aid recipients or Title IV funds are tied to programs that fail applicable earnings thresholds, resulting in provisional certification and Title IV ineligibility for the affected programs.
These proposals have not yet been implemented through final regulations and may be revised, delayed or not adopted. We continue to evaluate the potential impact of the new earnings-premium requirement and to monitor the ongoing rulemaking process. Given the complexity of the statutory and regulatory framework, the absence of final implementing regulations, and limited visibility into the underlying earnings data used to calculate the applicable metrics, we are unable to predict the timing or ultimate impact of these requirements on our business. Any failure to comply with applicable accountability requirements, including the existing GE rule or a final earnings premium rule, or an expansion of accountability standards, disclosure obligations, or adverse program-level determinations, could result in limitations or loss of Title IV eligibility and materially and adversely affect our student enrollments, profitability, business viability, financial condition and results of operations.
See Item 1, “ Business – Student Financial Aid and Related Federal Regulation -- Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations - Gainful Employment and Financial Value Transparency,” above, for additional information regarding the statutory and regulatory changes to federal accountability standards and related timelines.
Our institutions could lose their eligibility to participate in federal student financial aid programs, face significant limitations on their ability to serve new or former students or have other limitations placed upon them if the percentage of their revenues derived from certain federal programs is too high.
Our institutions, like all proprietary institutions of higher education, are subject to the “90-10 Rule” under the HEA. Under this rule, a proprietary institution will be ineligible to participate in Title IV Programs for at least two fiscal years if, for any two consecutive fiscal years, it derives more than 90% of its cash basis revenue, as defined in the rule, from federal funds, including Title IV Program funds or other qualifying federal funding sources, including tuition assistance programs offered by the U.S. Department of Defense (military tuition assistance) and U.S. Department of Veterans Affairs (veterans education benefits).
An institution that derives more than 90% of its cash receipts from qualifying federal funding sources for any fiscal year will be placed on provisional participation status for its next two fiscal years and must provide notices to existing students about the potential loss of Title IV funding. If the institution violates the 90-10 Rule for two consecutive fiscal years and becomes ineligible to participate in Title IV Programs, but continues to disburse Title IV Program funds, the Department would require the repayment of all Title IV Program funds received by it after the effective date of the loss of eligibility. The issuance of any required notice could deter prospective students from enrolling at our institutions and current students from continuing in their programs.
We have limited ability to control the amount of Title IV Program funds, military or veteran education benefits, or other federal funds sought by or awarded to our students. Additionally, the lack of visibility into federal fund sources that students utilize, the timing of the identification of the federal fund sources applicable to the 90-10 Rule, and the lack of clarity regarding the definition of federal funds make it difficult to predict future compliance with the 90-10 Rule. Although we have implemented various measures intended to reduce the percentage of our institutions’ cash basis revenue attributable to federal funding sources, including efforts to

30

 

diversify the sources of our revenue, these measures may not be sufficient to ensure our compliance with the 90-10 Rule in the future. We may be required to modify our business operations, including reducing investments in prospective student outreach, recruitment, and enrollment growth in order to preserve Title IV eligibility for our existing students.
In addition to the consequences described above, the financial responsibility rule, discussed further below, imposes mandatory consequences for failure to comply for one year of the 90-10 Rule. A one-year violation triggers a requirement to provide financial protection equal to at least 10 percent of the institution’s prior-year Title IV funding, which must remain in place until the institution passes the 90-10 Rule for two consecutive fiscal years. The Department has discretion to impose a wide range of additional conditions as part of its provisional certification. These conditions may include but are not limited to restrictions on the total amount of Title IV Program funds that may be distributed to students attending the institutions; restrictions on programmatic, enrollment, and geographic expansion; requirements to obtain and post letters of credit; and additional reporting requirements to include additional interim financial or enrollment reporting.
See Item 1, “ Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations - ‘90-10 Rule,' ” for more information about the 90-10 Rule and the measures we have implemented to improve our compliance.
If any of our institutions were to lose eligibility to participate in Title IV Programs due to violation of the 90-10 Rule, the institution would experience a dramatic decline in revenue and would be unable to continue its business as it currently is conducted. Past and future efforts to manage compliance with the 90-10 Rule for institutions may require actions that reduce our revenue, increase our operating expenses, or rely on interpretations of the 90-10 Rule or other Title IV regulations that are without clear precedent, any of which could materially and adversely affect our business, financial condition, and results of operations.
The extensive and evolving regulatory requirements applicable to our business may change, in particular as a result of the scrutiny of the for-profit postsecondary education sector, which could require us to make substantial changes to our business, reduce our profitability and make compliance more difficult.
Our business is subject to extensive federal, state, and accreditor regulatory requirements that change frequently, are subject to differing interpretations, and may be applied retroactively or differently over time. Regulatory interpretations may also shift as a result of changes in presidential administrations or agency leadership. As a result, compliance obligations applicable to our institutions may become more complex, burdensome, or costly, and may require material changes to our operations.
In recent years, the Department has adopted or revised numerous regulations affecting Title IV participation, including the Financial Value Transparency and Gainful Employment Rule, financial responsibility, administrative capability, the 90-10 Rule, distance education and certification regulations. Depending on the rule, these regulations became effective, or are scheduled to become effective, on July 1 of 2023, 2024 or 2026.
In July 2025, President Trump signed into law the Reconciliation Act, which made broad changes to federal spending, including significant amendments to federal student programs under the HEA. Among other things, the Act eliminates and replaces Grad PLUS loans for new graduate and professional students, imposes new annual and lifetime borrowing limits across multiple loan programs, establishing a new earnings-based eligibility requirement for federal student loans that applies equally to all higher education institutions, and adopts new loan repayment options. The changes generally take effect beginning July 1, 2026, and apply prospectively to new borrowers. Some of the changes are the subject of current rulemaking by the Department. For more information, see Item 1, “Business – Student Financial Aid and Related Federal Regulation” for more information on changes to federal student aid programs We anticipate that a number of other regulatory changes may be forthcoming. We have been operating with dramatic shifts in regulatory approaches across different presidential administrations, resulting in a significant number of regulations being adopted, subsequently rescinded, or revised, then re-adopted.
The HEA governs the federal government’s support of postsecondary education and requires periodic reauthorization by Congress, which last occurred in 2008. The reauthorization of the HEA historically has resulted in significant changes to program requirements and institutional participation in Title IV Programs. Additionally, funding levels for student financial assistance programs are determined annually through the appropriations process and may be affected by broader federal budgetary or policy priorities. See Item 1, “Business—Student Financial Aid and Related Federal Regulation—Legislative Action and Recent Department Regulatory Initiatives,” for more information about the reauthorization of the HEA.
In recent years, Congress, the Department, states, accrediting agencies, the CFPB, the FTC, state attorneys general, consumer advocacy groups, and the media have scrutinized the for-profit postsecondary education sector. See Item 1, “Business - Student Financial Aid and Related Federal Regulation - Scrutiny of the For-Profit Postsecondary Education Sector,” for more information about the focus on our industry. This scrutiny has resulted in significant regulatory changes and increased enforcement efforts designed to target and limit for-profit postsecondary education. See Item 1, “Business - Student Financial Aid and Related Federal Regulation - Legislative Action and Recent Department Regulatory Initiatives,” for an overview of regulatory initiatives by the Department. In addition, ongoing efforts by states and activist groups to change state authorization regulations, State Authorization Reciprocity Agreement (" SARA ") reciprocity rules, and other state-by-state standards could further increase regulatory compliance

31

 

burdens and operational complexity related to our business. See Item 1, “Business - Accreditation, State Regulation and Other Compliance Matters - State Regulation,” for more information about state regulation and SARA.
As in the past, recent and future regulatory changes—whether arising from legislation, rulemaking, enforcement actions, or shifts in regulatory interpretation—may have significant impacts on our business, potentially requiring a large number of operational changes, changes to and elimination of certain educational programs, or other fundamental changes to our business. These actions could reduce our student enrollments and profitability or limit our ability to maintain or grow our business. These recent and future regulatory changes may also make compliance with regulatory requirements even more complex and difficult.
A failure to demonstrate "financial responsibility," "administrative capability" or meet new "certification" requirements would have negative impacts on our operations.
See Item 1, “Business – Student Financial Aid and Related Federal Regulation -- Negotiated Rulemaking: Financial Responsibility,” “ Business – Student Financial Aid and Related Federal Regulation -- Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations, ” “Business – Student Financial Aid and Related Federal Regulation -- Negotiated Rulemaking: Administrative Capability” and “Business – Student Financial Aid and Related Federal Regulation -- Negotiated Rulemaking: Certification Procedures” above for an overview of the current rules relating to the financial responsibility, administrative capability and certification procedures.
If our institutions fail to maintain financial responsibility or administrative capability, they could lose their eligibility to participate in Title IV Programs, have that eligibility adversely conditioned or be subject to similar negative consequences under accreditor and state regulatory requirements, which would have a material adverse effect on our operations. In particular, limitations on participation in Title IV Programs resulting from the failure to demonstrate financial responsibility or administrative capability could materially reduce the enrollments and revenue at the impacted institution, and a termination of participation would cause a dramatic decline in revenue, and we would be unable to continue our business as it currently is conducted.
“Borrower defense to repayment” regulations, including closed school loan discharges, may subject us to significant repayment liability to the Department for discharged federal student loans and posting of substantial letters of credit that may limit our ability to make investments in our business which could negatively impact our future growth.
See Item 1, “ Business – Student Financial Aid and Related Federal Regulation -- Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations ” above for an overview of the current rules relating to Borrower Defense to Repayment.
Federal “borrower defense to repayment” regulations, including closed school loan discharge provisions, permit the discharge of certain federal student loans under specified circumstances and may result in the assertion of repayment liability against institutions for discharged amounts. In addition, these regulations may require institutions to post letters of credit or other forms of financial protection, which could restrict liquidity and limit our ability to make investments in our business.
We cannot predict the effect that current or future borrower defense and loan discharge regulations will have on student enrollments, the volume of claims submitted by borrowers for loan discharge (including closed school discharge claims), the number or amount of claims for loan discharge the Department approves, the extent to which the Department may seek to recover discharged loan amounts from us, our future financial responsibility as determined by the Department, or any sanctions, conditions, or enforcement actions that may be taken or imposed by the Department against our institutions based on loans discharged, including any requirement to post a letter of credit. Any such developments could require significant cash outlays, increase compliance costs, constrain capital resources, and materially and adversely affect our business, financial condition, results of operations, and future growth.
Our institutions would lose their ability to participate in Title IV Programs if they fail to maintain their institutional accreditation, and our student enrollments could decline if certain of our programs fail to obtain or maintain programmatic accreditation.
Our institutions must maintain institutional accreditation from an accrediting agency recognized by the Department in order to participate in Title IV Programs. See Item 1, “Business – Accreditation, Jurisdictional Authorizations and Other Compliance Matters – Institutional Accreditation.” Failure to comply with applicable accreditation standards may subject an institution to additional oversight and reporting requirements, adverse accreditation actions, including show-cause directives, probation, deferral or denial of accreditation actions, suspension or loss of an institution's accreditation or a program's approval, or other negative actions. Future inquiries or actions by state or federal agencies could negatively impact our accreditation status.
If any of our institutions or programs were to be subject to negative accreditation actions or placed on probationary or other negative accreditation status, we could experience adverse publicity, impaired ability to attract and retain students, increased compliance costs, and substantial expense to restore good standing. The inability to obtain reaccreditation following periodic reviews or any final loss of institutional accreditation after exhaustion of the administrative agency processes would result in a loss of Title IV Program funds for the affected institution and its students. In addition, if an accrediting agency that accredits one of our institutions were to lose recognition by the Department, that institution could lose its ability to participate in Title IV Programs. See Item 1,

32

 

" Business - Student Financial Aid and Related Federal Regulation - Eligibility and Certification by the Department ," for more information.
In addition to institutional accreditation, many states, licensing bodies, and professional associations require certain educational programs to be accredited by specialized accrediting agencies. While programmatic accreditation alone is not a sufficient basis to qualify for institutional Title IV Program certification, it may be required for graduates to obtain professional licensure or employment in their chosen field. Those of our programs that do not have such programmatic accreditation, where available, or fail to maintain such accreditation, particularly in programs in the health sciences field, may experience adverse publicity, declining enrollments, litigation or other claims from students or suffer other adverse impacts, which could result in it being impractical for us to continue offering such programs.
Recent changes to federal student loan programs that reduce annual, aggregate, and lifetime borrowing limits may limit students’ ability to finance their education and materially reduce enrollments.
The Reconciliation Act made significant changes to federal student loan programs under the HEA, including imposing new annual, aggregate, and lifetime borrowing limits across multiple loan programs and eliminating or restricting certain loan options previously available to graduate and professional students. Many of these changes are scheduled to take effect beginning July 1, 2026, and generally apply prospectively to new borrowers, subject to further implementation through Department regulations.
These changes may materially reduce the amount of Title IV Program loan funding available to students seeking to enroll in, continue, or complete their educational programs. Students who are unable to access sufficient federal loan funds may be required to rely more heavily on personal savings, private loans, employer assistance, or other sources of financing, which may be unavailable, more expensive, or less predictable. As a result, some prospective students may choose not to enroll, delay enrollment, enroll part-time, select shorter or lower-cost programs, or discontinue their studies before completion.
Reduced borrowing capacity may have a disproportionate impact on students enrolled in longer-duration, higher-cost, in-person or graduate-level programs, as well as on students with limited financial resources. In addition, uncertainty regarding the availability of federal loan funding, evolving regulatory guidance, or changes in borrower eligibility may negatively affect student decision-making and demand for our programs.
Any sustained reduction in students’ ability or willingness to finance their education through federal loan programs could materially reduce student enrollments, persistence and completion rates, increase price sensitivity, and adversely affect our revenue, operating results, and growth prospects. We cannot predict the extent to which these loan program changes, individually or in combination with other regulatory developments, will affect student behavior or our institutions’ enrollment trends.
See Item 1, " Business - Legislative Action and Recent Department Regulatory Initiatives – 2025 Negotiated Rulemakings ,” for more information.
Elevated cohort default rates could result in operational restrictions or loss of Title IV eligibility and materially adversely affect our business.
Our institutions’ eligibility to participate in Title IV student financial aid programs is subject to cohort default rate (“ CDR ”) requirements, which measure the percentage of former students who default on federally funded student loans during a three-year measurement period after entering repayment. If an institution’s three-year CDR exceeds specified thresholds, it may be required to delay loan disbursements, implement default prevention measures, or, in more severe cases, lose eligibility to participate in Title IV Programs.
Federal student loan repayment was suspended for an extended period beginning in 2020, during which defaults could not occur, resulting in historically low cohort default rates for affected repayment cohorts. In September 2025, the Department released official three-year cohort default rates for the 2022 cohort, which were 0% for each of our academic institutions. However, repayment resumed in October 2023, accompanied by a temporary repayment “on-ramp,” evolving income-driven repayment options, and significant operational challenges affecting federal loan servicers, including borrower communication issues and limited outreach to delinquent borrowers. The combined effects of the resumption of repayment, servicer disruptions, changes to repayment plans, litigation affecting repayment options, and borrower behavior following extended relief periods create uncertainty regarding future repayment performance. The Department has cautioned that default rates across the higher education sector may increase as temporary relief measures expire, and recent data indicate that repayment performance for loans re-entering repayment has been weaker than historical norms.
As a result, our cohort default rates beginning with the 2024 cohort may increase significantly from historically low levels until repayment behavior and servicing conditions stabilize. Any sustained increase in cohort default rates could subject our institutions to additional oversight, operational restrictions, or loss of Title IV eligibility and could materially and adversely affect our student enrollments, financial condition, results of operations, and business prospects.
See Item 1, “ Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – Student Loan Cohort Default Rates.”

33

 

If our institutions fail to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institutions may lose the ability to participate in Title IV Programs or have participation in these programs conditioned or limited.
Our institutions must maintain systems and processes to identify and prevent fraudulent applications for enrollment and financial aid. We cannot be certain that our institutions’ systems and processes will continue to be adequate in the face of increasingly sophisticated fraud schemes, or that we will be able to expand such systems and processes at a pace consistent with the changing nature of these fraud schemes. We believe the risk of outside parties attempting to perpetrate fraud in connection with the award and disbursement of Title IV Program funds, including as a result of identity theft, is heightened at our institutions that are exclusively online education providers.
The Department requires institutions that participate in Title IV Programs to refer to the Department’s Office of the Inspector General (" OIG ") credible information about fraud or other illegal conduct involving Title IV Programs. If the systems and processes that our institutions have established to detect and prevent fraud are inadequate, the Department may find that our institutions do not satisfy the Department’s administrative capability requirements, which could have the adverse effects described in the risk factor captioned “A failure to demonstrate "financial responsibility" or "administrative capability" or meet new "certification" requirements would have negative impacts on our operations.” In addition, our ability to participate in Title IV Programs is conditioned on maintaining accreditation by an accrediting agency that is recognized by the Department. Any significant failure to adequately detect fraudulent activity related to student enrollment and financial aid could cause us to fail to meet accreditors’ standards. Furthermore, accrediting agencies that evaluate institutions offering online programs must require such institutions to have processes through which the institution establishes that a student who registers for such a program is the same student who participates in and receives credit for the program. Failure to meet the requirements of our institutions’ accrediting agencies could result in the loss of accreditation of one or more of our institutions, which could result in their loss of eligibility to participate in Title IV Programs.
See Item 1, “ Business – Student Financial Aid and Related Federal Regulation – Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations – Fraudulent Applications for Enrollment and Financial Aid.”
Our agreement with the FTC may lead to unexpected impacts on our student enrollments or higher than anticipated expenses. A failure to comply with the agreement may lead to additional enforcement actions and continued scrutiny, which may result in additional costs or new enforcement actions.
As discussed above, states and other regulatory bodies have increased their focus on the for-profit postsecondary education sector. In 2019, we entered into an agreement with the FTC to bring closure to inquiries made by them. See Item 1, “Business – Accreditation, State Regulation and Other Compliance Matters – Other Compliance Matters” for information about this agreement. This agreement may ultimately result in negative impacts on our business, any one of which may be material.
Pursuant to the agreement with the FTC, we agreed to various operating provisions including the operation of a system to monitor lead aggregators and generators involving a compliance review by, or on behalf of, the Company of the various sources a prospective student interacts with prior to the Company’s purchase and use of the prospective student lead. The compliance costs related to these agreements may be greater than anticipated and may have a negative impact on our ability to compete effectively and maintain and grow student enrollments at our institutions, and a failure to comply may lead to additional enforcement action by the FTC. In addition, we may receive requests from states and other regulatory bodies to provide ongoing proof that we are complying with applicable laws and regulations and meeting our obligations pursuant to this agreement. Compliance with these potential requests results in significant additional costs and a failure to respond, whether required or not, could result in additional enforcement actions.
If we are unable to successfully resolve pending or future litigation and regulatory and governmental inquiries, or face increased regulatory actions or litigation, our financial condition and results of operations could be adversely affected.
We have been named as defendants currently and/or in the past in various lawsuits, investigations and claims covering a range of matters, including, but not limited to, violations of federal securities laws, breaches of fiduciary duty and claims made by current and former students and employees of our institutions. Current claims include a qui tam action filed in federal court by an individual plaintiff on behalf of themselves and the federal government alleging that we submitted false claims or statements to the Department in violation of the False Claims Act. See Note 11 " Contingencies " to our audited consolidated financial statements for a discussion of these and certain other current matters. Additional actions may arise in the future.
Given the highly regulated nature of our industry, we and our institutions are subject to and have regular audits, compliance reviews, inquiries, investigations, and claims of non-compliance by the Department, federal and state regulatory agencies, accrediting agencies, state attorney general offices, present and former students and employees, and others that may allege violations of statutes, regulations, accreditation standards, consumer protection and other legal and regulatory requirements applicable to us or our academic institutions. See Note 11 " Contingencies " to our consolidated financial statements and Item 1, "Business - Student Financial Aid and Related Federal Regulation - Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violations" for additional discussion of these and certain other current matters. If the results of any such audits, reviews, inquiries, investigations,

34

 

claims, or actions are unfavorable to us, we may be required to pay monetary damages or be subject to fines, operational limitations, loss of federal funding, injunctions, undertakings, additional oversight, and reporting, or other civil or criminal penalties.
Even if we maintain compliance with applicable governmental and accrediting body regulations, increased regulatory scrutiny or adverse publicity arising from allegations of non-compliance may increase our costs of regulatory compliance and adversely affect our financial results, growth rates and prospects.
We are subject to a variety of other claims and litigation that arise from time-to-time alleging non-compliance with or violations of state or federal regulatory requirements including, but not limited to, claims involving students, graduates, and employees. In the event that extensive changes in the overall federal and state regulatory construct results in additional statutory or regulatory bases for these types of claims, or other events result in an increase of such claims or unfavorable outcomes to such claims, there exists the possibility of a material adverse impact on our business, reputation, financial position, cash flows and results of operations for the periods in which the effects of any such matter or matters becomes probable and reasonably estimable.
We cannot predict the ultimate outcome of these and future matters and expect to continue to incur significant defense costs and other expenses in connection with such matters. We may be required to pay substantial damages or settlement costs in excess of our insurance coverage related to these matters. Government investigations and any related legal and administrative proceedings may result in the institution of administrative, civil injunctive or criminal proceedings against us and/or our current or former directors, officers or employees, or the imposition of significant fines, penalties or suspensions, or other remedies and sanctions. Any such costs and expenses could have a material adverse effect on our financial condition and results of operations and the market price of our common stock.
If the Department denies, or significantly conditions, recertification of any of our institutions to participate in Title IV Programs, that institution could not operate its business as it is currently conducted.
Under the HEA, an institution must apply to the Department for continued certification to participate in Title IV Programs at least every six years or whenever it undergoes a change of control. Generally, the recertification process includes a review by the Department of an institution’s educational programs and locations, administrative capability, financial responsibility, and other regulatory oversight categories. USAHS is operating under a temporary provisional program participation agreement as a result of its change of ownership at the end of 2024. Pursuant to applicable regulations, if the change of ownership is approved, USAHS will then participate under provisional certification for up to three years. During the period of provisional certification, an institution must obtain prior Department approval to add an educational program, open a new location, increase the credential level of its offerings, or shorten or lengthen its programs, which could negatively impact USAHS’s ability to undertake any of these actions. Institutions may be given provisional program participation agreements for any number of reasons, and we have seen in some instances without justification, including the existence of an open and pending audit or review within the Department’s discretion or unspecified issues arising out of past administrative capability issues. Recently, the Department has imposed additional reporting, limiting, and monitoring conditions on continued participation against institutions it has previously recertified.
As indicated above, in February 2025, both CTU and AIUS received renewals of their program participation agreements through June 30, 2027. AIUS was removed from provisional certification, leaving both AIUS and CTU with full certification. By March 31, 2027, CTU and AIUS will each be required to submit applications for recertification to continue participation in Title IV Programs.
If the Department finds that any of our institutions do not fully satisfy all required eligibility and certification standards, the Department could deny recertification or limit, suspend, or terminate the institution’s participation in Title IV Programs. Continued Title IV Program eligibility is critical to the operation of our business. If any of our institutions becomes ineligible to participate in Title IV Programs or have its participation significantly conditioned, it could not operate its business as currently conducted, and we would experience a dramatic decline in revenue.
We are dependent on the recertification and maintenance of Title IV Programs.
A substantial majority of our students rely upon Title IV Programs to assist in financing their education, and we derive a substantial majority of our revenue and cash flows from Title IV Programs. For example, for the year ended December 31, 2025, a majority of our students who were in a program of study at any time during that year participated in Title IV Programs, which resulted in Title IV Program cash receipts of approximately $615 million. As a result, any legislative or regulatory action that significantly reduces Title IV Program funding or the ability of our institutions to participate, or that places significant additional burdens on or eliminates our ability to participate, would materially reduce the number of students who enroll at our institutions, and we would be unable to continue our business as it currently is conducted, which would have a material adverse effect on our revenues, cash flows and results of operations.
We need timely approval by applicable regulatory agencies to offer new programs or make substantive changes to existing programs.

35

 

Our institutions frequently need to obtain approvals from regulatory agencies in the regular conduct of their business. For example, to establish a new educational program or make substantive changes to existing programs, we are required to obtain the appropriate approvals from the Department and applicable state and accrediting regulatory agencies. Staffing levels at the Department and other regulatory agencies and the volume of applications and other requests may delay our receipt of necessary approvals. Further, approvals may be conditioned or denied in a manner that could significantly affect our strategic plans and future growth. Approval by these regulatory agencies may also be negatively impacted due to regulatory inquiries or reviews and any adverse publicity relating to such matters or the industry generally.
If our institutions become ineligible to participate in various educational assistance programs, it could have a material negative impact on student enrollments and could have other adverse consequences.
A portion of our student population relies on education-related benefits provided through employer-sponsored tuition assistance programs and programs administered for military members and veterans, including benefits offered through the U.S. Department of Defense and the U.S. Department of Veterans Affairs. Participation in these programs is subject to separate eligibility requirements, oversight, and compliance obligations that are distinct from, and in some cases in addition to, the requirements applicable to Title IV student financial aid programs.
If our institutions were to lose eligibility, experience delays in approval, or become subject to limitations or adverse determinations affecting participation in any employer-sponsored, military, or veterans’ education benefit programs, students’ ability to utilize these benefits could be reduced or eliminated. Such outcomes could result from regulatory changes, compliance findings, changes in program policies, or determinations by the administering agencies. Any reduction in access to these benefits could materially reduce student enrollments and revenue and adversely affect our operating results. In addition, adverse determinations, or heightened oversight in connection with these programs could result in increased compliance costs, operational restrictions, reputational harm, or other adverse consequences for our business.
Risks Related to Our Business
Our financial performance depends on student enrollment levels in our institutions.
The number of students enrolled at our academic institutions is impacted by many of the regulatory risks discussed above and business risks discussed below, many of which are beyond our control. We also believe that the level of our student enrollments is affected by changes in economic conditions, although both the nature and magnitude of this effect are uncertain and may change over time. For example, during periods when the unemployment rate declines or remains stable, prospective students may have more employment options, leading them to choose to work rather than to pursue postsecondary education. On the other hand, high unemployment rates may affect the willingness of students to incur loans to pay for postsecondary education or to pursue postsecondary education in general.
Affordability concerns and negative perception of the value of a college degree increase reluctance to take on debt and make it more challenging for us to attract and retain students. We may experience decreasing enrollments in our institutions due to changing demographic trends in family size, overall declines in enrollment in postsecondary institutions, job growth in fields unrelated to our core disciplines or other societal factors. Further, we continue to make investments in our academic institutions which are designed to improve student experiences, retention and academic outcomes and support the long-term sustainable and responsible growth of our institutions. These initiatives may not be successful or the impact of these initiatives may decrease over time.
Our student enrollments could suffer under any of these circumstances. We believe it is likely that legislative, regulatory, and economic uncertainties will continue, and thus it is currently difficult to assess our long-term growth prospects. Reduced enrollments at our institutions, for any of the reasons mentioned herein or otherwise, generally reduce our revenues and profitability, which, depending on the level of the decline, could be material.
We compete with a variety of educational institutions, especially in the online education market, and if we are unable to compete effectively, our student enrollments and revenue could be adversely impacted.
The postsecondary education industry is highly fragmented and increasingly competitive. Our institutions compete with traditional public and private two-year and four-year colleges and universities, other for-profit institutions, other online education providers and alternatives to higher education, such as employment and military service. Some public and private institutions charge lower tuition for courses of study similar to those offered by our institutions due, in part, to government subsidies, government and foundation grants, tax-deductible contributions and other financial resources not available to for-profit institutions, and this competition may increase if additional subsidies or resources become available to those institutions. For example, a typical community college is subsidized by local or state government and, as a result, tuition rates for associate’s degree programs may be much lower at community colleges than at our institutions. Many states have adopted or proposed programs to enable residents to attend local community colleges for free.
Some of our competitors are more widely known and are perceived to have more established reputations than our institutions. In addition, some of our competitors are subject to fewer regulatory burdens on enrollment and financial aid processes, which may

36

 

enable them to compete more effectively for potential students. In particular, several of our publicly traded for-profit competitors have converted or are attempting to convert to a structure where a for-profit service company provides services to a non-profit educational institution, which reduces the impact of certain regulations on their operations, such as the 90-10 Rule and GE.
We have experienced increased competition as more postsecondary education providers increase their online program offerings (in particular programs that are geared towards the needs of working adults), including traditional and community colleges that had not previously offered online education programs, and increase their use of personalized learning technologies. Increased competition may create greater pricing or operating pressure on us, which could have a material adverse effect on our institutions’ enrollments, revenues, and profitability. We may also face increased competition in maintaining and developing new corporate and other engagements with employers, particularly as employers become more selective as to which online universities they will encourage or offer scholarships to their employees to attend and from which online universities they will hire prospective employees.
Congress, the Department and other agencies have required increasing disclosure of information to prospective students (with some disclosures only required by for-profit institutions). Some of these disclosures may negatively impact a prospective student’s decision to enroll in one of our institutions.
An increase in competition, particularly from traditional colleges with well-established reputations that rely on a history of selective admissions, may affect the success of our recruiting efforts to enroll and retain students who are likely to succeed in our educational programs, or cause us to reduce our tuition rates and increase our marketing and other recruiting expenses, which could adversely impact our profitability and cash flows.
The U.S. political and economic environment could materially impact our business operations and financial performance, and uncertainty surrounding the potential legal, regulatory and policy changes by the new U.S. presidential administration may directly affect us and the global economy.
The political and economic environment in the U.S. and elsewhere has resulted in and may continue to result in uncertainty. Changing regulatory policies due to the shifting political environment could impact our regulatory and compliance costs and future revenues, all of which could materially and adversely affect our business, financial condition, and operating results. Failure to adapt to or comply with evolving regulatory requirements or investor or stakeholder expectations and standards could also negatively impact our reputation, access to capital and our stock price.
The presidential election and congressional seat turnover may result in increased regulatory and economic uncertainty. Changes in federal policy by the executive branch and regulatory agencies may occur over time through the new presidential administration’s and/or Congress’s policy and personnel changes, which could lead to changes involving the level of oversight and focus on for-profit postsecondary education providers. However, the nature, timing and economic and political effects of such potential changes remain uncertain. Any future changes in federal and state laws and regulations, as well as the interpretation and implementation of such laws and regulations, could affect us in substantial and unpredictable ways.
In July 2025, Congress passed, and President Trump signed into law the Reconciliation Act, which that made broad changes to many areas of federal spending. The Act includes a number of changes to federal student aid programs under the HEA, including eliminating and replacing Grad PLUS loans for new graduate and professional students, imposing new annual and lifetime borrowing limits across multiple loan programs, establishing an earnings-based eligibility requirement for federal loans that applies equally to all higher education institutions, and adopting new loan repayment options. The changes generally take effect beginning July 1, 2026, and apply prospectively to new borrowers. See Item 1, “Business – Student Financial Aid and Related Federal Regulation” for more information on changes to federal student aid programs. Levels of U.S. federal government spending are difficult to predict and subject to significant risk. Considerable uncertainty exists regarding how future budget and program decisions will unfold, including the spending priorities of the presidential administration and Congress and what challenges budget reductions will present for us and our industry generally. We are unable to predict if there will be additional budget reduction initiatives that would impact student federal financial assistance available to our students and, if so, the extent of those reductions.
Pressures on and uncertainty surrounding the U.S. federal government’s budget going forward, and potential changes in budgetary priorities, could adversely affect the funding of federal programs providing financial assistance to our students, which could in turn adversely affect our business, financial condition, and operating results.
Our financial performance depends on our ability to develop awareness among, and enroll and retain, students in our institutions and their programs in a cost-effective manner.
If our institutions are unable to successfully conduct outreach for and recruit prospective students for their educational programs, our institutions’ ability to attract and enroll prospective students in those programs could be adversely affected. We have been investing in our student admissions and advising functions and other initiatives to improve student experiences, retention, and academic outcomes. If these initiatives do not continue to succeed, our ability to attract, enroll and retain students in our programs could be adversely affected. Further, internet and other technologies, including data gathering and marketing and advertising, is evolving quickly and we may be unable to adapt our initiatives to attract, enroll and retain students in a timely manner. Consequently, our ability to increase revenue or maintain profitability could be impaired. Some of the factors that could prevent us from successfully

37

 

conducting outreach and recruitment for our institutions and the programs that they offer include, but are not limited to: student or employer dissatisfaction with our educational programs and services; diminished access to prospective students; our failure to maintain or expand our brand names or other factors related to our marketing or advertising practices; FTC or Federal Communications Commission restrictions on contacting prospective students and the use of internet, mobile phone and other advertising and marketing media; costs and effectiveness of internet, mobile phone and other advertising programs; and changing media preferences of our target audiences.
We use third-party lead aggregators and generators to help us identify prospective students. The practices of some lead aggregators and generators have been questioned by various regulatory bodies, which could lead to changes in the quality and number of prospective student leads provided by these lead aggregators and generators as well as the cost thereof, which could in turn result in a reduction in the number of students we enroll. Further, the highly regulated nature of the postsecondary education industry and the resulting compliance measures undertaken by the industry are burdensome and some lead aggregators may choose not to work with us in favor of providing their services to different industries. In addition, the number of lead aggregators and generators has reduced over time due to consolidation in that industry, and this could exaggerate the indirect impact on us of any negative developments within that industry or with respect to any lead aggregator or generator with which we do business.
We may not be able to retain our key personnel or hire, train and retain the personnel we need to sustain and grow our business.
Our future success depends largely on the skills, efforts and motivation of our executive officers and other key personnel, as well as on our ability to attract and retain qualified managers and our institutions’ ability to attract and retain qualified faculty members and administrators. If any of our executive officers leave the Company, it may be difficult to hire a replacement with similar experience and skills due to the highly regulated nature of our business. The political and regulatory uncertainty facing the for-profit postsecondary education industry may make it difficult to retain key personnel, in particular long-tenured senior officers. Loss of key personnel in the future could impact our growth, lead to changes in or create uncertainty about our business strategies or otherwise impact management’s attention to operations.
Our success and ability to grow depends on the ability to hire, train and retain significant numbers of talented people. We face competition from companies in postsecondary education and other industries in attracting, hiring, and retaining personnel who possess the combination of skills and experiences that we seek to implement our business strategy. In particular, our performance is dependent upon the availability and retention of qualified personnel for our student support operations. The negative publicity surrounding our industry sometimes makes it difficult and more expensive to attract, hire and retain qualified and experienced personnel, and the Department’s regulations related to incentive compensation negatively affect our ability to compensate admissions and financial aid personnel. Our ability to effectively train our student support personnel and the length of time it takes them to become productive also impacts our results of operations. This may result in additional costs in the future as we are required to provide increased compensation in order to attract and retain qualified employees.
Regulatory changes impacting the for-profit postsecondary education sector may require us to make substantial changes to our business and explore alternative business strategies to maintain or grow our business. If our executive officers and other key personnel lack experience necessary to support these changes, we may be unable to timely attract the talent that we need.
Our financial performance depends, in part, on our ability to keep pace with changing market needs and technology.
Increasingly, prospective employers of students who graduate from our institutions demand that their new employees possess appropriate technological skills and also appropriate “soft” skills, such as communication, critical thinking, and teamwork skills. These desired skills can change rapidly in an evolving economic and technological environment, so it is important for our institutions’ educational programs to evolve in response to those economic and technological changes. Current or prospective students or the employers of our graduates may not accept expansion of our existing programs, improved program content and the development of new programs. Students and faculty increasingly rely on personal communication devices and expect that we will be able to adapt our information technology platforms and our educational delivery methods to support these devices and any new technologies that may emerge. Even if our institutions are able to develop acceptable new and improved programs in a cost-effective manner, our institutions may not be able to begin offering them as quickly as prospective students and employers would like or as quickly as our competitors offer similar programs. If we are unable to adequately respond to changes in market requirements due to regulatory or financial constraints, rapid technological changes or other factors, our ability to attract and retain students could be impaired and our revenue and profitability could be adversely affected.
Our use of artificial intelligence may subject us to increased compliance obligations and legal risk.
We use and are working to further incorporate AI technologies into our operations to increase efficiencies. We expect our use of AI to help reach prospective students, grow our business and benefit our current students, but it is not certain that we will realize our desired or anticipated benefits. The rise of, and strict adherence to, robocall mitigation regulations and consumer-driven call-blocking technology has severely impacted legitimate outreach, resulting in high rates of legitimate calls being flagged as "Spam Risk" or "Scam Likely." These, along with required, explicit, and often mandatory disclosures, significantly reduce the ability of our academic institutions to connect with prospective students. Call-blocking apps and carrier-level filters that block or label "Spam Risk," "Scam

38

 

Likely," or "Telemarketer," make call recipients significantly less likely to answer, even if they are expecting a call. These technologies may adversely impact our ability to engage with prospective students, which would have a material adverse effect on our ability to grow our business, our results of operations and financial condition.
The presence of AI increases our legal risk due to the increasing scope of AI regulation in various jurisdictions as AI regulation is a top focus of regulators in the United States and abroad. Compliance with these AI regulations increases our cost of compliance and may result in legal exposure in the event of noncompliance. Additionally, our development, training and use of AI may require additional investments and/or increase the cost of our offerings, which could impact our financial condition. Furthermore, the use of AI may result in incidents that compromise the confidentiality of data (including personal data). Any such incidents related to our use of AI could harm our business, financial condition and reputation. AI also raises ethical issues and, if our use of AI becomes controversial, we may be subjected to brand or reputational harm.
The complexity of many AI models makes it challenging to understand why they are generating particular outputs. This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of AI models, reducing erroneous output, eliminating bias and complying with regulations that require documentation or explanation of the basis on which decisions are made.
In addition, as AI becomes increasingly prevalent in our operations, we will have increased risk of disputes over the ownership or use of AI-generated content, as well as the risk of inadvertently infringing on third-party intellectual property rights. The intellectual property landscape for AI is evolving, and new laws, regulations or interpretations may create further uncertainty or increase the likelihood of such claims. If such claims arise, they could result in costly litigation, licensing fees, or limitations on our ability to use certain AI technologies, any of which could adversely affect our business, financial condition and results of operations. Furthermore, if the content, analyses or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate, or biased, or infringe third-party intellectual property rights, we may be subject to private lawsuits, regulatory scrutiny or reputational harm, and our business and financial condition may be adversely affected.
Our future results of operations could be materially adversely affected if we are required to write down the carrying value of non-financial assets and non-financial liabilities, such as goodwill.
In accordance with U.S. GAAP, we review our non-financial assets and non-financial liabilities, including goodwill , for impairment on at least an annual basis through the application of fair value-based measurements. On an interim basis, we review our assets and liabilities to determine if a triggering event has occurred that would result in it being more likely than not that the fair value would be less than the carrying amount for any of our reporting units or indefinite-lived intangible assets. Some factors that management considers when determining if a triggering event has occurred include reviewing the significant inputs to the fair value calculation and any events or circumstances that could affect such significant inputs, including, but not limited to, financial performance, legal, regulatory, contractual, competitive, economic, political, business or other factors, industry and market conditions as well as the most recent quantitative fair value analysis for each reporting unit and the amount of the difference between the estimated fair value and the carrying value. We determine the fair value of our reporting units using a combination of an income approach, based on discounted cash flow, and a market-based approach. To the extent the fair value of a reporting unit is less than its carrying amount, we will be required to record an impairment charge in the consolidated statements of income. Our estimates of fair value are based primarily on projected future results and expected cash flows consistent with our plans to manage the underlying businesses, including projections of newly acquired businesses, such as USAHS. However, should we encounter unexpected economic conditions or operational results, have unforeseen complications with integration of newly acquired businesses or need to take additional actions not currently foreseen to comply with current and future regulations, the assumptions used to calculate the fair value of our assets, estimates of future cash flows, revenue growth, and discount rates could be negatively impacted and could result in an impairment of goodwill which could materially adversely affect our financial condition and results of operations.
We rely on proprietary rights and intellectual property in conducting our business, which may not be adequately protected under current laws, and we may encounter disputes from time to time relating to our use of the intellectual property of third parties.
Our success depends in part on our ability to protect our proprietary rights and intellectual property. We rely on a combination of copyrights, trademarks, service marks, trade secrets, domain names and agreements to protect our proprietary rights and intellectual property. We rely on service mark and trademark protection in the United States and select foreign jurisdictions to protect our rights to our marks as well as distinctive logos and other marks associated with our services. These measures may not be adequate, and we cannot be certain that we have secured, or will be able to secure, appropriate protections for all of our proprietary rights and intellectual property. Unauthorized third parties may attempt to duplicate the proprietary aspects of our curricula, online resource material and other content despite our efforts to protect these rights. Our management’s attention may be diverted by these attempts, and we may need to use funds for lawsuits to protect our proprietary rights and intellectual property against any infringement or violation.
We may encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in these disputes. Third parties may raise a claim against us alleging an infringement or violation of the intellectual property of that third party. Some third-party intellectual property rights may be extremely broad, and it may not be possible for us to conduct our

39

 

operations in such a way as to avoid those intellectual property rights. In addition, in some instances, our faculty members or our students may post various articles or other third-party content on class discussion boards or download third-party content to personal computers, which may result in claims or liability for the unauthorized duplication or distribution of protected material. Any intellectual property claim could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether such claim has merit.

Our corporate engagement programs have contributed to student enrollment growth through 2025. If we fail to enter new corporate engagements or if existing corporate partners pause or reduce participation in their tuition assistance programs, our total student enrollments may suffer.
We remain focused on investing in and improving processes that support our corporate engagement programs. These programs have been a meaningful driver of total enrollment growth through 2025. Our continued success with these programs depends, in part, on our ability to maintain existing corporate engagements and enter into additional corporate engagements. There is no guarantee that our existing corporate partners will have an interest in continuing to fund or expand these tuition assistance programs, and there is no guarantee that their employees will continue to have the same level of interest in participating, which could adversely impact total student enrollments.
The acquisition, integration, and growth of acquired businesses may present challenges that could harm our business.
Our future success will depend, in part, on our ability to integrate any institutions or businesses we may acquire in the future, into our operations. The successful integration and profitable operation of an acquired institution or business, including the realization of anticipated cost savings and additional revenue opportunities, can present challenges, and the failure to overcome these challenges can have an adverse effect on our business, financial condition, cash flows and results of operations. Such challenges, while ultimately dependent on the particular acquisition at hand, may include, among other things, the inability to maintain uniform standards, controls, policies and procedures; the acquired business not performing as expected; distraction of management’s attention from normal business operations during the integration process; the inability to attract and/or retain key management personnel to operate the acquired entity; the inability to obtain, or delays in obtaining, regulatory or other approvals necessary to operate the business; the risk that disruptions from the integration will harm our or the acquired entity’s businesses; potential adverse reactions or changes to business relationships resulting from an acquisition; the inability to correctly estimate the size of a target market or accurately assess market dynamics; expenses associated with the integration efforts; and our assumption of unexpected risks, liabilities and obligations of the acquired business, including issues not discovered in the due diligence process.
An acquisition related to an institution or other educational business often requires various regulatory approvals and in the case of a Title IV eligible institution, like USAHS, has recently required growth restrictions, reporting obligations and temporary conditions on operations that limit changes to the institution after its acquisition. If we are unable to obtain such approvals, or we obtain them on unfavorable terms, our ability to consummate a future transaction may be impaired or we may be unable to operate the acquired entity in a manner that is favorable to us. If we fail to properly evaluate an acquisition, we may be required to incur costs in excess of what we anticipated, and we may not achieve the anticipated benefits of such acquisition, including the acquisition of USAHS.
Natural disasters or other extraordinary events may cause us to close some of our schools or suffer casualty losses.
We may experience business interruptions or casualty losses resulting from natural disasters, inclement weather, transit disruptions or other extraordinary events in one or more of the geographic areas in which we operate, particularly in California, Colorado, Florida, Georgia, and Texas, where our physical campuses are located. These events could impair the value of our assets and/or cause us to close physical campuses, temporarily or permanently, and could affect student recruiting opportunities in those locations, causing enrollment and revenue to decline, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Related to Our Business Technology Infrastructure
If we, our third-party vendors, our regulators or any other quasi-governmental organization we are required to report information to are subject to cyberattacks, data breaches or other security incidents, or if there is a disruption or failure of our information technology systems or software, such events could expose us to liability and could adversely affect our financial condition and operating results.
As part of our business, we collect, process, use and store sensitive data and certain personal information from our students and employees. We also utilize third-party vendors and provide information about our students and employees to governmental and quasi-governmental agencies to satisfy legal and regulatory requirements and use electronic payment methods to process and store some of this information, including credit card information. Our business relies on information technology networks and systems to store this data, process financial and personal information, manage a variety of business processes, and comply with regulatory, legal and tax requirements. Additionally, we maintain other confidential, proprietary, or otherwise sensitive information relating to our business and from third parties.

40

 

The information technology networks and systems owned, operated, controlled or used by us, our third-party vendors or other external agencies may be vulnerable to damage, disruptions or shutdowns, software or hardware vulnerabilities, data breaches, security incidents, failures during the process of upgrading or replacing software or databases or components thereof, power outages, natural disasters, hardware failures, attacks by computer hackers, telecommunication failures, user errors, user malfeasance, computer viruses, unauthorized access, phishing or social engineering attacks, ransomware attacks, distributed denial-of-service attacks, brute force attacks, robocalls and other real or perceived cyberattacks or catastrophic events, all of which may not be prevented by our efforts to secure our networks and systems. Security incidents can also occur as a result of non-technical issues, including intentional or inadvertent actions by our employees, our third-party vendors, external agencies or their personnel, or other parties. Security incidents are becoming increasingly prevalent and severe, as well as increasingly difficult to detect. Any of these incidents could lead to interruptions or shutdowns of our platforms, disruptions in our ability to process service requests and record or analyze the use of our services, the loss or corruption of data or unauthorized access to, or acquisition of, personal or other sensitive information, such as our intellectual property. We maintain policies, practices, operational safeguards, measures and controls aimed at reducing our cyber risk, protecting, and recovering our data and ensuring business continuity, which include reasonable efforts that aim to ensure that our third-party vendors maintain reasonable security, including encryption and authentication technology, and will notify us promptly if a security incident occurs. However, none of our vendors’ or external agencies’ security measures can provide absolute security. Advances in computer capabilities, increasingly sophisticated tools and methods used by hackers and cyber terrorists, new discoveries in the field of cryptography or other developments may result in our failure or inability, or the failure or inability of our vendors or external agencies, to adequately protect personal or other sensitive information, and there can be no assurance that we, our vendors or external agencies will not suffer a cyberattack, that hackers or other unauthorized parties will not gain access to or exfiltrate personal information or other sensitive data or that any such data compromise or unauthorized access will be discovered in a timely fashion.
Like many businesses, we, our third-party vendors, and external agencies have in the past and will in the future continue to be subject to cyberattacks, cybersecurity threats and attempts to compromise and penetrate our data security and systems and disrupt our services. Regular patching of each of our respective computer systems and frequent updates to our virus detection and prevention software with the latest virus and malware signatures may not catch newly introduced malware, ransomware, viruses or “zero-day” viruses prior to their infecting our, our third-party vendors and/or external agencies’ computer systems or networks. Future cyberattacks against us, our third-party vendors or external agencies could lead to operational disruptions that could have an adverse effect on our ability to provide services to students and on our results of operations and financial condition. Any general decline in internet use for any reason, including security or privacy concerns, increased cost of internet service or changes in government regulation, could result in less demand for online educational services and limit growth in our online programs.
Failure of our systems to operate effectively or a compromise in the security of our systems, or the systems of our third-party vendors, external agencies or other third parties, that results in unauthorized persons or entities obtaining personal or other sensitive information could materially and adversely affect our reputation, operations, operating results and financial condition. Actual or anticipated cyberattacks may cause us to incur costs, including costs to deploy additional personnel and protection technologies, train employees, pay higher insurance premiums and engage third-party specialists for additional services. Breaches in our data security or that of our third-party vendors, external agencies or other third parties could expose us to risks of data loss, inappropriate disclosure of confidential or proprietary information, potential claims, investigations, regulatory proceedings, litigation penalties and other liabilities, could impede our processing of transactions and our financial reporting and could result in a disruption of our operations. In addition, we may incur substantial costs in connection with remediating and otherwise responding to any data security incident, including potential liability for stolen client, student, or employee data, repairing system damage, or providing credit monitoring or other benefits to clients, students or employees affected by the incident. Additionally, if we, our third-party service providers or external agencies experience security incidents that result in a performance decline in necessary services, availability problems or the loss, corruption of, unauthorized access to or disclosure of personal data or confidential information, people may become unwilling to provide us the information necessary to enroll in our institutions, and our reputation and market position could be harmed. Existing students may also decrease their use of our services or cease using our services altogether. The impact of security threats, incidents and other disruptions are difficult to predict. Our insurance coverage for such security threats, incidents and other disruptions may not be adequate to cover all related costs, and we may not otherwise be fully indemnified for such costs. This may result in an increase in our costs for insurance or insurance not being available to us on economically feasible terms or at all. Insurers may also deny us coverage as to any future claim. Any of these results could materially harm our growth prospects, financial condition, business, and reputation.
The personal information that we collect may be vulnerable to breach, theft, or loss, any of which could adversely affect our reputation, operations, and ability to attract and retain students.
In the ordinary course of our business, we maintain on our network systems and the networks of our third-party providers, and report to external agencies, certain information that is confidential, proprietary, personal (such as student information) or otherwise sensitive in nature, including financial information and confidential business information. Our computer networks, those of our vendors that manage confidential information for us or provide services to our students or to us and those of external agencies can be accessed globally through the internet and are vulnerable to unauthorized access, inadvertent access or display, theft or misuse, hackers, installation of ransomware and malware and computer viruses, during regular use and in connection with hardware and

41

 

software upgrades and changes. These attacks have become more prevalent and sophisticated. Unauthorized access, misuse, theft, or hacks can evade our intrusion detection and prevention measures, and the intrusion detection and prevention precautions of our third-party providers and external agencies to which we report certain information, without alerting us to the breach or loss for some period of time or ever. An individual or group that circumvents security measures could misappropriate confidential or proprietary information or personal information about our students or employees, cause interruptions or malfunctions in our operations or commit fraud. New variants of malware or virus attacks on our systems may be undetected by our virus detection and preventions software.
The FTC passed an amendment to the Safeguards Rule under the Gramm-Leach-Bliley Act (the “ GLBA ”), effective on June 9, 2023, that updated data security requirements for financial institutions, including all Title IV institutions of higher education. The Department has increased enforcement authority by requiring auditors to verify an institution’s compliance with components of the Safeguards Rule. Failure to comply with the applicable GLBA requirements may result in FTC enforcement, which could include the imposition of conditions on our business operations, penalties, monitoring, and oversight.
In addition to being subject to privacy and information security laws and regulations in the U.S. because our services can be accessed globally via the internet, we may also be subject to privacy and information security laws in countries outside the U.S. from which students access our services, which laws may constrain the way we market and provide our services. Any breach of student or employee privacy or errors in storing, using, or transmitting personal information could violate privacy laws and regulations resulting in fines or other penalties. The adoption of new or modified state or federal data or cybersecurity legislation could increase our costs and require changes in our operating procedures or systems. An example of this is the California Consumer Privacy Act which became effective January 1, 2020.
The reliability of our program infrastructure and mechanisms to protect the personal information of our students is critical to our operations, reputation, and ability to attract and retain students. A breach, theft or loss of personal information held by us, our vendors or an external agency, or a violation of the laws and regulations governing privacy, could have a material adverse effect on our reputation and ability to attract and retain students, or result in lawsuits, additional regulation, remediation and compliance costs or investments in additional security systems to protect our computer networks, the costs of which may be substantial.
Our primarily remote work environment may exacerbate the risks related to our business technology infrastructure.
A significant portion of our employees work remotely, as do employees of a number of our third-party service vendors. These remote work environments may exacerbate certain risks to our business, including increasing the stress on, and our vulnerability to disruptions of, our technological infrastructure and systems and the risks of phishing and other cybersecurity attacks, unauthorized dissemination of confidential information and social engineering attempts. If a natural disaster, power outage, connectivity issue or other event occurs that impacts the ability of employees to work remotely, it may be difficult or, in certain cases, impossible for us to continue our business for a period of time, which could materially harm our growth prospects, results of operations, financial condition and reputation.
Risk Related to Our Common Stock
The trading price of our common stock may continue to fluctuate substantially in the future, as a result of which returns on an investment in our common stock may be volatile.
The trading price of our common stock has previously and may continue to fluctuate significantly as a result of a number of factors, some of which are not under our control. These factors may include:
• the actual, anticipated, or perceived impact of changes in the political environment or government policies affecting the for-profit education industry;

• the outcomes and impacts on our business of the Department’s rulemakings, and other changes in the legal or regulatory environment in which we operate;

• negative media coverage of the for-profit education industry;

• general economic conditions or conditions in the postsecondary education field, including declining enrollments;

• the initiation, pendency or outcome of litigation, accreditation reviews, regulatory reviews, inquiries and investigations and any related adverse publicity;

• the failure of certain of our institutions or programs to maintain compliance under the 90-10 Rule or other regulatory standards;

• our ability to meet or exceed, or changes in, expectations of analysts or investors, or the extent of analyst coverage of our company;

• any reduction or elimination of our payment of dividends on our common stock or planned stock repurchases;

• decisions by any of our significant investors to reduce their investment;

42

 

• quarterly variations in our operating results, which sometimes occur due to the academic calendar and unexpected significant expense items that do not regularly occur;

• loss of key personnel; and

• price and volume fluctuations in the overall stock market, which may cause the market price for our common stock to fluctuate significantly more than the market as a whole.

Changes in the trading price of our common stock may occur without regard to our operating performance, and the price of our common stock could fluctuate based upon factors that have little or nothing to do with our company. Further, the trading volume of our common stock has historically been, and may continue to be, relatively low, which may cause our stock price to react more to the above and other factors. The fluctuations in the trading price of our common stock may impact an investor’s ability to sell their shares at a desired time or at a price considered satisfactory, including at or above the price at which the investor acquired them.
Shareholders may not receive the level of dividends previously provided under the dividend policy our Board of Directors has adopted, or any dividends at all.
We declared our first quarterly cash dividend in the third quarter of 2023 and have paid and even increased the quarterly dividend since then. However, we are not obligated to pay dividends on our common stock. Despite our recent history of paying dividends, the declaration and payment of all future dividends to holders of our common stock are subject to the discretion of our Board of Directors, which may amend, revoke or suspend our dividend policy at any time and for any reason, including earnings and cash flows, capital spending plans, financial conditions and other factors our Board of Directors may deem relevant. The terms of our indebtedness and any limitations imposed by regulatory authorities, among other factors, may also restrict us from paying cash dividends on our common stock under certain circumstances.
Over time, our capital and other cash needs may change significantly from our current needs, which could affect whether we pay dividends and the level of any dividends we may pay in the future. Accordingly, shareholders may not receive dividends consistent with the previously declared amounts, or at all. Any reduction or elimination of dividends may cause the market price of our common stock to decline.

We cannot guarantee that our share repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value. Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.
On January 2, 2026, our Board of Directors authorized a share repurchase program pursuant to which we may repurchase up to $100.0 million of our common stock through June 30, 2027. As of February 19, 2026, no repurchases have been made under this share repurchase program. The manner, timing, and amount of any share repurchases may fluctuate and will be determined by us based on a variety of factors, including the market price of our common stock, our priorities for the use of cash to support our business operations and plans, general business and market conditions, tax laws, and alternative investment opportunities. The share repurchase program authorization does not obligate us to acquire any specific number or dollar value of shares. Further, our share repurchases could have an impact on our share trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance. Our share repurchase program may be modified, suspended, or terminated at any time, which may result in a decrease in the trading price of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.
 
 
ITEM 1B. UNRESOLVE D STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
The Company recognizes the critical importance of assessing, identifying and managing material risks associated with cybersecurity threats, as well as developing, implementing and maintaining effective cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity and availability of our data. We focus significant resources on protecting our technology infrastructure and the personal information contained therein regarding applicants, our students, their families, our alumni and our employees. Our principal cybersecurity risks include, among other things, operational risks, intellectual property theft, fraud, extortion, harm to employees or customers, violation of privacy or security laws and other litigation and legal risks, and reputational risks.
The Board of Directors, as a whole, oversees the Company’s risk management through both the Company’s enterprise risk management program and the internal audit function. To identify and assess material risks from cybersecurity threats, our enterprise

43

 

risk management program considers cybersecurity threat risks alongside other Company risks as part of our overall risk assessment process.

The Board has delegated oversight of the Company’s management of cybersecurity risk to the Compliance and Risk Committee (the “ Committee ”). Directors with experience in cybersecurity are appointed to this Committee to assist in developing strategies and processes for protecting against, responding to, and remediating information security breaches. Those directors are Dennis Chookaszian, Patrick Gross and Leslie Thornton. The Committee reviews information security matters quarterly. In addition, the full Board regularly receives updates on cybersecurity matters from our Chief Information Officer, David C. Czeszewski, at each board meeting. The Chief Information Officer reports on, among other things, our cyber risks and threats, the status of projects to strengthen our information security systems, an assessment of the information security program, and the emerging threat landscape. Mr. Czeszewski has a Bachelor of Arts degree in business and computer studies and a Master in Business Administration. He has worked in the technology field since 1986, joined the Company in 2001, and has been its Chief Information Officer since 2013.

The Company has a long-standing management-led Risk Committee (the “ Risk Committee ”) which is currently comprised of the President and Chief Executive Officer (who serves as the chair), Chief Financial Officer, General Counsel, Chief Compliance Officer, Chief Internal Auditor, Risk & Insurance Program Manager, Senior Vice President - American InterContinental University System, Senior Vice President - Colorado Technical University, Chief Information Officer and Vice President - Human Resources. The Risk Committee reviews enterprise-wide, business-unit specific and other discrete topic risk surveys and assessments, including cybersecurity risk. The Risk Committee reports identified cybersecurity risks, risk assessment and mitigation processes, effectiveness of risk management and related matters to the Committee.

We have a cybersecurity-specific risk assessment process, which helps identify our cybersecurity threat risks by comparing our processes to standards set by the Center for Internet Security (“ CIS ”). As part of these efforts to assess and mitigate the risks posed by cybersecurity incidents and cyber-attacks, we employ a range of tools and services, including regular network and endpoint monitoring, vulnerability assessments, penetration testing, and tabletop exercises to help inform our cybersecurity risk identification and assessment. We also maintain an information security policy, which addresses privacy of student records under the Family Education Rights and Privacy Act of 1974 (“ FERPA ”), and require annual information technology security awareness training by employees. We also maintain a cybersecurity risk insurance policy as an additional element of our risk mitigation strategy.
We engage third-party experts to review our cybersecurity program to help identify areas for continued focus, improvement and/or compliance. These third-party experts perform periodic cyber assessments, including security assessments using the CIS Controls cybersecurity framework. Our processes address cybersecurity threat risks associated with our use of these third-party service providers, including those in our supply chain or who have access to our customer and employee data or our systems. Third-party risks are included within our enterprise risk management assessment program, as well as our cybersecurity-specific risk identification program, both of which are discussed above. In addition, cybersecurity considerations affect the selection and oversight of our third-party service providers. We perform diligence on third parties that have access to our systems, data or facilities that house such systems or data, and continually monitor cybersecurity threat risks identified through such diligence. Additionally, we generally require those third parties that could introduce significant cybersecurity risks to us to agree by contract to manage their cybersecurity risks in specified ways, and to agree to be subject to cybersecurity audits, which we conduct as appropriate.
In fiscal year 2025, we did not identify any cybersecurity threats that have materially impacted or are likely to materially impact our business strategy, operational results, or financial condition. However, despite our proactive measures, we cannot entirely eliminate cybersecurity risks or guarantee that no undetected incidents have occurred. We describe whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect us , including our business strategy, results of operations, or financial condition, under the headings “ If we, our third-party vendors, our regulators or any other quasi-governmental organization we are required to report information to are subject to cyberattacks, data breaches or other security incidents, or if there is a disruption or failure of our information technology systems or software, such events could expose us to liability and could adversely affect our financial condition and operating results ,” “ The personal information that we collect may be vulnerable to breach, theft or loss, any of which could adversely affect our reputation, operations and ability to attract and retain students ,” and “ Our primarily remote work environment may exacerbate the risks related to our business technology infrastructure, ” included as part of our risk factor disclosures within Item 1A of this Annual Report on Form 10-K.

ITEM 2. P ROPERTIES
We have ground-based campuses located in Georgia (AIUS), Texas (AIUS and USAHS), California (USAHS), Florida (USAHS) and Colorado (CTU), which generally consist of teaching facilities, including classrooms and laboratories, and administrative offices. Additionally, we have administrative facilities located in the areas of Chicago, Illinois and Phoenix, Arizona, which are used for our universities and corporate functions.
We have transitioned our workforce to a primarily remote work environment, supported by our scalable and innovative technology infrastructure and we continue to look for ways to optimize our lease portfolio.

44

 

All of our campus and administrative facilities are leased except one in Houston, Texas. As of December 31, 2025, we leased approximately 0.8 million square feet under lease agreements that have remaining terms ranging from less than one year through 2050. The facility in Houston, Texas, is used by AIUS and is less than 0.1 million square feet of real property.
ITEM 3. LEGAL PROCEEDINGS
See Note 11 “ Contingencies ” to our consolidated financial statements in Item 15 of this Annual Report on Form 10-K.
ITEM 4. MINE SAF ETY DISCLOSURES
Not applicable.

45

 

PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed for trading on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “PRDO”.
The closing price of our common stock as reported on the Nasdaq on February 13, 2026 was $31.43 per share. As of February 13, 2026, there were approximately 86 holders of record of our common stock, including The Depository Trust Company, which holds shares of our common stock on behalf of an indeterminate number of beneficial owners.
Our common stock transfer agent and registrar is Computershare Trust Company, N.A. They can be contacted at P.O. Box# 43006, Providence, RI 02940-3006 or at their website www.computershare.com/investor .
In 2025, the Company's Board of Directors continued to declare and distribute dividends on a quarterly basis. The declaration and payment of dividends on our common stock are subject to the discretion of our Board of Directors. Any decision to pay future cash dividends will be made by the Board of Directors and depend on the Company’s available retained earnings, financial condition, the impact of changing laws and regulations, economic conditions, general business conditions, capital spending plans, the anticipated effect of a dividend payment on our financial condition, and other factors the Board of Directors may consider relevant. In addition to quarterly dividends, the Company reinvests earnings in our operations to promote future growth and, from time to time, executes repurchases of shares of our common stock under the stock repurchase program discussed below. The repurchase of shares of our common stock reduces the amount of cash available to pay cash dividends to our common stockholders.
On July 31, 2025, the Board of Directors of the Company approved a stock repurchase program for up to $75.0 million, which commenced July 31, 2025 and expires January 31, 2027. The stock repurchase program replaced the previous stock repurchase program. The other terms of the stock repurchase program are consistent with the Company’s previous stock repurchase program.
During 2025, we repurchased 4.1 million shares of our common stock for approximately $120.8 million at an average price of $29.17 per share, of which approximately 1.6 million shares of our common stock for approximately $46.1 million were purchased under the previous stock repurchase program. As of December 31, 2025, approximately $0.2 million was available under the stock repurchase program.
On January 2, 2026, the Board of Directors of the Company approved a new common stock repurchase program, authorizing the Company to repurchase up to $100.0 million of its outstanding common stock on the open market (the " Stock Repurchase Program "). This new Stock Repurchase Program, which expires on June 30, 2027, replaces the previous $75.0 million stock repurchase program, which was described above. The Stock Repurchase Program may be modified, suspended or discontinued at any time in the Company's discretion without prior notice, and does not commit the Company to repurchase shares of its common stock. The timing of purchases and the number of shares repurchased under the Stock Repurchase Program is determined by the Company’s management and will depend on a variety of factors including stock price, trading volume and other general market and economic conditions, its assessment of alternative uses of capital, regulatory requirements and other factors. Repurchases will be made in open market transactions, including block purchases, conducted in accordance with Rule 10b-18 under the Exchange Act as well as may be made pursuant to trading plans established under Rule 10b5-1 under the Exchange Act, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The Stock Repurchase Program does not obligate the Company to purchase shares and the Company may, in its discretion, begin, suspend or terminate repurchases at any time, without any prior notice.
The Board of Directors approved the aforementioned stock repurchase programs believing it advantageous to the Company and its stockholders to repurchase shares of the Company’s common stock from time to time at prices below what the Board of Directors believed to be the intrinsic value of the Company’s common stock.

46

 

Issuer Purchases of Equity Securities

Period

 

Total Number of
Shares
Purchased (1)

 

 

Average Price
Paid per Share

 

 

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

 

 

Maximum
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs (2)

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

$

47,106,022

 

January 1, 2025 - January 31, 2025

 

 

-

 

 

$

-

 

 

 

-

 

 

 

47,106,022

 

February 1, 2025 - February 28, 2025

 

 

350,000

 

 

 

25.81

 

 

 

350,000

 

 

 

38,065,303

 

March 1, 2025 - March 31, 2025

 

 

941,657

 

 

 

25.17

 

 

 

635,000

 

 

 

21,894,476

 

April 1, 2025 - April 30, 2025

 

 

-

 

 

 

-

 

 

 

-

 

 

 

21,894,476

 

May 1, 2025 - May 31, 2025

 

 

240,000

 

 

 

31.11

 

 

 

240,000

 

 

 

14,422,532

 

June 1, 2025 - June 30, 2025

 

 

410,000

 

 

 

32.74

 

 

 

410,000

 

 

 

990,720

 

July 1, 2025 - July 31, 2025

 

 

-

 

 

 

-

 

 

 

-

 

 

 

75,000,000

 

August 1, 2025 - August 31, 2025

 

 

545,000

 

 

 

30.89

 

 

 

545,000

 

 

 

58,154,087

 

September 1, 2025 - September 30, 2025

 

 

115,000

 

 

 

33.07

 

 

 

115,000

 

 

 

54,348,316

 

October 1, 2025 - October 31, 2025

 

 

-

 

 

 

-

 

 

 

-

 

 

 

54,348,316

 

November 1, 2025 - November 30, 2025

 

 

1,225,000

 

 

 

29.67

 

 

 

1,225,000

 

 

 

17,976,513

 

December 1, 2025 - December 31, 2025

 

 

621,668

 

 

 

28.51

 

 

 

621,668

 

 

 

239,095

 

 

 

 

4,448,325

 

 

 

 

 

 

4,141,668

 

 

 

 

 

 

(1) Includes 306,657 shares delivered back to the Company for payment of withholding taxes from employees for vesting restricted stock units pursuant to the terms of the Perdoceo Education Corporation Amended and Restated 2016 Incentive Compensation Plan.

(2) On July 31, 2025, the Board of Directors of the Company approved a stock repurchase program of up to $75.0 million which commenced on July 31, 2025 and expires on January 31, 2027. On January 2, 2026, the Board of Directors of the Company approved a new common stock repurchase program, authorizing the Company to repurchase up to $100.0 million of its outstanding common stock on the open market. This new Stock Repurchase Program, which expires on June 30, 2027, replaces the previous $75.0 million stock repurchase program.

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” for information as of December 31, 2025, with respect to shares of our common stock that may be issued under our existing share-based compensation plans.
The graph below shows a comparison of cumulative total returns for Perdoceo, the Standard & Poor’s 500 Index and an index of peer companies selected by Perdoceo. The companies in the peer index are weighted according to their market capitalization as of the end of each period for which a return is indicated. Included in the peer index are the following companies whose primary business is postsecondary education: Adtalem Global Education Inc., American Public Education, Inc., Grand Canyon Education, Inc., Laureate

47

 

Education, Inc., and Strategic Education, Inc. The performance graph begins with Perdoceo’s $12.63 per share closing price on December 31, 2020.
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN
(Based on $100 invested on December 31, 2020 and assumes the reinvestment of all dividends.)

 
The information contained in the performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission nor shall such information be deemed incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, as both are amended from time to time, except to the extent specifically incorporated by reference into such filing.
 
ITEM 6. Reserved

48

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion below contains “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” “plan,” “may,” “should,” ”will,” “continue to,” “focused on” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Item 1A, “Risk Factors,” in Part I of this Annual Report on Form 10-K that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason.
As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “the Company,” “Perdoceo” and “PEC” refer to Perdoceo Education Corporation and our wholly-owned subsidiaries. The terms “institution” and “university” refer to an individual, branded, for-profit educational institution, owned by us and including its campus locations. The term “campus” refers to an individual main or branch campus operated by one of our institutions.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto appearing elsewhere in this Annual Report on Form 10-K. The MD&A is intended to help investors understand the results of operations, financial condition and present business environment. The MD&A is organized as follows:
• Overview

• Consolidated Results of Operations

• Segment Results of Operations

• Summary of Critical Accounting Policies and Estimates

• Liquidity, Financial Position and Capital Resources

OVERVIEW
Perdoceo’s accredited academic institutions offer a quality postsecondary education to a diverse student population, with fully online, campus-based and hybrid learning programs. The Company’s academic institutions – Colorado Technical University (“ CTU ”), the American InterContinental University System (“ AIUS ” or “ AIU System ”) and University of St. Augustine for Health Sciences (" USAHS" ) – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Our academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. USAHS prepares medical professionals to provide quality medical care to communities across the country primarily through its graduate health sciences degree offerings in physical therapy, occupational therapy, speech language therapy and nursing, as well as continuing education programs. Perdoceo's academic institutions are committed to providing quality education that closes the gap between learners who seek to advance their careers and employers and communities needing a qualified workforce.
Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a postsecondary education provider that offers a variety of academic programs. We organize our business across three reporting segments: CTU, AIUS and USAHS.
See Note 17 “ Segment Reporting ” for a description of each of our current reporting segments along with revenues, operating income, significant segment expenses and total assets by reporting segment.
Regulatory Environment and Political Uncertainty
As indicated in “ Scrutiny of the For-Profit Postsecondary Education Sector ” section within Item 1, "Business", the for-profit education industry is scrutinized by various policymakers, regulatory agencies and interest groups. Congressional hearings and roundtable discussions were previously held regarding certain aspects of the education industry, including issues surrounding student debt, as well as publicly reported student outcomes that may be used as part of an institution’s recruiting and admissions practices, and

49

 

reports were issued that are highly critical of for-profit colleges and universities. Many of the most highly criticized institutions have been closed now for several years.
The November 2024 federal elections resulted in a new President and Congress. We cannot predict the actions that the new Administration or Congress may take or their effect on the higher education sector. The new Congress or Administration may delay, block, modify, or eliminate certain Title IV and other regulations applicable to higher education institutions. In addition, the new Administration may interpret, apply, and enforce Title IV and other regulations in a manner different from current Department guidance and practice. We expect to continue to need to operate nimbly, making necessary changes to the extent possible to comply with new rules or interpretations as well as new interpretations of existing rules.
We encourage you to review Item 1, “Business,” and Item 1A, “Risk Factors,” to learn more about our highly regulated industry and related risks and uncertainties.
Note Regarding Non-GAAP measures
We believe it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of our core business. As a general matter, we use non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of our core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, we believe that non-GAAP financial information is used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance.
Adjusted operating income and adjusted earnings per diluted share have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance with and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of our liquidity.
Non-GAAP financial measures, when viewed in a reconciliation to respective GAAP financial measures, provide an additional way of viewing the Company's results of operations and the factors and trends affecting the Company's business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP.
2025 Review
During the year ended December 31, 2025 (" current year "), our academic institutions remained focused on enhancing student experiences and academic outcomes while aligning their academic programs with the current demands of the workforce. Student retention continued to trend near multi-year highs and we made purposeful investments in marketing and admissions to efficiently serve the prospective student interest our academic institutions experienced.
As of December 31, 2025, we experienced total student enrollment growth, supported by continued momentum in student retention and engagement as well as increased interest from prospective students looking to pursue a degree at our academic institutions. Total student enrollments increased 7.3% at December 31, 2025 as compared to December 31, 2024, driven by enrollment growth at all three of our academic institutions. CTU's total student enrollments increased 6.6% as compared to the prior year end, supported by high levels of student retention and engagement, growth within the corporate student program and strong levels of prospective student interest. Total student enrollments increased 11.2% at AIUS for the current year end as compared to the prior year end, driven by an additional academic session during the fourth quarter, as well as underlying student retention and engagement trends. Lastly, for USAHS, total student enrollments increased 2.6% for the current year end as compared to the prior year end, primarily driven by growth in programs such as nursing and speech language pathology.
Strategic investments in technology have been strong contributors to enrollment growth across all three of our academic institutions, as it gives our students, faculty and support staff the enhanced resources to support enrollment processes, student experiences and academic outcomes. Additionally, we are continuing to refine our overall marketing, advising, and admissions investments with a focus on optimizing the effectiveness of our student enrollment and support processes. This approach is designed to further enhance student retention and engagement while maintaining a disciplined cost structure.
Through our corporate student programs, we provide accredited degree opportunities to employees of our partner organizations, supporting their career advancement while helping corporate partners strengthen employee development and retention. We continue to make strategic investments in technology and talent to expand these programs.
We expect the strong levels of student retention and student engagement we experienced over the past year, as well as the prospective student interest experienced, to continue into 2026. As a result, full year adjusted operating income is expected to be higher for 2026 as compared to 2025, primarily driven by expected total student enrollment and revenue growth.
Financial Highlights

50

 

Revenue for the current year increased by 24.2% or $164.8 million as compared to the prior year, primarily due to an increase of $147.5 million of revenue from the USAHS acquisition which was completed in December 2024 and therefore did not have comparable results in the prior year. CTU also contributed to the increase in revenue due to growth in total student enrollments driven by strong student retention and engagement trends along with increased prospective student interest, while AIUS remained relatively flat as compared to the prior year.
Operating income for the current year increased by 12.5% to $196.0 million as compared to operating income of $174.3 million in the prior year, driven by increased operating income within all three of our academic institutions as well as reduced operating losses within Corporate and Other. The increase in operating income for the current year was a result of revenue growth and continued management of operating expenses.
The Company believes it is useful to present non-GAAP financial measures, such as adjusted operating income, which exclude certain non-cash items, as a means to better understand the core performance of its operations. During the current year, the Company no longer adjusts for legal fees associated with certain matters as these amounts are no longer material to the results of operations and, as a result, prior period non-GAAP amounts have been recast to be comparable. (See tables below for a GAAP to non-GAAP reconciliation.) Adjusted operating income was $237.6 million for the current year as compared to $188.9 million for the prior year.
Adjusted operating income and adjusted earnings per diluted share for the years ended December 31, 2025 and 2024 is presented below (dollars in thousands, except per share amounts):
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

Adjusted Operating Income

 

2025

 

 

2024

 

 

Operating income

 

$

196,000

 

 

$

174,253

 

 

Depreciation and amortization

 

 

41,627

 

 

 

14,645

 

 

Adjusted Operating Income

 

$

237,627

 

 

$

188,898

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

Adjusted Earnings Per Diluted Share

 

2025

 

 

2024

 

 

Reported Earnings Per Diluted Share

 

$

2.42

 

 

$

2.19

 

 

Pre-tax adjustments included in operating expenses:

 

 

 

 

 

 

 

Amortization for acquired intangible assets

 

 

0.26

 

 

 

0.09

 

 

Total pre-tax adjustments

 

 

0.26

 

 

 

0.09

 

 

Tax effect of adjustments (1)

 

 

(0.07

)

 

 

(0.02

)

 

Total adjustments after tax

 

 

0.19

 

 

 

0.07

 

 

Adjusted Earnings Per Diluted Share

 

$

2.61

 

 

$

2.26

 

 

___________________________
(1) The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.

CONSOLIDATED RESULTS OF OPERATIONS
The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the years ended December 31, 2025 and 2024 (dollars in thousands), including comparisons of our year-over-year performance between these years. Please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our results for the year ended December 31, 2024, as well as the year-over-year comparison of our 2024 financial performance to 2023.

51

 

 

 

 

For the Year Ended December 31,

 

 

 

2025

 

 

% of
Total
Revenue

 

 

2024

 

 

% of
Total
Revenue

 

 

2023

 

 

% of
Total
Revenue

 

TOTAL REVENUE

 

$

846,096

 

 

 

 

 

$

681,263

 

 

 

 

 

$

710,004

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Educational services and facilities (1)

 

 

197,540

 

 

 

23.3

%

 

 

120,860

 

 

 

17.7

%

 

 

130,324

 

 

 

18.4

%

General and administrative (2) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing

 

 

112,858

 

 

 

13.3

%

 

 

100,963

 

 

 

14.8

%

 

 

102,588

 

 

 

14.4

%

Admissions

 

 

88,957

 

 

 

10.5

%

 

 

81,783

 

 

 

12.0

%

 

 

91,359

 

 

 

12.9

%

Administrative

 

 

179,616

 

 

 

21.2

%

 

 

150,587

 

 

 

22.1

%

 

 

170,922

 

 

 

24.1

%

Bad debt

 

 

29,492

 

 

 

3.5

%

 

 

33,719

 

 

 

4.9

%

 

 

33,215

 

 

 

4.7

%

Total general and administrative expense

 

 

410,923

 

 

 

48.6

%

 

 

367,052

 

 

 

53.9

%

 

 

398,084

 

 

 

56.1

%

Depreciation and amortization

 

 

41,627

 

 

 

4.9

%

 

 

14,645

 

 

 

2.1

%

 

 

16,887

 

 

 

2.4

%

Asset impairment

 

 

6

 

 

 

0.0

%

 

 

4,453

 

 

 

0.7

%

 

 

14,263

 

 

 

2.0

%

OPERATING INCOME

 

 

196,000

 

 

 

23.2

%

 

 

174,253

 

 

 

25.6

%

 

 

150,446

 

 

 

21.2

%

PRETAX INCOME

 

 

216,836

 

 

 

25.6

%

 

 

201,440

 

 

 

29.6

%

 

 

192,121

 

 

 

27.1

%

PROVISION FOR INCOME TAXES

 

 

56,922

 

 

 

6.7

%

 

 

53,850

 

 

 

7.9

%

 

 

44,469

 

 

 

6.3

%

Effective tax rate

 

 

26.3

%

 

 

 

 

 

26.7

%

 

 

 

 

 

23.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

$

159,914

 

 

 

18.9

%

 

$

147,590

 

 

 

21.7

%

 

$

147,652

 

 

 

20.8

%

_______________
(1) Educational services and facilities expense includes costs attributable to the educational activities of our campuses, including: salaries and benefits of faculty, academic administrators and student support personnel, and costs of educational supplies and goods and services, including costs of textbooks and laptops, and rents on leased campus and administrative facilities.

(2) General and administrative expense includes operating expenses associated with corporate and campus administration, marketing, admissions, information technology, financial aid, accounting, human resources, legal and compliance. Other expenses within this expense category include costs of advertising and production of marketing materials and bad debt expense.

Year Ended December 31, 2025 as Compared to the Year Ended December 31, 2024
Revenue
Revenue for the year ended December 31, 2025 (" current year ") increased by 24.2% or $164.8 million, as compared to the prior year. The increase was primarily driven by the acquisition of USAHS, which was completed in December 2024 and therefore not included for the full comparative period of the prior year. Excluding the impact of the USAHS, revenue increased due to higher revenue at CTU as a result of growth in total student enrollments for the current year as compared to the prior year.
Educational Services and Facilities Expense (dollars in thousands)

 

 

For the Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2025 vs 2024 % Change

 

 

2024 vs 2023 % Change

 

Educational services and facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Academics & student related

 

$

173,015

 

 

$

112,216

 

 

$

120,023

 

 

 

54.2

%

 

 

-6.5

%

Occupancy

 

 

24,525

 

 

 

8,644

 

 

 

10,301

 

 

 

183.7

%

 

 

-16.1

%

Total educational services and facilities

 

$

197,540

 

 

$

120,860

 

 

$

130,324

 

 

 

63.4

%

 

 

-7.3

%

 
Educational services and facilities expense for the current year increased by 63.4% or $76.7 million as compared to the prior year. The increase was primarily due to a full year of expenses related to the USAHS acquisition as compared to only one month of such expenses in the prior year. Excluding the impact of USAHS, expenses increased slightly, primarily driven by increased academic expenses at CTU to support the growth in total student enrollments.
Academics and student-related costs increased by 54.2%, or $60.8 million, and occupancy-related costs increased by 183.7%, or $15.9 million, respectively, as compared to the prior year. These increases were primarily attributable to a full year of expenses related to USAHS in the current year, as compared to only one month of such expenses in the prior year period.
 

52

 

General and Administrative Expense (dollars in thousands)

 

 

For the Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2025 vs 2024 % Change

 

 

2024 vs 2023 % Change

 

General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising and marketing

 

$

112,858

 

 

$

100,963

 

 

$

102,588

 

 

 

11.8

%

 

 

-1.6

%

Admissions

 

 

88,957

 

 

 

81,783

 

 

 

91,359

 

 

 

8.8

%

 

 

-10.5

%

Administrative

 

 

179,616

 

 

 

150,587

 

 

 

170,922

 

 

 

19.3

%

 

 

-11.9

%

Bad Debt

 

 

29,492

 

 

 

33,719

 

 

 

33,215

 

 

 

-12.5

%

 

 

1.5

%

Total general and administrative expense

 

$

410,923

 

 

$

367,052

 

 

$

398,084

 

 

 

12.0

%

 

 

-7.8

%

 
The general and administrative expense for the current year increased by 12.0% or $43.9 million as compared to the prior year. The increase was primarily due to a full year of expenses related to the USAHS acquisition as compared to only one month of such expenses in the prior year. Excluding the impact of USAHS, expenses increased by 1.3% or $4.9 million, primarily driven by higher expenses at CTU to support the growth in total student enrollments for the current year as compared to the prior year.
Advertising and marketing expense for the current year increased by 11.8% or $11.9 million as compared to the prior year. The increase was due to a full year of advertising and marketing expenses related to the USAHS acquisition in the current year, as compared to only one month of such expenses in the prior year. Excluding the impact of USAHS, advertising and marketing costs decreased slightly as compared to the prior year.
Admissions expense increased by 8.8% or $7.2 million as compared to the prior year. The increase was primarily attributable to a full year of admissions expenses related to the USAHS acquisition in the current year, as compared to only one month of such expenses in the prior year. Excluding the impact of USAHS, admissions expenses would have slightly increased as compared to the prior year, primarily due to total student enrollment growth at both CTU and AIUS.
Administrative expense for the current year increased by 19.3% or $29.0 million as compared to the prior year. The increase was primarily attributable to a full year of administrative expenses related to the USAHS acquisition in the current year, as compared to only one month of such expenses in the prior year. Excluding the impact of USAHS, administrative expenses would have increased as compared to the prior year, primarily due to non-recurring personnel investments in the current year period.
Bad debt expense incurred by each of our segments during the years ended December 31, 2025, 2024 and 2023 was as follows (dollars in thousands):

 

 

For the Year Ended December 31,

 

 

 

2025

 

 

% of Segment Revenue

 

 

2024

 

 

% of Segment Revenue

 

 

2023

 

 

% of Segment Revenue

 

 

2025 vs 2024 % Change

 

 

2024 vs 2023 % Change

 

Bad debt expense by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CTU

 

$

19,441

 

 

 

4.2

%

 

$

19,907

 

 

 

4.5

%

 

$

20,203

 

 

 

4.4

%

 

 

-2.3

%

 

 

-1.5

%

AIUS

 

 

9,607

 

 

 

4.2

%

 

 

13,612

 

 

 

6.0

%

 

 

13,028

 

 

 

5.1

%

 

 

-29.4

%

 

 

4.5

%

USAHS (1)

 

 

442

 

 

 

0.3

%

 

 

201

 

 

NM

 

 

 

-

 

 

NA

 

 

 

119.9

%

 

NA

 

Corporate and Other

 

 

2

 

 

NM

 

 

 

(1

)

 

NM

 

 

 

(16

)

 

NM

 

 

NM

 

 

NM

 

Total bad debt expense

 

$

29,492

 

 

 

3.5

%

 

$

33,719

 

 

 

4.9

%

 

$

33,215

 

 

 

4.7

%

 

 

-12.5

%

 

 

1.5

%

 
_______________
(1)	USAHS includes results of operations starting from the acquisition date on December 2, 2024.
Bad debt expense decreased by 12.5% or $4.2 million for the current year as compared to the prior year. The improvement for the current year was primarily driven by decreases in bad debt expense at both CTU and AIUS as we experienced stronger student engagement and retention within our academic institutions.
We regularly evaluate our reserve rates, which includes a quarterly update of our analysis of historical student receivable collectability based on the most recent data available and a review of current known factors which we believe could affect future collectability of our student receivables, such as the number of students that do not complete the financial aid process. We continue to expect quarterly fluctuations in bad debt expense.

53

 

Depreciation and Amortization Expense
Depreciation and amortization expense increased by 184.2% or $27.0 million as compared to the prior year. This increase was primarily driven by amortization associated with intangible assets at USAHS as well as increased depreciation expense for assets within USAHS, including a failed sale lease-back transaction.
Operating Income
Operating income for the current year increased by 12.5% or $21.7 million as compared to the prior year. This improvement was primarily driven by increased revenue, which more than offset the increases in operating expenses, as compared to the prior year.
Provision for Income Taxes
The effective income tax rate for the current year was 26.3% compared to 26.7% for the prior year. The decrease in the effective income tax rate was primarily due a reduction in nondeductible compensation.
For the full year 2026, we expect our effective tax rate to be between 23.5% and 24.5%.
SEGMENT RESULTS OF OPERATIONS
The summary of segment financial information below should be referenced in connection with a review of the following discussion of our segment results from operations for the years ended December 31, 2025 and 2024 (dollars in thousands), including comparisons of our year-over-year performance. Please refer to Part II Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our results for the year ended December 31, 2024, as well as the year-over-year comparison of our 2024 financial performance to 2023.

 

 

For the Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2025 vs 2024 % Change

 

 

2024 vs 2023 % Change

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CTU (1)

 

$

461,602

 

 

$

443,374

 

 

$

456,169

 

 

 

4.1

%

 

 

-2.8

%

AIUS (1)

 

 

226,220

 

 

 

227,072

 

 

 

253,057

 

 

 

-0.4

%

 

 

-10.3

%

USAHS (2)

 

 

157,576

 

 

 

10,041

 

 

 

-

 

 

 

1469.3

%

 

NA

 

Corporate and Other

 

 

698

 

 

 

776

 

 

 

778

 

 

NM

 

 

NM

 

                         Total

 

$

846,096

 

 

$

681,263

 

 

$

710,004

 

 

 

24.2

%

 

 

-4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CTU (1)

 

$

180,597

 

 

$

174,686

 

 

$

150,699

 

 

 

3.4

%

 

 

15.9

%

AIUS (1)

 

 

35,950

 

 

 

32,756

 

 

 

38,592

 

 

 

9.8

%

 

 

-15.1

%

USAHS (2)

 

 

3,211

 

 

 

(2,640

)

 

 

-

 

 

 

221.6

%

 

NA

 

Corporate and Other

 

 

(23,758

)

 

 

(30,549

)

 

 

(38,845

)

 

 

22.2

%

 

 

21.4

%

                         Total

 

$

196,000

 

 

$

174,253

 

 

$

150,446

 

 

 

12.5

%

 

 

15.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS) MARGIN:

 

 

 

 

 

 

 

 

 

 

 

 

 

CTU (1)

 

 

39.1

%

 

 

39.4

%

 

 

33.0

%

 

 

 

 

 

 

AIUS (1)

 

 

15.9

%

 

 

14.4

%

 

 

15.3

%

 

 

 

 

 

 

USAHS (2)

 

 

2.0

%

 

 

-26.3

%

 

NA

 

 

 

 

 

 

 

Corporate and Other

 

NM

 

 

NM

 

 

NM

 

 

 

 

 

 

 

                         Total

 

 

23.2

%

 

 

25.6

%

 

 

21.2

%

 

 

 

 

 

 

______________________
(1) The prior year operating results for CTU and AIUS were recast to reflect the transition of Hippo Education from CTU to AIUS.

(2) USAHS includes results of operations beginning on the acquisition date of December 2, 2024. Operating income (loss) for the current year includes $30.3 million of depreciation and amortization expense associated with acquired tangible and intangible assets, as well as finance leases, as compared to $2.5 million in the prior year.

 

54

 

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

2025 vs 2024 % Change

 

 

2024 vs 2023 % Change

 

TOTAL STUDENT ENROLLMENTS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CTU

 

 

29,950

 

 

 

28,090

 

 

 

25,970

 

 

 

6.6

%

 

 

8.2

%

AIUS

 

 

10,560

 

 

 

9,500

 

 

 

8,490

 

 

 

11.2

%

 

 

11.9

%

USAHS  (1)

 

 

3,890

 

 

 

3,790

 

 

 

-

 

 

 

2.6

%

 

NA

 

Total

 

 

44,400

 

 

 

41,380

 

 

 

34,460

 

 

 

7.3

%

 

 

20.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
______________________
(1) Perdoceo completed the acquisition of USAHS on December 2, 2024.

Total student enrollments represent all students who are active as of the last day of the reporting period. Active students are defined as those students who are considered in attendance by participating in class related activities during the previous two weeks of the most recent academic term. Total student enrollments do not include learners participating in: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at our universities.
Year Ended December 31, 2025 as Compared to the Year Ended December 31, 2024
CTU. Revenue for the current year increased by 4.1% or $18.2 million as compared to the prior year. The increase was driven by total student enrollment growth of 6.6% at December 31, 2025 as compared to December 31, 2024. CTU's total student enrollment growth was supported by high levels of student retention and engagement, growth in the corporate student program and higher levels of prospective student interest.
Current year operating income for CTU increased by 3.4% or $5.9 million as compared to the prior year. This improvement in operating income was driven by the increase in revenue discussed above, which more than offset increased operating expenses to support the student enrollment growth.
AIUS. Revenue for the current year decreased slightly by 0.4% or $0.9 million as compared to the prior year. Total student enrollments increased by 11.2% at December 31, 2025 as compared to December 31, 2024 due to an extra session start in December 2025, which will positively impact revenue into 2026. The slight decrease in revenue is driven by Trident University, as the recent government shutdown disparately impacted this institution.
Current year operating income for AIUS increased by 9.8% or $3.2 million as compared to the prior year, driven by lower operating expenses as compared to the prior year.
USAHS. Revenue for the current year was approximately $157.6 million, with operating income of approximately $3.2 million. Operating income for the current year includes $30.3 million of depreciation and amortization expense associated with acquired tangible and intangible assets, as well as finance leases, as compared to $2.5 million in the prior year.
Corporate and Other. This category includes unallocated costs that are incurred on behalf of the entire company. Total Corporate and Other operating loss for the current year improved by 22.2% or $6.8 million as compared to the prior year, primarily due to lower acquisition-related expenses.
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have identified the accounting policies and estimates listed below as those that we believe require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties. This section should be read in conjunction with Note 2 “Summary of Significant Accounting Policies” to our audited consolidated financial statements which includes a discussion of these and other significant accounting policies.
Revenue Recognition
Description : Our revenue, which is derived primarily from academic programs taught to students who attend our universities, is generally segregated into two categories: (1) tuition and fees, and (2) other. Tuition and fees represent costs to our students for educational services provided by our universities and are reflected net of scholarships and tuition discounts. Our universities charge tuition and fees at varying amounts and bill students a single charge that covers tuition, certain fees and required program materials, such as textbooks and supplies, which we treat as a single performance obligation. Generally, we bill student tuition at the beginning of each academic term for our degree programs and recognize the tuition as revenue on a straight-line basis over the academic term. As part of a student’s course of instruction, certain fees, such as technology fees and graduation fees, are billed separately to students. These fees are generally earned over the applicable term and are not considered separate performance obligations.
Assumptions and judgment : Revenue recognition includes assumptions and significant judgments including determination of the appropriate portfolios to assess for meeting the criteria to recognize revenue under ASC Topic 606 as well as the assessment of

55

 

collectability. We analyze revenue recognition on a portfolio approach under ASC Topic 606. Significant judgment is used in determining the appropriate portfolios to assess for meeting the criteria to recognize revenue under ASC Topic 606. We have determined that all of our students can be grouped into one portfolio. Based on our past experience, students at different universities, in different programs or with different funding all behave similarly. Enrollment agreements all contain similar terms, refund policies are similar across all institutions and students work with the university to obtain some type of funding, for example, Title IV Program funds, Veterans Administration funds, military funding, employer tuition assistance or self-pay. We have significant historical data for our students which allows us to analyze collectability. We do not expect that revenue earned for the portfolio is significantly different as compared to revenue that would be earned if we were to assess each student contract separately.
Significant judgment is also required to assess collectability, particularly as it relates to students seeking funding under Title IV Programs. Because students are required to provide documentation, and in some cases extensive documentation, to the Department to be eligible and approved for funding, the timeframe for this process can sometimes span between 90 to 120 days. We monitor the progress of students through the eligibility and approval process and assess collectability for the portfolio each reporting period to monitor that the collectability threshold is met.
These assumptions and significant judgments are based upon our interpretation of accounting guidance and historical experience. Although management believes these assumptions and significant judgments to be reasonable, actual amounts may differ if historical experience is not reflective of future results.
Impact if actual results differ from assumptions and judgment: If actual performance is not consistent with historical experience in regards to our assessment of collectability, our revenue recognition may be materially different than what was originally recorded.
Allowance for Credit Losses
Description: We extend unsecured credit to a portion of the students who are enrolled at our academic institutions for tuition and certain other educational costs. Based upon past experience and judgment, we establish an allowance for credit losses with respect to student receivables which we estimate will ultimately not be collectible. As such, our results from operations only reflect the amount of revenue that is estimated to be reasonably collectible. Our standard student receivable allowance is based on an estimate of lifetime expected credit losses for student receivables. Our estimation methodology considers a number of quantitative and qualitative factors that, based on our collection experience, we believe have an impact on our repayment risk and ability to collect student receivables. Changes in the trends in any of these factors may impact our estimate of the allowance for credit losses. These factors include, but are not limited to: internal repayment history, changes in the current economic, legislative or regulatory environments, internal cash collection forecasts and the ability to complete the federal financial aid process with the student. These factors are monitored and assessed on a regular basis. Overall, our allowance estimation process for student receivables is validated by trend analysis of our collections and write-off experience as well as monitoring any emerging factors that we believe impact the ability to collect our student receivables.
Assumptions and judgment: Management makes a range of assumptions to determine what is believed to be the appropriate level of allowance for credit losses. Management determines a reasonable and supportable forecast based on the expectation of future conditions over a supportable forecast period as described above, as well as qualitative adjustments based on current and future conditions that may not be fully captured in the historical modeling factors described above. All of these estimates are susceptible to significant change.
Impact if actual results differ from assumptions and judgment : We monitor our collections and write-off experience to assess whether or not adjustments to our allowance percentage estimates are necessary. Changes in trends in any of the factors that we believe impact the collection of our student receivables, as noted above, or modifications to our collection practices, and other related policies may impact our estimate of our allowance for credit losses and our results from operations.
A one percentage point change in our allowance for credit losses as a percentage of gross earned student receivables as of December 31, 2025 would have resulted in a change in pretax income of $0.8 million during the year then ended.
Because a substantial portion of our revenue is derived from Title IV Programs, any legislative or regulatory action that significantly reduces the funding available under Title IV Programs, or the ability of our students or institutions to participate in Title IV Programs, would likely have a material impact on the realizability of future receivables.
Income Taxes
Description : We are subject to the income tax laws of the U.S. and various state, local and foreign jurisdictions. These tax laws are complex and subject to interpretation. As a result, significant judgments and interpretations are required in determining our income tax provisions (benefits) and evaluating our uncertain tax positions.
We account for income taxes in accordance with FASB ASC Topic 740 – Income Taxes . Topic 740 requires the recognition of deferred income tax assets and liabilities based upon the income tax consequences of temporary differences between financial reporting and income tax reporting by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax basis of existing assets and liabilities. Topic 740 also requires that deferred

56

 

income tax assets be reduced by a valuation allowance if it is more likely than not that some portion of the deferred income tax asset will not be realized.
Assumptions and judgment: In establishing a provision for income tax expense or a liability for an uncertain tax position, we must make judgments and interpretations about the application of inherently complex tax laws. We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws may be subject to review/adjudication by the court systems in the various tax jurisdictions or may be settled with the taxing authority upon examination or audit.
Impact if actual results differ from assumptions and judgment: Although we believe the judgments and estimates used are reasonable, actual results could differ and we may be exposed to changes in tax liability that could be material. To the extent we prevail in matters for which reserves have been established, or are required to pay amounts in excess of our reserves, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would result in an increase in our effective income tax rate.
LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES
As of December 31, 2025, cash, cash equivalents, restricted cash and available-for-sale short-term investments (“cash balances”) totaled $643.5 million. Restricted cash as of December 31, 2025 was $21.3 million and primarily relates to a letter of credit USAHS is required to maintain with the Department of Education. On January 16, 2026, USAHS was notified by the Department that it is no longer required to maintain its existing letter of credit in the amount of $20.5 million and thus these funds are no longer restricted as of the date of the letter. Our cash flows from operating activities have historically been adequate to fulfill our liquidity requirements. We have historically financed our operating activities, organic growth and acquisitions primarily through cash generated from operations and existing cash balances. We generated cash in 2025 as a result of improved operating performance and expect to continue to generate cash in 2026. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, our working capital needs, capital expenditures, lease commitments, share repurchases and quarterly dividends payments through at least the next 12 months primarily with cash generated by operations and existing cash balances.
We maintain a balanced capital allocation strategy that focuses on maintaining a strong balance sheet and adequate liquidity, while (i) investing in organic projects at our universities, in particular technology-related initiatives which are designed to benefit our students, as well as real estate updates, and (ii) evaluating diverse strategies to enhance stockholder value, including acquisitions, quarterly dividend payments and share repurchases. Ultimately, our goal is to deploy resources in a way that drives long term stockholder value while supporting and enhancing the academic value of our institutions.
On July 31, 2025, the Board of Directors of the Company approved a stock repurchase program for up to $75.0 million, which commenced July 31, 2025 and expires January 31, 2027. The stock repurchase program replaced the previous stock repurchase program approved on February 20, 2024. The timing of purchases and the number of shares repurchased under the program is determined by the Company’s management and will depend on a variety of factors including stock price, trading volume and other general market and economic conditions, its assessment of alternative uses of capital, regulatory requirements and other factors.
During the year ended December 31, 2025, we repurchased 4.1 million shares of our common stock for approximately $120.8 million at an average price of $29.17 per share. Shares of stock repurchased under the program are held as treasury shares. These repurchased shares have reduced the weighted average number of shares of common stock outstanding for basic and diluted earnings per share calculations.
On January 2, 2026, the Board of Directors of the Company approved a new common stock repurchase program, authorizing the Company to repurchase up to $100.0 million of its outstanding common stock on the open market. This new stock repurchase program, which expires on June 30, 2027, replaces the previous $75.0 million stock repurchase program, which was described above. The stock repurchase program may be modified, suspended or discontinued at any time in the Company's discretion without prior notice, and does not commit the Company to repurchase shares of its common stock.
The Board of Directors approved the aforementioned stock repurchase programs believing it advantageous to the Company and its stockholders to repurchase shares of the Company’s common stock from time to time at prices below what the Board of Directors believed to be the intrinsic value of the Company’s common stock.
The discussion above reflects management’s expectations regarding liquidity; however, as a result of the significance of the Title IV Program funds received by our students, we are highly dependent on these funds to operate our business. Any reduction in the level of Title IV funds that our students are eligible to receive or any impact on timing or our ability to receive Title IV Program funds, or any requirement to post a significant letter of credit to the Department, may have a significant impact on our operations and our financial condition. In addition, our financial performance is dependent on the level of student enrollments which could be impacted by external factors. See Item 1A, “ Risk Factors .”

57

 

Sources and Uses of Cash
Operating Cash Flows
During the years ended December 31, 2025 and 2024, net cash flows provided by operating activities totaled $225.2 million and $161.6 million, respectively. The increase in net cash flows from operating activities for the current year was primarily driven by increased operating income.
Our primary source of cash flows from operating activities is tuition collected from our students. Our students derive the ability to pay tuition costs through the use of a variety of funding sources, including, among others, federal loan and grant programs, state grant programs, private loans and grants, institutional payment plans, private and institutional scholarships, and cash payments. For the years ended December 31, 2025 and 2024, approximately 76% and 77% of our institutions’ aggregate cash receipts from tuition payments came from Title IV Program funding. This percentage differs from the Title IV Program percentage calculated under the 90-10 Rule due to the treatment of certain funding types and certain student level limitations on what and how much to count as prescribed under the rule.
For further discussion of Title IV Program funding and other funding sources for our students, see Item 1, “ Business - Student Financial Aid and Related Federal Regulation. ”
Our primary uses of cash to support our operating activities include, among other things, cash paid and benefits provided to our employees for services, to vendors for products and services, to lessors for rents and operating costs related to leased facilities, to suppliers for textbooks and other institution supplies, and to federal, state and local governments for income and other taxes.
Investing Cash Flows
During the years ended December 31, 2025 and 2024, net cash flows used in investing activities totaled $53.6 million and $107.8 million, respectively.
Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a net cash outflow of $47.0 million for the year ended December 31, 2025 as compared to a net cash inflow of $34.6 million for the year ended December 31, 2024.
Capital Expenditures. Capital expenditures increased to $8.6 million for the year ended December 31, 2025 as compared to $4.6 million for the year ended December 31, 2024. Capital expenditures represented approximately 1.0% and 0.7% of revenue for the years ended December 31, 2025 and 2024, respectively. For the year ending December 31, 2026, we expect capital expenditures to be approximately 1.5% of revenue.
Business acquisition. The Company received a working capital true up of $0.8 million from the former owners of USAHS in connection with the USAHS acquisition during the current year. For the year ended December 31, 2024, the Company made total cash payments of $137.8 million in relation to USAHS acquisition.
Financing Cash Flows
During the years ended December 31, 2025 and 2024, net cash flows used in financing activities totaled $171.1 million and $41.1 million, respectively.
Payments of employee tax associated with stock compensation. Payments of employee tax associated with stock compensation were $7.5 million for the year ended December 31, 2025 and $3.4 million for the year ended December 31, 2024.
Repurchase of stock. During the year ended December 31, 2025, we repurchased 4.1 million shares of our common stock for approximately $120.8 million at an average price of $29.17 per share. During the year ended December 31, 2024, we repurchased 0.4 million shares of common stock for $6.8 million at an average price of $17.60 per share. Repurchases of stock during 2025 and 2024 were funded by cash generated from operating activities and existing cash balances. See Part II, Item 5 for more information.
Release of cash held in escrow . During each of the years ended December 31, 2025 and 2024, we released $0.3 million of escrow funds associated with acquisitions.
Payments of cash dividends and dividend equivalents . During the years ended December 31, 2025 and 2024, the Company made dividend and dividend equivalent payments of $36.9 million and $31.7 million, respectively.
Principal payments for finance leases and failed sale leaseback. During the years ended December 31, 2025 and 2024, the Company made payments of $5.5 million and $1.1 million, respectively, for finance leases and a failed sale leaseback, both related to the acquisition of USAHS.
Earnout payments related to business acquisition. During the year ended December 31, 2025, the Company made cash earnout payments of $1.8 million related to the Coding Dojo acquisition.

58

 

Contractual Obligations
As of December 31, 2025, future minimum cash payments due under contractual obligations for our non-cancelable operating and finance lease arrangements were $62.9 million and $12.2 million, respectively. Of these amounts, approximately $9.0 million for operating leases and $6.0 million for finance leases are due within the next 12 months. Additionally, future minimum cash payments due under a failed sale leaseback transition were $154.1 million. These future minimum cash payments reflect base rent and other fixed lease-related costs identified in the lease agreements but excludes variable costs such as common area maintenance payments and taxes, as these amounts are undeterminable at this time and may vary based on future circumstances. We lease most of our administrative and educational facilities under non-cancelable operating leases expiring at various dates through 2050.
As of December 31, 2025, we were not a party to any off-balance sheet financing or contingent payment arrangements, nor do we have any unconsolidated subsidiaries.
Changes in Financial Position – December 31, 2025 Compared to December 31, 2024
Selected consolidated balance sheet account changes from December 31, 2024 to December 31, 2025 were as follows (dollars in thousands):

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

 

% Change

 

ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, restricted cash and short-term investments

 

$

643,491

 

 

$

591,548

 

 

 

9

%

NON-CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

Goodwill

 

 

265,697

 

 

 

258,012

 

 

 

3

%

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

Payroll and related benefits

 

 

44,363

 

 

 

35,059

 

 

 

27

%

NON-CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

Sale lease-back financing

 

 

56,992

 

 

 

-

 

 

NA

 

Construction financing

 

 

-

 

 

 

56,500

 

 

 

-100

%

Cash, cash equivalents, restricted cash and short-term investments. The increase in total cash, cash equivalents, restricted cash and short-term investments is primarily due to increased operating income, partially offset with payments for share repurchases and dividends.
Goodwill: The increase in goodwill during the period was due to the finalization of purchase accounting for the USAHS acquisition.
Payroll and related benefits: The increase primarily relates to an accrual for a non-recurring investment in personnel costs that was paid in the first quarter of 2026.
Sale lease-back financing. The increase in sale lease-back financing liability is primarily due to the recategorization of construction financing upon lease commencement due to a failed sale leaseback transaction.
Construction financing. The decrease in construction financing liability is primarily due to the recategorization of the failed sale leaseback upon lease commencement.
 
Recent Accounting Pronouncements
See Note 4 “ Recent Accounting Pronouncements ” to our consolidated financial statements for a discussion of recent accounting pronouncements that may affect us.
 
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK
We are exposed to financial market risks, primarily changes in interest rates. We use various techniques to manage our interest rate risk. We have no derivative financial instruments or derivative commodity instruments, and believe the risk related to cash equivalents and available-for-sale investments is limited due to the adherence to our investment policy, which focuses on capital preservation and liquidity. In addition, we use asset managers who conduct initial and ongoing credit analyses on our investment portfolio and monitor that investments are in compliance with our investment policy. Despite the investment risk mitigation strategies

59

 

we employ, we may incur investment losses as a result of unusual and unpredictable market developments and may experience reduced investment earnings if the yields on investments deemed to be low risk remain low or decline.
Interest Rate Exposure
Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell investments that have declined in market value due to changes in interest rates. At December 31, 2025, a 100 basis point increase or decrease in average interest rates applicable to our investments would not have had a material impact on our future earnings, fair values or cash flows.
Our financial instruments are recorded at their fair values as of December 31, 2025 and December 31, 2024. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates applicable to our investments or borrowings is not significant.
 
 
ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
The financial information required by Item 8 is contained in Part IV, Item 15 of this Annual Report on Form 10-K.
 
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOU NTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROL S AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We completed an evaluation as of the end of the period covered by this Annual Report on Form 10-K (“ Report ”) under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the rules and forms provided by the U.S. Securities and Exchange Commission (“ SEC ”), and (ii) the information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on the Effectiveness of Controls
Our management does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of a control's effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

60

 

Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles.
Based upon the evaluation under the framework contained in the 2013 Committee of Sponsoring Organizations of the Treadway Commission Report, management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.
Grant Thornton LLP, our independent registered public accounting firm, who audited and reported on the consolidated financial statements for the year ended December 31, 2025 included in this Annual Report on Form 10-K, has issued a report on the effectiveness of our internal control over financial reporting. This attestation report is included on page 69 of this Annual Report on Form 10-K.
ITEM 9B. OTHE R INFORMATION
Rule 10b5-1 Plan Elections
During the quarter ended December 31, 2025, the following executive officers of the Company adopted a “Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K:
Ashish Ghia , Senior Vice President, Chief Financial Officer and Treasurer , entered into a pre-arranged stock trading plan on November 13, 2025 covering his unvested performance shares and restricted stock units that will vest during 2026. Mr. Ghia’s plan provides for the sale between March 17, 2026 and September 30, 2026, of net vested restricted stock held by Mr. Ghia upon the vesting of performance shares and restricted stock units that will vest prior to September 30, 2026.
Greg Jansen , Senior Vice President, General Counsel and Corporate Secretary , entered into a pre-arranged stock trading plan on November 7, 2025 covering his unvested performance shares and restricted stock units that will vest during 2026. Mr. Jansen’s plan provides for the sale between April 1, 2026 and October 1, 2026, of net vested restricted stock held by Mr. Jansen upon the vesting of performance shares and restricted stock units that will vest prior to October 1, 2026.
Each of the trading plans was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s insider trading policy, which governs transactions in Company securities.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.

61

 

PART III
ITEM 10. DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE
Below is a list of our Executive Officers and Board of Directors as of February 19, 2026:

Executive Officers:

 

Board of Directors:

 

 

 

Todd S. Nelson

 

Gregory L. Jackson - Chairman of the Board

President and Chief Executive Officer

 

Private Investor

 

 

 

Ashish R. Ghia

 

Dennis H. Chookaszian

Senior Vice President, Chief Financial Officer and Treasurer

 

Former Chairman and Chief Executive Officer of CNA Financial Corporation

 

 

 

Sunitha Araamudhu

 

Kenda B. Gonzales

Senior Vice President - American InterContinental University System

 

Former Chief Financial Officer of Harrison Properties, LLC

 

 

 

Elise L. Baskel

 

Patrick W. Gross

Senior Vice President - Colorado Technical University

 

Chairman of the Lovell Group

 

 

 

David C. Czeszewski

 

William D. Hansen

Senior Vice President and Chief Information Officer

 

President and Chief Executive Officer of Building Hope Holdings, Inc.

 

 

 

Greg E. Jansen

 

Todd S. Nelson

Senior Vice President, General Counsel and Corporate Secretary

 

President and Chief Executive Officer of Perdoceo Education Corporation

 

 

 

Julia Leeman

 

Hanna Skandera

Senior Vice President - Campus Operations

 

President and Chief Executive Officer of Daniels Fund

 

 

 

John R. Kline

 

Leslie T. Thornton

Senior Vice President - American InterContinental University System

 

Former Senior Vice President, General Counsel and Corporate Secretary of WGL Holdings, Inc. and Washington Gas

 

 

 

Michele A. Peppers

 

Alan D. Wheat

Vice President - Accounting & Reporting and Chief Accounting Officer

 

Chair of Wheat Shroyer Government Relations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
The other information required by this item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with our 2026 Annual Meeting of Stockholders.
 

62

 

ITEM 11. EXECUT IVE COMPENSATION
The information required by this item is incorporated herein by reference to our definitive Proxy Statement to be filed in connection with our 2026 Annual Meeting of Stockholders.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OW NERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table provides information as of December 31, 2025 with respect to shares of our common stock that may be issued under our existing equity compensation plans:
EQUITY COMPENSATION PLAN INFORMATION

 

 

(a)

 

 

(b)

 

 

(c)

 

 

Plan Category

 

Number of shares to be
issued upon exercise of
outstanding options

 

 

Weighted-average exercise
price of outstanding options