SCHAUMBURG, Ill. - Perdoceo Education (NASDAQ:PRDO) Corporation (NASDAQ: PRDO), a provider of postsecondary education, announced its plans to purchase the University of St. Augustine for Health Sciences (USAHS), a leader in graduate health sciences degrees. The transaction, valued between $142 million and $144 million, is set to close in December 2024, subject to regulatory approvals and customary closing conditions.
USAHS, accredited by the WASC, has a network of campuses in California, Florida, and Texas, and offers online programs in various health science disciplines. The acquisition is expected to diversify Perdoceo's academic offerings and capitalize on the growing demand for health science professionals. According to the U.S. Bureau of Labor Statistics, jobs in health sciences are projected to grow by 13% by 2031.
The definitive agreement, detailed in Perdoceo's Current Report on Form 8-K, requires approval from the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges, among other regulatory bodies. The acquisition will not alter USAHS's current academic programs or commitments to student education.
Todd Nelson, Perdoceo's President and CEO, expressed confidence in the merger, anticipating that the company's resources will enhance student experiences and contribute to sustainable growth. The transaction is unanimously approved by both parties' boards and does not require further stockholder or board approvals.
Perdoceo plans to fund the acquisition with cash on hand and has procured a buyer-side representation and warranty insurance policy as the primary protection against certain transaction-related risks. The company remains on target to achieve its full-year adjusted operating income outlook of $175 million to $190 million for the fiscal year 2024.
The acquisition aligns with Perdoceo's strategy of investing in quality, accretive academic institutions while returning capital to shareholders through dividends and share repurchases. USAHS reported revenues of approximately $170 million and operating income of around $35 million for the year ended December 31, 2023, serving about 4,500 students.
This news is based on a press release statement issued by Perdoceo Education Corporation.
In other recent news, Perdoceo Education Corporation has reported significant growth in its Q1 earnings, announcing a net income of $39.4 million, or $0.59 per diluted share. This financial milestone is accompanied by a mixed trend in student enrollments, with a 28.5% increase at Colorado Technical University (CTU) and a 22.9% decrease at American InterContinental University (AIU) System.
Despite the contrasting enrollment figures, Perdoceo Education remains positive about sustaining high student retention and engagement throughout 2024. The company has also expressed its intention to continue investing in technology to improve academic experiences.
For the full year of 2024, it projects an adjusted operating income between $175 million and $190 million. In terms of student enrollments, CTU is expected to see growth in 2024, while the AIU System is projected to experience a decline in revenue in the first half of the year but growth in the second half. These are among the recent developments in the company's operations and financial outlook.
InvestingPro Insights
As Perdoceo Education Corporation (NASDAQ: PRDO) is set to enhance its educational portfolio through the acquisition of the University of St. Augustine for Health Sciences, investors may find the company's current financial health and market performance to be of particular interest.
With a market capitalization of $1.48 billion and a robust gross profit margin of 82.93% over the last twelve months as of Q1 2024, Perdoceo's financial metrics suggest a strong foundation as it embarks on this new venture.
The company's ability to hold more cash than debt on its balance sheet, coupled with its impressive gross profit margins, are notable InvestingPro Tips that underline Perdoceo's financial stability. Moreover, the company is trading at a low P/E ratio of 9.66 relative to near-term earnings growth, indicating potential value for investors considering the company's earnings prospects.
Perdoceo's strategic move to acquire USAHS appears timely, with the health science sector poised for growth. The company's cash flows, which can sufficiently cover interest payments, and a notable high return over the last year, with a 77.55% one-year price total return as of the date provided, reflect a positive trajectory that aligns with the company's growth-oriented acquisition strategy.
For more detailed analysis and additional InvestingPro Tips, including insights into sales projections and the company's financial health, visit InvestingPro's dedicated page for Perdoceo Education Corporation. Investors can utilize the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, gaining access to a wide array of financial metrics and professional investment tools. There are 11 additional InvestingPro Tips available for Perdoceo, providing a deeper dive into the company's financial nuances and investment potential.
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