Business Acquisition

12 Months Ended

Dec. 31, 2024

3. BUSINESS ACQUISITION

On December 2, 2024, the Company completed the acquisition of the University of St. Augustine for Health Sciences ("USAHS").

USAHS is among the nation’s reputable universities offering graduate health sciences degrees, primarily in physical therapy, occupational therapy, speech language therapy and nursing, as well as continuing education programs. Founded in 1979, USAHS educates students through its network of campuses in San Marcos, California; St. Augustine and Miami, Florida; and Austin and Dallas, Texas and through its online programs.

The preliminary purchase price of $136.9 million for USAHS was allocated to the preliminary fair values of acquired tangible and identifiable intangible assets of $268.3 million and assumed liabilities of $131.4 million as of December 2, 2024. The preliminary purchase price consisted of an initial cash payment made in December 2024, and an estimated working capital true up of $0.9 million to be made within 90 days of December 2, 2024. Based on our preliminary purchase price allocation, we have recorded goodwill of $16.9 million. Goodwill reflects the inherent value of the acquired workforce as well as revenue growth opportunities following the acquisition. All of this goodwill balance will not be deductible for income tax reporting purposes. Management's purchase price allocation is provisional as the fair values of acquired assets and liabilities are still being finalized, primarily due to the timing of the acquisition which occurred in December 2024.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of acquisition date (dollars in thousands):


	USAHS
	December 2, 2024
Assets:
Student and other receivables	$	1,771
Prepaid assets		4,727
Property, plant and equipment		78,800
ROU assets		53,271
Intangible assets
Trade name (indefinite-lived)		9,800
Customer relationships (2 year life)		14,000
Course curriculum (4 year life)		15,500
Accreditation rights (12 year life)		25,000
Deferred tax asset, net		47,626
Other assets		977
Goodwill		16,850
Total assets acquired	$	268,322
Liabilities:
Accounts payable and other accrued liabilities	$	9,148
Deferred revenue		10,137
Lease liabilities		55,625
Construction financing		56,500
Total liabilities assumed	$	131,410

Net assets acquired	$	136,912

Pro forma financial information (unaudited)

The following unaudited summary financial information for the years ended December 31, 2024 and 2023 gives effect to the USAHS acquisition as if it had been completed on January 1, 2023. The unaudited pro forma financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or the consolidated financial position of Perdoceo would have been had the USAHS acquisition been completed on the date noted above, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

The below information is based on available information and certain assumptions the Company believes are reasonable, including adjustments to depreciation, amortization, interest income and interest expense based on the fair value purchase accounting adjustments primarily related to leases and property, plant and equipment. Additionally, for the year ended December 31, 2023, a non-recurring adjustment was made to eliminate $241.6 million of asset impairment expense related to USAHS.


	Twelve Months Ended December 31,
in thousands, except per share amounts	2024		2023
Total revenue	$	825,902	$	880,455
Operating income		175,480		174,775
Net income		147,012		161,971
Net income per share - Basic		2.24		2.44
Net income per share - Diluted		2.19		2.39