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Acquisitions | 12 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions | Note 4 - Acquisitions Concorde Career Colleges On December 1, 2022, we completed the acquisition of Concorde. Concorde operates 17 campuses across eight states with approximately 7,600 students, and offers its programs via in-person, hybrid and online formats. Concorde offers more than 20 programs across the allied health, dental, nursing, patient care, and diagnostic fields. The acquisition expands our portfolio of offerings into the higher-growth healthcare arena and creates the opportunity to bring workforce educational solutions to a broader array of students and employers. Under the terms of the Stock Purchase Agreement (the “Purchase Agreement”), dated May 3, 2022, by and among the Company, Concorde, Liberty Partners Holdings 28, L.L.C., a Delaware limited liability company, and Liberty Investment IIC, LLC, a Delaware limited liability company (each a “Seller,” and collectively, the “Sellers”); and Liberty Partners L.P., a Delaware limited partnership, in its capacity as a representative of the Sellers, we acquired all of the issued and outstanding shares of capital stock of Concorde for a base purchase price of $50.0 million, less $1.9 million of net adjustments including the post-closing working capital adjustment, for total cash consideration paid of $48.1 million. As a result of the transactions contemplated by the Purchase Agreement, Concorde is now a wholly-owned subsidiary of the Company. We funded the consideration paid for Concorde by the Revolving Credit Facility entered into on November 18, 2022. See Note 13 for further details on the Revolving Credit Facility. In connection with the acquisition, we incurred total transaction costs of $5.3 million, of which $3.0 million was incurred during the year ended September 30, 2022 and $2.3 million was incurred during the year ended September 30, 2023. These costs are included in “Selling, general and administrative” expenses in the consolidated statements of operations for the applicable period. Allocation of the purchase price Under the acquisition method of accounting, the total purchase price was allocated to the identifiable assets acquired and the liabilities assumed based on our valuation estimates of the fair values as of the acquisition date. As of December 1, 2023, the fair value and the purchase price allocation are considered final. The final allocation of the purchase price at December 1, 2022 is summarized as follows:
Assets acquired: |  |
Cash and cash equivalents |  | $ | 30,064 |
Restricted cash |  | 1,689 |
Accounts receivable, net |  | 6,800 |
Prepaid expenses |  | 2,957 |
Other current assets |  | 827 |
Property and equipment |  | 23,238 |
Right-of-use assets for operating leases |  | 71,153 |
Goodwill |  | 11,600 |
Intangible assets |  | 5,400 |
Deferred tax assets |  | 5,112 |
Other assets |  | 4,997 |
Total assets acquired |  | $ | 163,837 |
Less: Liabilities assumed |  |
Accounts payable and accrued expenses |  | $ | 15,482 |
Deferred revenue |  | 20,145 |
Operating lease liability, current portion |  | 10,011 |
Long-term debt, current portion (1) |  | 807 |
Other current liabilities |  | 208 |
Long-term debt (1) |  | 5,468 |
Operating lease liability |  | 63,582 |
Total liabilities assumed |  | 115,703 |
Net assets acquired |  | $ | 48,134 |
(1) Long-term debt consists of one lease classified as a finance lease under ASC 842. Since September 30, 2023, we further adjusted the purchase price allocation by approximately $0.1 million for income taxes receivable and approximately $0.6 million for deferred income taxes due to completing and filing the final stub period income tax return for Concorde, which results in a $0.7 million adjustment to property and equipment. These adjustments did not have a material impact on the financial statements since the date of acquisition. The amount allocated to goodwill of $11.6 million represents the acquired assembled workforce. None of the goodwill is expected to be deductible for tax purposes. Factors that contributed to a purchase price resulting in the recognition of goodwill include Concorde’s strategic fit into our growth and diversification strategy, which is focused on offering a broader array of high-quality, in-demand workforce education solutions which both prepare students for a variety of careers in fast-growing fields and help close the country's skills gap by leveraging key industry partnerships. The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our consolidated financial statements including the amount of depreciation and amortization expense. The fair value of the property and equipment was estimated using the cost and market approaches as of the valuation date. The fair value of the leases were estimated using the income and market approaches to determine if there was any favorable or unfavorable terms in place. The intangible assets acquired, which primarily consist of the accreditations and regulatory approvals, trademarks and trade names, and curriculum, were valued using different valuation techniques depending upon the nature of the intangible asset acquired, all of which are considered level 3 as defined in Note 7. The accreditations and regulatory approvals were valued using the multi-period excess earnings method (“MPEEM”) under the income approach. The MPEEM is a variation of discounted cash-flow analysis. Rather than focusing on the whole entity, the MPEEM isolates the cash flows that can be associated with a single intangible asset and measures fair value by discounting them to present value. The trademarks and trade names were valued using the relief from royalty method. The value of the trade name encompasses all items necessary to generate revenue utilizing the trade name. The curriculum was valued using the cost approach. The table below presents the final summary of the intangible assets acquired and the useful lives of these assets:
Intangible Asset |  | Useful life |  | Amount
Accreditations and regulatory approvals |  | Indefinite |  | $ | 3,500 |
Trademarks and trade names |  | 10 years |  | 500 |
Curriculum |  | 5 years |  | 1,400 |
Total |  |  |  | $ | 5,400 |
See Note 9 and Note 10 and for additional details on goodwill and intangible assets. Student receivables When financial assets are acquired in connection with a business combination, we evaluate whether those acquired financial assets have experienced a more-than-insignificant deterioration in credit quality since origination. Financial assets acquired with evidence of such credit deterioration are referred to as purchased credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at the acquisition date. The student receivables acquired in the Concorde acquisition were reviewed to determine if any had experienced a more-than-insignificant deterioration in credit quality since origination. Student receivables of approximately $2.3 million met the established criteria to indicate a more-than insignificant deterioration in credit quality and were identified as PCD assets. Using our best estimate of projected losses over the term of the contracts, we calculated an allowance for credit losses on these PCD assets of approximately $1.0 million. Pro forma financial information The following unaudited pro forma financial information summarizes our results of operations as though the acquisition occurred on October 1, 2020:
|  |  |  |  | Twelve Months Ended
|  |  |  |  |  |  |  | September 30, 2023 |  | September 30, 2022
Revenue |  |  |  |  |  |  |  | $ | 643,429 |  |  | $ | 618,949 |
Net income |  |  |  |  |  |  |  | 12,749 |  |  | 28,173 |
The unaudited pro forma financial information includes adjustments to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets and the finance lease asset had been applied from October 1, 2020, with the related tax effects. The unaudited pro forma financial information also includes adjustments to reflect the additional interest expense on the Revolving Credit Facility issued to fund the acquisition (see Note 13). Lastly, the unaudited pro forma financial information includes adjustments to reflect the reduction in depreciation expense assuming the fair value adjustments to property and equipment assets had been applied from October 1, 2020. This unaudited pro forma financial information is for informational purposes only. It does not reflect the integration of the business or any synergies or incremental costs that may result from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on October 1, 2020. In addition, the unaudited pro forma financial information amounts are not indicative of future operating results. MIAT College of Technology On November 1, 2021, using available operating cash, we acquired all of the issued and outstanding shares of capital stock of MIAT for $26.0 million base purchase price plus $2.8 million working capital surplus for total cash consideration paid of $28.8 million. MIAT is a post-secondary school that offers vocational and technical certificates and degrees across aviation maintenance, energy technology, wind energy technology, robotics and automation, non-destructive testing, heating ventilation air conditioning and refrigeration, and welding disciplines. In connection with this acquisition, we incurred total transaction costs of $1.7 million of which $0.9 million were incurred during the year ended September 30, 2022 and $0.8 million during the year ended September 30, 2021. These costs are included in “Selling, general and administrative” expenses in the consolidated statements of operations for the applicable period. The final allocation of the purchase price at November 1, 2021 is summarized as follows:
Assets acquired: |  |
Cash and cash equivalents |  | $ | 2,301 |
Accounts receivable, net |  | 3,230 |
Prepaid expenses |  | 268 |
Other current assets |  | 507 |
Property and equipment |  | 3,043 |
Goodwill |  | 8,637 |
Intangible assets |  | 16,200 |
Right-of-use assets for operating leases |  | 14,979 |
Other assets |  | 314 |
Total assets acquired |  | $ | 49,479 |
Less: Liabilities assumed |  |
Accounts payable and accrued expenses |  | $ | 1,720 |
Deferred revenue |  | 1,843 |
Operating lease liability, current portion |  | 817 |
Deferred tax liabilities, net |  | 1,975 |
Operating lease liability |  | 14,216 |
Other liabilities |  | 93 |
Total liabilities assumed |  | 20,664 |
Net assets acquired |  | $ | 28,815 |
The goodwill of $8.6 million arising from the acquisition consists largely of the growth and operating synergies expected from integrating MIAT into UTI. The total amount of goodwill expected to be deductible for tax purposes is approximately $0.6 million. See Note 9 for additional details on goodwill. The accreditations and regulatory approvals were valued using the MPEEM under the income approach. The trademarks and trade names were valued using the relief from royalty method. The curriculum was valued using the cost approach. The table below presents a summary of the intangible assets acquired and the useful lives of these assets:
Intangible Asset |  | Useful life |  | Amount
Accreditations and regulatory approvals |  | Indefinite |  | $ | 12,800 |
Trademarks and trade names (1) |  | Indefinite |  | 3,000 |
Curriculum |  | 5 years |  | 400 |
Total |  |  |  | $ | 16,200 |
(1) During the fourth quarter of 2022, in conjunction with our growth and diversification initiatives, we completed a branding study and determined that the useful life of the MIAT trademarks and trade name was no longer indefinite, and a four-year finite useful life was more appropriate. We completed the required impairment testing when changing from an indefinite to a finite useful life for an intangible asset and determined that the carrying value of the MIAT trademarks and trade name exceeded its fair value. We determined the fair value of intangible asset to be $1.0 million as of September 30, 2022 using the relief from royalty method and recorded an intangible asset impairment charge of $2.0 million during the year ended September 30, 2022. During the fourth quarter of 2024, we determined it would be appropriate to further shorten the remaining useful life by one year of this trade name given the Company’s rebranding plans. Pro forma financial information is not presented as revenues and earnings of MIAT were not material to our consolidated statements of operations. MIAT is included in the “UTI” reportable segment disclosed in Note 22 on Segments.

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