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Contingencies | 3 Months Ended
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Mar. 31, 2023
Loss Contingency [Abstract] |
Contingencies | 9. CONTINGENCIES An accrual for estimated legal fees of $4.9 million and $1.7 million at March 31, 2023 and December 31, 2022, respectively, is presented within other current liabilities on our condensed consolidated balance sheets. We record a liability when we believe that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. We evaluate, at least quarterly, developments in our legal matters that could affect the amount of liability that was previously accrued and make adjustments as further information develops, circumstances change or contingencies are resolved. Significant judgment is required to determine both probability and the estimated amount. We may be unable to estimate a possible loss or range of possible loss due to various reasons, including, among others: (1) if the damages sought are indeterminate; (2) if the proceedings are in early stages; (3) if there is uncertainty as to the outcome of pending appeals, motions or settlements; (4) if there are significant factual issues to be determined or resolved; and (5) if there are novel or unsettled legal theories presented. In such instances, there is considerable uncertainty regarding the ultimate resolution of such matters, including a possible eventual loss, if any. On April 8, 2022, the Company received a Civil Investigative Demand (“CID”) from the Department of Justice (“DOJ”). The CID requests information and documentation from CTU regarding compliance with federal financial aid credit hour requirements for five of its entry-level courses as well as information regarding CTU’s learning management system. The information sought covers the time period from January 1, 2017 to the present. On October 27, 2022 we learned that the allegations underlying this inquiry were made as part of a civil qui tam complaint filed by an individual and brought pursuant to the federal False Claims Act. The case remains under seal in the United States District Court for the district of Colorado and includes the same allegations against both CTU and AIU which use the same learning management system. The Company is cooperating with the DOJ with a view towards resolving this inquiry as promptly as possible. We receive from time-to-time requests from state attorneys general, federal and state government agencies and accreditors relating to our institutions, to specific complaints they have received from students or former students or to student loan forgiveness claims which seek information about students, our programs, and other matters relating to our activities. These requests can be broad and time consuming to respond to, and there is a risk that they could expand and/or lead to a formal action or claims of non-compliance. We are subject to a variety of other claims, lawsuits, arbitrations and investigations that arise from time to time out of the conduct of our business, including, but not limited to, matters involving prospective students, students or former students, alleged violations of the Telephone Consumer Protection Act, both individually and on behalf of a putative class, and employment matters. Periodically matters arise that we consider outside the scope of ordinary routine litigation incidental to our business. While we currently believe that these matters, individually or in aggregate, will not have a material adverse impact on our financial position, cash flows or results of operations, these matters are subject to inherent uncertainties, and management’s view of these matters may change in the future. Were an unfavorable outcome to occur in any one or more of these matters, there exists the possibility of a material adverse impact on our business, reputation, financial position and cash flows. Contingent Consideration for Business Acquisitions We have an accrual for contingent consideration amounts related to the Coding Dojo acquisition in the aggregate fair value amount of $12.7 million as of March 31, 2023. Pursuant to the acquisition agreement, post-closing contingent consideration payments are expected to be paid in January 2024 and January 2025, based upon the achievement of certain financial metrics, with an aggregate maximum for the two payments of $15.0 million. The determination of the estimated fair value of contingent consideration requires significant estimates and assumptions, and as such, this fair value measurement is categorized as Level 3 per ASC Topic 820. These estimates and assumptions primarily include, but are not limited to, operating cash flow projections, discount rate and volatility rate. Due to the inherent uncertainty involved in deriving those estimates, actual results could differ from those estimates.

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- Definition The entire disclosure for legal proceedings, legal contingencies, litigation, regulatory and environmental matters and other contingencies. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI https://asc.fasb.org/topic&trid=2127136 + Details
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