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What changed in LINCOLN EDUCATIONAL SERVICES CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LINCOLN EDUCATIONAL SERVICES CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+546 added−494 removedSource: 10-K (2024-03-05) vs 10-K (2023-03-07)

Top changes in LINCOLN EDUCATIONAL SERVICES CORP's 2023 10-K

546 paragraphs added · 494 removed · 302 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

151 edited+91 added−61 removed156 unchanged
Biggest changeSee “Business – Regulatory Environment – Gainful Employment.” As previously noted above, the DOE also announced in January 2023 its intention to initiate a new negotiated rulemaking process in April 2023 on several topics including, for example, amending regulations on state authorization as a component of institutional eligibility, amending regulations on accreditation including standards for the DOE’s recognition of accrediting agencies and accreditation procedures as a component of institutional eligibility for Title IV Programs, amending regulations on the requirements for institutions to return unearned Title IV Program funds for students who withdraw without completing their educational programs, amending the cash management regulations to ensure that students have and maintain timely access to student aid disbursed by their institutions, amending regulations on third-party servicers, and amending the definition of distance education.
Biggest changeThe DOE also commenced a new negotiated rulemaking process with meetings scheduled for January through March 2024 on several topics including state authorization, accreditation, return of unearned Title IV Program funds for students who withdraw from school without completing their educational programs, cash management, and distance education. See Part I, Item 1.
In addition, we continually grow and enhance our digital marketing efforts, which include paid search, paid and organic social media, search engine optimization, online video and display advertising and pay-per-lead channels. These channels currently drive the majority of our new student leads and enrollments.
In addition, we continually grow and enhance our digital marketing efforts, which include paid search, paid and organic social media, search engine optimization, online video and display advertising and pay-per-lead channels. These digital channels currently drive the majority of our new student leads and enrollments.
This extension of credit helps fill the gap between what the student receives from all financial aid sources and what the student may need to cover the full cost of his or her education. Students or their parents can apply to a number of different lenders for this funding at current market interest rates.
This extension of credit helps fill the gap between what the student receives from all financial aid sources and what the student may need to cover the full cost of his or her education. Students or their parents can apply to a number of different unaffiliated lenders for this funding at current market interest rates.
Among other things, the ARPA provides $40 billion in relief funds that will go directly to colleges and universities with $395.8 million going to for-profit institutions. The DOE has allocated a total of $24.4 million to our schools from the funds made available under CRRSAA and ARPA.
Among other things, the ARPA provides $40 billion in relief funds that will go directly to colleges and universities with $395.8 million going to for-profit institutions. The DOE allocated a total of $24.4 million to our schools from the funds made available under CRRSAA and ARPA.
Our skilled trades programs include electrical, heating and air conditioning repair, welding, computerized numerical control and electronic and electronic systems technology. Graduates of these programs are qualified to obtain entry-level employment positions such as electrician, CNC machinist, cable installer, welder, wiring and heating, ventilating and air conditioning, or HVAC installer.
Our skilled trades programs include electrical, heating and air conditioning repair, welding, computerized numerical control and electronic and electronic systems technology. Graduates of our programs are qualified to obtain entry-level employment positions such as electrician, CNC machinist, cable installer, welder, wiring and heating, ventilating and air conditioning, or HVAC installer.
While each of our programs has different admissions criteria, we screen all applications and counsel prospective students on the most appropriate program to increase the likelihood that our students complete the requisite coursework and obtain and sustain employment following graduation. Enrollment.
While each of our programs has different admissions criteria, we screen all applications and counsel prospective students on the most appropriate program to increase the likelihood that they complete the requisite coursework and obtain and sustain employment following graduation. Enrollment.
In addition, many of our schools have internship programs that provide our students with opportunities to work with employers prior to graduation. For example, some of the students in our automotive programs have the opportunity to complete a portion of their hands-on training in an actual work environment.
In addition, many of our schools have internship programs that provide our students with opportunities to work with potential employers prior to graduation. For example, some of the students in our automotive programs have the opportunity to complete a portion of their hands-on training in an actual work environment.
In order to accommodate the schedules of our students and maximize classroom utilization at some of our campuses, we typically offer courses four to five days per week in three shifts per day and start new classes every month.
In order to accommodate the schedules of our students and maximize classroom utilization at some of our campuses, we typically offer courses four to five days a week in three shifts per day and start new classes every month.
We update and expand our programs frequently to reflect the latest technological advances in each field, providing our students with the specific skills and knowledge required in the current marketplace.
We update and expand our programs frequently to reflect the latest technological advances in the field, providing our students with the specific skills and knowledge required in the current marketplace.
Federal Regulatory Matters The various approvals granted by the regulatory entities to which we are subject are what allow our schools to operate and to participate in a variety of government-sponsored financial aid programs that assist students in paying for their education the most significant of which are the federal student aid programs administered by the DOE under the Higher Education Act of 1965, as amended (the “HEA”).
The various approvals granted by the regulatory entities to which we are subject are what collectively allow our schools to operate and to participate in a variety of government-sponsored financial aid programs that assist students in paying for their education the most significant of which are the federal student aid programs administered by the DOE under the Higher Education Act of 1965, as amended (the “HEA”).
As noted above, if any of our institutions lose eligibility to participate in Title IV Programs, that loss would also adversely affect our students’ access to various government-sponsored student financial aid programs, and would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations. 15 Index Student Loan Defaults.
As noted above, if any of our institutions lose eligibility to participate in Title IV Programs, that loss would also adversely affect our students’ access to various government-sponsored student financial aid programs, and would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations. Student Loan Defaults.
We are focused on improving capacity utilization of existing facilities through increased enrollments, the introduction of new programs and partnerships with industry. In addition, we see opportunities to reduce our real estate needs with the advancement of our hybrid teaching model that we will continue to roll out over the next two years. • Expand Geographically.
We are focused on improving capacity utilization of existing facilities through increased enrollments, the introduction of new programs and partnerships with industry. In addition, we see opportunities to adjust our real estate needs with the advancement of our hybrid teaching model that we will continue to roll out over the next two years. • Expand Geographically.
The Company identifies high-performing employee participants for acceleration training programs to develop internal candidates for succession opportunities in key functions. Labor Relations We believe that we have good relationships with all of our employees. At six of our 22 campuses, the teaching professionals are represented by various unions.
The Company identifies high-performing employee participants for acceleration training programs to develop internal candidates for succession opportunities in key functions. Labor Relations We believe that we have good relationships with all of our employees. At six of our 21 campuses, the teaching professionals are represented by various unions.
In turn, the new and proposed regulations are likely to increase the possibility that our schools could be subject to additional reporting requirements, to potential liabilities and sanctions such as letter of credit amounts, and to potential loss of Title IV eligibility if our efforts to modify our operations to comply with the new regulations are unsuccessful. 18 Index Substantial Misrepresentation.
In turn, the new and proposed regulations are likely to increase the possibility that our schools could be subject to additional reporting requirements, to potential liabilities and sanctions such as letter of credit amounts, and to potential loss of Title IV eligibility if our efforts to modify our operations to comply with the new regulations are unsuccessful. Substantial Misrepresentation.
Moreover, we believe blended learning will create operating efficiencies that will enable us to contain tuition increases over the coming years and thus provide our students with a higher return on investment in their education in addition to the increased flexibility and convenience. • Expand Market .
Moreover, we believe blended learning will create operating efficiencies that will enable us to contain tuition increases over the coming years and thus provide our students with a higher return on investment in their education in addition to the increased flexibility and convenience.
Regardless of whether we expand our current campuses to take advantage of the operating leverage or establish new campuses, our goal is to remain competitive and prudently deploy our resources. Our expansion plans may be achieved organically through the opening of new campuses with existing resources or through acquisitions. • Expand Teaching Platform.
Regardless of whether we expand our current campuses to take advantage of the operating leverage or establish new campuses, our goal is to remain competitive and prudently deploy our resources. Our expansion plans may be achieved organically through the opening of new campuses with existing resources or through acquisitions.
To maximize student retention, the staff at each school is trained to recognize the early warning signs of a potential drop in retention and to assist and advise students on academic, financial and employment matters. We monitor our retention rates by instructor, course, program and school.
To maximize student retention, the staff at each school is trained to recognize the early warning signs of a potential drop and to assist and advise students on academic, financial and employment matters. We monitor our retention rates by instructor, course, program, and campus.
The establishment of the Office of Enforcement could result in an increase in enforcement actions and other activities against for-profit schools and school companies, including us. In addition to Title IV Programs and other government-administered programs, all of our schools offer extended financing programs to their students.
The establishment of the Office of Enforcement could result in an increase in enforcement actions and other activities against for-profit schools and school companies, including us. 22 Index In addition to Title IV Programs and other government-administered programs, all of our schools offer extended financing programs to their students.
In addition, we provide intensive instructional training and continuing education, including quarterly instructional development seminars, annual reviews, technical upgrade training, faculty development plans and weekly staff meetings. The Company acknowledges the relevance of managing productivity and efficiency of its workforce.
In addition, we provide intensive instructional training and continuing education, including quarterly instructional development seminars, annual reviews, technical upgrade training, faculty development plans and weekly staff meetings. 5 Index The Company acknowledges the relevance of managing productivity and efficiency of its workforce.
The following table sets forth the expiration dates for each of our institutions’ current Title IV Program participation agreements: Institution Expiration Date of Current Program Participation Agreement Iselin, NJ December 31, 2024 1 Indianapolis, IN December 31, 2024 1 New Britain, CT December 31, 2024 1 1 Provisionally certified.
The following table sets forth the expiration dates for each of our institutions’ current Title IV Program participation agreements: Institution Expiration Date of Current Program Participation Agreement Iselin, NJ December 31, 2024 2 Indianapolis, IN December 31, 2024 2 New Britain, CT December 31, 2024 2 2 Provisionally certified.
See “Regulatory Environment – 90/10 Rule.” Because a significant percentage of our revenues are derived from Title IV Programs, any action by Congress or the DOE that significantly reduces Title IV Program funding, that limits or restricts the ability of our schools, programs, or students to receive funding through the Title IV Programs, or that imposes new restrictions or constraints upon our business or operations could reduce our student enrollment and our revenues, and could increase our administrative costs and require us to modify our practices in order for our schools to comply fully with Title IV Program requirements.
“Business - Regulatory Environment – 90/10 Rule.” Because a significant percentage of our revenues are derived from Title IV Programs, any action by Congress or the DOE that significantly reduces Title IV Program funding, that limits or restricts the ability of our schools, programs, or students to receive funding through the Title IV Programs, or that imposes new restrictions or constraints upon our business or operations could reduce our student enrollment and our revenues, and could increase our administrative costs and require us to modify our practices in order for our schools to comply fully with Title IV Program requirements.
Further, current requirements for student or school participation in Title IV Programs may change or one or more of the present Title IV Programs could be replaced by other programs with materially different student or school eligibility requirements. Gainful Employment.
Further, current requirements for student or school participation in Title IV Programs may change or one or more of the present Title IV Programs could be replaced by other programs with materially different student or school eligibility requirements. 12 Index Gainful Employment.
We cannot predict any additional closed school loan discharges that the DOE may approve or the liabilities that the DOE may seek from us for campuses that have closed in the past or any possible school closures in the future. Administrative Capability.
We cannot predict with certainty any additional closed school loan discharges that the DOE may approve or the liabilities that the DOE may seek from us for campuses that have closed in the past or any possible school closures in the future. Administrative Capability.
By combining substantial distance training with traditional classroom-based training led by experienced instructors, we believe we offer our students a unique opportunity to develop practical job skills in many of the key areas of expected job demand. We believe these job skills enable our students to compete effectively for employment opportunities and to pursue salary and career advancement.
By combining virtual training with traditional classroom-based training led by experienced instructors, we believe we offer our students a unique opportunity to develop practical job skills in many of the key areas of expected job demand. We believe these job skills enable our students to compete effectively for employment opportunities and to pursue salary and career advancement.
Our recruiting efforts are conducted by a group of approximately 250 campus-based and field representatives who meet directly with prospective students during presentations conducted at high schools, in the prospective students’ homes or during a visit to one of our campuses. We also recruit adult career-seekers or career-changers through our campus-based representatives.
Our recruiting efforts are conducted by a group of approximately 260 campus-based and field representatives who meet directly with prospective students during presentations conducted at high schools, in the prospective students’ homes or during their visit to one of our campuses. We also recruit adult career-seekers or career-changers through our campus-based representatives.
In order to attend our schools, students must have either a high school diploma or a high school equivalency certificate (or General Education Development Certificate, GED). In addition, students must complete an admissions interview and complete a learner assessment.
To attend our schools, students must have either a high school diploma or a high school equivalency certificate (or General Education Development Certificate, GED). In addition, students must complete both an admissions interview and learner assessment.
Accrediting Commission of Career Schools and Colleges Reaccreditation Dates School Last Accreditation Letter Next Accreditation Philadelphia, PA 2 November 26, 2018 May 1, 2023 Union, NJ 1 May 24, 2019 February 1, 2024 Mahwah, NJ 1 October 15, 2020 August 1, 2024 Melrose Park, IL 2 December 2, 2019 November 1, 2024 Denver, CO 1 September 6, 2022 February 1, 2026 Columbia, MD 2 March 8, 2017 February 1, 2022 4 Grand Prairie, TX 1 May 26, 2022 August 1, 2026 Allentown, PA 2 March 8, 2017 January 1, 2022 4 Nashville, TN 1 September 6, 2017 May 1, 2022 4 Indianapolis, IN May 15, 2018 November 1, 2021 4 New Britain, CT June 5, 2018 January 1, 2023 4 Shelton, CT 2 March 1, 2019 September 1, 2023 Queens, NY 1 September 4, 2018 June 1, 2023 East Windsor, CT 2 October 17, 2017 February 1, 2023 4 South Plainfield, NJ 1 December 2, 2019 August 1, 2024 Iselin, NJ May 15, 2018 May 15, 2023 Moorestown, NJ 3 May 15, 2018 May 15, 2023 Paramus, NJ 3 May 15, 2018 May 15, 2023 Lincoln, RI 3 May 15, 2018 May 15, 2023 Somerville, MA 3 May 15, 2018 May 15, 2023 Summerlin, NV 3 May 15, 2018 May 15, 2023 Marietta, GA 3 May 1, 2022 May 1, 2027 1 Branch campus of main campus in Indianapolis, IN 2 Branch campus of main campus in New Britain, CT 3 Branch campus of main campus in Iselin, NJ 4 Campus going through reaccreditation If one of our schools fails to comply with accrediting commission requirements, the institution and its main and/or branch campuses are subject to the loss of accreditation or may be placed on probation or a special monitoring or reporting status which, if the noncompliance is not resolved, could result in loss of accreditation or restrictions on the addition of new locations, new programs, or other substantive changes.
Accrediting Commission of Career Schools and Colleges Reaccreditation Dates School Last Accreditation Letter Next Accreditation Philadelphia, PA 2 September 1, 2023 May 1, 2028 Union, NJ 1 May 24, 2019 February 1,2024 4 Mahwah, NJ 1 October 15, 2020 August 1, 2024 4 Melrose Park, IL 2 December 2, 2019 November 1, 2024 4 Denver, CO 1 September 6, 2022 February 1, 2026 Columbia, MD 2 September 1, 2023 February 1, 2027 Grand Prairie, TX 1 May 26, 2022 August 1, 2026 Allentown, PA 2 May 23, 2023 January 1, 2027 Nashville, TN 1 March 8, 2023 May 1, 2027 Indianapolis, IN May 23, 2023 November 1, 2026 New Britain, CT December 1, 2023 January 1, 2028 Shelton, CT 2 May 23, 2023 January 1, 2028 Queens, NY 1 September 4, 2018 June 1, 2023 4 East Windsor, CT 2 October 17, 2017 February 1, 2023 4 South Plainfield, NJ 1 December 2, 2019 August 1, 2024 4 Iselin, NJ May 15, 2018 May 15, 2023 4 Moorestown, NJ 3 May 15, 2018 May 15, 2023 4 Paramus, NJ 3 May 15, 2018 May 15, 2023 4 Lincoln, RI 3 May 15, 2018 May 15, 2023 4 Summerlin, NV 3 May 15, 2018 May 15, 2023 4 Marietta, GA 3 May 1, 2022 May 1, 2027 East Point, GA 2 December 20, 2023 December 20, 2025 1 Branch campus of main campus in Indianapolis, IN 2 Branch campus of main campus in New Britain, CT 3 Branch campus of main campus in Iselin, NJ 4 Campus going through reaccreditation If one of our schools fails to comply with accrediting commission requirements, the institution and its main and/or branch campuses are subject to the loss of accreditation or may be placed on probation or a special monitoring or reporting status which, if the noncompliance is not resolved, could result in loss of accreditation or restrictions on the addition of new locations, new programs, or other substantive changes.
The Company has distributed the full $13.7 million of its first installment as emergency grants to students and has utilized the full $13.7 million of its second installment. If the funds are not spent or accounted for in accordance with applicable requirements, we could be required to return funds or be subject to other sanctions. See Part I .
The Company has distributed the full $13.7 million of its first installment as emergency grants to students and has utilized the full $13.7 million of its second installment. If the funds are not spent or accounted for in accordance with applicable requirements, we could be required to return funds or be subject to other sanctions.
The ARPA does not identify the specific federal funding programs that will be covered by this provision, but it is expected to include funding from federal student aid programs such as the veterans’ benefits programs, which include the Post-9/11 GI Bill and Veterans Readiness and Employment services, from which we derived approximately 74% of our revenues on a cash basis in fiscal year 2022.
The ARPA does not identify the specific federal funding programs that will be covered by this provision, but it is expected to include funding from federal student aid programs such as the veterans’ benefits programs, which include the Post-9/11 GI Bill and Veterans Readiness and Employment services, from which we derived approximately 5.5% of our revenues on a cash basis in fiscal year 2023.
Provisional certification makes it easier for the DOE to revoke or decline to renew our Title IV eligibility if the DOE under the new administration chooses to take such an action against us and other provisionally certified for-profit schools without undergoing a formal administrative appeal process.
Provisional certification makes it easier for the DOE to revoke or decline to renew our Title IV eligibility if the DOE chooses to take such an action against us and other provisionally certified for-profit schools without undergoing a formal administrative appeal process.
“Business - Regulatory Environment – Borrower Defense to Repayment Regulations.” In March 2022, the DOE published guidance about the enforcement of the requirements regarding substantial misrepresentations.
“Business - Regulatory Environment – Borrower Defense to Repayment Regulations.” 19 Index In March 2022, the DOE published guidance about the enforcement of the requirements regarding substantial misrepresentations.
When we become aware that a particular instructor or program is experiencing a higher than normal dropout rate, we quickly seek to determine the cause of the problem and attempt to correct it. When we identify that a student is experiencing difficulty academically, we offer tutoring.
When we become aware that a particular instructor or program is experiencing a higher-than-normal dropout rate, we quickly seek to determine the cause of the problem and attempt to correct it. When we identify that a student is having trouble academically, we offer tutoring.
We had no seasonal workers. The number of individuals comprising our workforce increased by approximately 3.2% in the most recently completed fiscal year.
We had no seasonal workers. The number of individuals comprising our workforce increased by approximately 8.3% in the most recently completed fiscal year.
Item 1. “Business - Regulatory Environment – Compliance with Regulatory Standards and Effect of Regulatory Violations.” Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (“CRRSAA”) and ARPA. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law.
See Part I , Item 1. “Business - Regulatory Environment – Compliance with Regulatory Standards and Effect of Regulatory Violations.” Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (“CRRSAA”) and ARPA. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law.
During the fiscal year ended December 31, 2022 we recruited approximately 23% of our students directly out of high school. Field sales continue to be a large part of our business and developing local community relationships is one of our most important recruiting functions. Student Admissions, Enrollment and Retention Admissions.
During the fiscal year ended December 31, 2023, we recruited approximately 21% of our students directly out of high school. Field sales continue to be a large part of our business and developing local community relationships is one of our most important recruiting functions. Student Admissions, Enrollment and Retention Admissions.
The expanded financial responsibility regulations could result in the DOE recalculating and reducing our composite score to account for DOE estimates of potential losses under one or more of the extensive list of triggering circumstances and also could result in the imposition of conditions and requirements, including a requirement to provide a letter of credit or other form of financial protection.
The expanded financial responsibility regulations could result in the DOE recalculating and reducing our composite score to account for DOE estimates of potential losses under one or more of the extensive list of triggering circumstances and also could result in the imposition of conditions and requirements, including a requirement to provide one or more letters of credit or other forms of financial protection.
Classroom instruction combines lectures and demonstrations by our experienced faculty with comprehensive hands-on laboratory exercises in simulated workplace environments. 2 Index The following table lists the programs offered as of December 31, 2022: Current Programs Offered Area of Study Associate's Degree Diploma and Certificate Skilled Trades Electronic Engineering Technology, Electronics Systems Service Management Electrical & Electronics Systems Technology, Electrician Training, HVAC, Welding Technology, Welding and Metal Fabrication Technology, Welding with Introduction to Pipefitting, CNC Machining and Manufacturing, Advanced Manufacturing with Robotics Automotive Automotive Service Management, Collision Repair & Refinishing Service Management, Diesel & Truck Service Management, Heavy Equipment Maintenance Service Management Automotive Mechanics, Automotive Technology, Automotive Technology with Audi, Automotive Technology with BMW FastTrack, Automotive Technology with Mopar X-Press, Automotive Technology with High Performance, Automotive Technology with Volkswagen, Collision Repair and Refinishing Technology, Diesel & Truck Mechanics, Diesel & Truck Technology, Diesel & Truck Technology with Alternate Fuel Technology, Diesel & Truck Technology with Transport Refrigeration, Diesel & Truck with Automotive Technology, Heavy Equipment Maintenance Technology, Heavy Equipment and Truck Technology Health Sciences Medical Assisting Technology Medical Assistant, Patient Care Technician, Dental Assistant, Licensed Practical Nursing Hospitality Services Culinary Arts & Food Services, Cosmetology, Aesthetics, International Baking and Pastry, Nail Technology, Therapeutic Massage & Bodywork Technician Information Technology Computer Networking and Support Computer Systems Support Technician Skilled Trades.
Classroom instruction combines lectures and demonstrations by our experienced faculty with comprehensive hands-on laboratory exercises in simulated workplace environments. 2 Index The following table lists the programs offered as of December 31, 2023: Current Programs Offered Area of Study Associate's Degree Diploma and Certificate Skilled Trades Electrical and Electronic Systems Technology Service Management, HVAC Electrical & Electronics Systems Technology, Electrician Training, HVAC, Welding Technology, Welding Fabrication Technology, Welding and Metal Fabrication Technology, Welding with Introduction to Pipefitting, CNC Machining and Manufacturing, Advanced Manufacturing with Robotics Automotive Automotive Service Management, Collision Repair & Refinishing Service Management, Diesel & Truck Service Management, Heavy Equipment Maintenance Service Management Automotive Technology, Automotive Technology with BMW, Automotive Technology with Mopar X-Press, Automotive Technology with Volkswagen, Collision Repair and Refinishing Technology, Diesel & Truck Technology, Diesel & Truck Technology with Alternate Fuel Technology, Diesel & Truck Technology with Transport Refrigeration, Heavy Equipment Service Technology Health Sciences Medical Assisting Technology Medical Assistant, Patient Care Technician, Dental Assistant, Licensed Practical Nursing Hospitality Services and Information Technology Culinary Arts & Food Services, Cosmetology, Aesthetics, International Baking and Pastry, Nail Technology, Therapeutic Massage & Bodywork Technician.
These approximately 200 employees are covered by collective bargaining agreements that expire between 2023 and 2025. Those agreements expiring in the short term are in the process of renegotiation. We believe that we have good relationships with these unions and with the employees covered by these collective bargaining agreements and do not foresee issues with entering into satisfactory new agreements.
These approximately 200 employees are covered by collective bargaining agreements that expire between 2024 and 2026. Those agreements expiring in the short term are in the process of renegotiation. We believe that we have good relationships with these unions and with the employees covered by these collective bargaining agreements and do not foresee issues with entering into satisfactory new agreements.
Effective July 1, 2016, a school under HCM1, HCM2 or reimbursement payment methods must also pay any credit balances due to a student before drawing down funds for the amount of those disbursements from the DOE, even if the student or parent provides written authorization for the school to hold the credit balance.
A school under HCM1, HCM2 or reimbursement payment methods must also pay any credit balances due to a student before drawing down funds for the amount of those disbursements from the DOE, even if the student or parent provides written authorization for the school to hold the credit balance.
Upon such a change of control, a school's eligibility to participate in Title IV Programs is generally suspended until it has applied for recertification by the DOE as an eligible school under its new ownership, which requires that the school also re-establish its state authorization and accreditation. See Part I, Item 1.
Upon such a change of control, a school's eligibility to participate in Title IV Programs is generally suspended until it has applied for recertification by the DOE as an eligible school under its new ownership, which requires that the school also re-establish its state authorization and accreditation.
We devote significant effort to complying with state and federal consumer protection laws. In recent years, Congress, the DOE, state legislatures and regulatory agencies, accrediting agencies, the CFPB, the FTC, state attorneys general and the media have scrutinized the for-profit postsecondary education sector.
We devote significant effort to complying with state and federal consumer protection laws. In recent years, Congress, the DOE, state legislatures and regulatory agencies, accrediting agencies, the CFPB, the FTC, the SEC, the Department of Justice, state attorneys general and the media have scrutinized the for-profit postsecondary education sector.
Our campuses in East Windsor, Connecticut; Nashville, Tennessee; Grand Prairie, Texas; Indianapolis, Indiana; and Denver, Colorado are destination campuses, attracting students throughout the United States and, in some cases, from abroad. Health Sciences. For the fiscal year ended December 31, 2022, 25% of our total average student enrollment was in our health science program.
Our campuses in East Windsor, Connecticut; Nashville, Tennessee; Grand Prairie, Texas; Indianapolis, Indiana; and Denver, Colorado are destination campuses, attracting students throughout the United States and, in some cases, from abroad. Health Sciences. For the year ended December 31, 2023, 24% of our total average student enrollment was in our health science program.
Our average student to teacher ratio was approximately 16 to 1 during the fiscal year ended December 31, 2022. Diversity and Inclusion We strive to create a culture of diversity and inclusion through our human capital management practices. The achievement of workforce diversity is one important goal in the outreach efforts for recruitment of professionals.
Our average student to teacher ratio was approximately 15.6 to 1 during the fiscal year ended December 31, 2023. Diversity and Inclusion We strive to create a culture of diversity and inclusion through our human capital management practices. The achievement of workforce diversity is one important goal in the outreach efforts for recruitment of professionals.
We take admissions requirements very seriously as they are the best indicators of our students’ likelihood for program success and completion thus leading to successful employment in the industry. The learner assessment is a questionnaire designed to discover student challenges and address them prior to attending.
We take admissions requirements very seriously as they are the best indicators of our students’ likelihood for program success and completion, leading to successful employment in their chosen industry. The learner assessment is a questionnaire designed to discover challenges and help us to address them prior to the student attending.
In fiscal year 2022, we derived approximately 74% of our revenues, on a cash basis, from veterans’ benefits programs, which include the Post-9/11 GI Bill and Veteran Readiness and Employment services.
In fiscal year 2023, we derived approximately 5.5% of our revenues, on a cash basis, from veterans’ benefits programs, which include the Post-9/11 GI Bill and Veteran Readiness and Employment services.
Our health science programs range from 27 to 104 weeks in length, with tuition rates ranging from $15,000 to $33,000. Graduates of these programs are qualified to obtain positions such as licensed practical nurse, registered nurse, dental assistant, medical assistant, medical administrative assistant, and claims examiner.
Our health science programs are 27 to 104 weeks in length, with tuition rates ranging from $14,000 to $33,000. Graduates of our programs are qualified to obtain positions such as licensed practical nurse, dental assistant, medical assistant, medical administrative assistant, and claims examiner.
“Business – Regulatory Environment – School Acquisitions.” Thus, any plans to expand our business through acquisition of additional schools and have them certified by the DOE to participate in Title IV Programs must take into account the approval requirements of the DOE and the relevant state education agencies and accrediting commissions.
Thus, any plans to expand our business through acquisition of additional schools and have them certified by the DOE to participate in Title IV Programs must take into account the approval requirements of the DOE and the relevant state education agencies and accrediting commissions.
These criteria require, among other things, that the institution: • comply with all applicable federal student financial aid requirements; • have capable and sufficient personnel to administer the federal student Title IV Programs; • administer Title IV Programs with adequate checks and balances in its system of internal controls over financial reporting; • divide the function of authorizing and disbursing or delivering Title IV Program funds so that no office has the responsibility for both functions; • establish and maintain records required under the Title IV Program regulations; • develop and apply an adequate system to identify and resolve discrepancies in information from sources regarding a student’s application for financial aid under the Title IV Program; • have acceptable methods of defining and measuring the satisfactory academic progress of its students; • refer to the Office of the Inspector General any credible information indicating that any applicant, student, employee, third party servicer or other agent of the school has been engaged in any fraud or other illegal conduct involving Title IV Programs; • not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension; • provide adequate financial aid counseling to its students; • submit in a timely manner all reports and financial statements required by the Title IV Program regulations; and • not otherwise appear to lack administrative capability. 20 Index The DOE has placed three of our institutions on provisional certification based on findings in recent audits of the institutions’ Title IV compliance that the DOE alleges identified deficiencies in regulations related to DOE regulations regarding an institution’s level of administrative capability.
These criteria require, among other things, that the institution: • comply with all applicable federal student financial aid requirements; • have capable and sufficient personnel to administer the federal student Title IV Programs; • administer Title IV Programs with adequate checks and balances in its system of internal controls over financial reporting; • divide the function of authorizing and disbursing or delivering Title IV Program funds so that no office has the responsibility for both functions; • establish and maintain records required under the Title IV Program regulations; • develop and apply an adequate system to identify and resolve discrepancies in information from sources regarding a student’s application for financial aid under the Title IV Program; • have acceptable methods of defining and measuring the satisfactory academic progress of its students; • refer to the Office of the Inspector General any credible information indicating that any applicant, student, employee, third party servicer or other agent of the school has been engaged in any fraud or other illegal conduct involving Title IV Programs; • not be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment or suspension; • provide adequate financial aid counseling to its students; • submit in a timely manner all reports and financial statements required by the Title IV Program regulations; and • not otherwise appear to lack administrative capability.
Under this definition, for DOE purposes as of December 31, 2022 we had the following three institutions, collectively consisting of three main campuses and 19 additional locations: 10 Index Main Institution/Campus(es) Additional Location(s) Iselin, NJ Moorestown, NJ Paramus, NJ Somerville, MA Lincoln, RI Marietta, GA Las Vegas, NV (Summerlin) New Britain, CT Shelton, CT Philadelphia, PA East Windsor, CT Melrose Park, IL Allentown, PA Columbia, MD Indianapolis, IN Grand Prairie, TX Nashville, TN Denver, CO Union, NJ Mahwah, NJ Queens, NY South Plainfield, NJ Each institution must periodically apply to the DOE for continued certification to participate in Title IV Programs.
Under this definition, for DOE purposes as of December 31, 2023 we had the following three institutions, collectively consisting of three main campuses and 19 additional locations: Main Institution/Campus(es) Additional Location(s) Iselin, NJ Moorestown, NJ Paramus, NJ Lincoln, RI Marietta, GA Las Vegas, NV (Summerlin) New Britain, CT Shelton, CT Philadelphia, PA East Windsor, CT Melrose Park, IL Allentown, PA Columbia, MD East Point, GA 1 Indianapolis, IN Grand Prairie, TX Nashville, TN Denver, CO Union, NJ Mahwah, NJ Queens, NY South Plainfield, NJ 1 Applied to participate in Title IV programs.
We cannot predict the ultimate timing, content, and impact of the proposed and final regulations on all of these topics. Some of the new and proposed regulations are expected to impose a broad range of additional requirements on institutions and especially on for-profit institutions like our schools.
We cannot predict the ultimate timing, content, and impact of the proposed and final regulations on all of these topics or of any regulations the DOE may propose in the future. Some of the new and proposed regulations are expected to impose a broad range of additional requirements on institutions and especially on for-profit institutions like our schools.
“Business – Regulatory Environment – Substantial Misrepresentation.” The new regulations also make it easier for borrowers to qualify for loan discharges by enabling the DOE to permit group consideration of borrower claims under certain circumstances either on its own initiative or at the request of state requestors or certain third-party legal assistance organizations (which could enable the DOE to evaluate and rule on a broad group of claims more quickly than evaluating the claims individually), establishing a rebuttable presumption that borrowers in a group claim reasonably relied on (and were impacted by) acts or omissions giving rise to a borrower defense, establishing a Borrower Defense to Repayment claim based on a separate state law standard if the DOE does not approve claims based on one of the other types of conduct for borrowers with loans first disbursed prior to July 1, 2017, and providing the DOE with the discretion to reopen its decisions at any time in accordance with regulatory requirements 12 Index The new regulations also reinstitute a general prohibition on institutions requiring borrowers to agree to mandatory pre-dispute arbitration agreements and requiring students to waive the ability to participate in a class-action lawsuit with respect to a borrower defense claim.
“Business – Regulatory Environment – Substantial Misrepresentation.” The new regulations also make it easier for borrowers to qualify for loan discharges by enabling the DOE to permit group consideration of borrower claims under certain circumstances either on its own initiative or at the request of state requestors or certain third-party legal assistance organizations (which could enable the DOE to evaluate and rule on a broad group of claims more quickly than evaluating the claims individually), establishing a rebuttable presumption that borrowers in a group claim reasonably relied on (and were impacted by) acts or omissions giving rise to a borrower defense, establishing a Borrower Defense to Repayment claim based on a separate state law standard if the DOE does not approve claims based on one of the other types of conduct for borrowers with loans first disbursed prior to July 1, 2017, and providing the DOE with the discretion to reopen its decisions at any time in accordance with regulatory requirements.
Our strategic plans for future expansion are based, in part, on our ability to open new schools as additional locations of our existing institutions and take into account the DOE’s approval requirements.
Our strategic plans for future expansion are based, in part, on our ability to open new schools as additional locations of our existing institutions and take into account the applicable approval requirements of the DOE and our other regulatory agencies.
We believe that the diversity and inclusion of our personnel is an essential component for providing a meaningful student experience by drawing upon a variety of backgrounds and experiences. As of December 31, 2022, we had approximately 2,121 employees, including 557 full-time instructors and 433 part-time instructors, and approximately 1,131 employees serving in various administrative and management positions.
We believe that the diversity and inclusion of our personnel is an essential component for providing a meaningful student experience by drawing upon a variety of backgrounds and experiences. As of December 31, 2023, we had approximately 2,300 employees, including approximately 600 full-time instructors and approximately 500 part-time instructors, and approximately 1,200 employees serving in various administrative and management positions.
The parties also stated that the DOE has determined that attendance at one of the institutions on the list justifies presumptive relief based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the high rate of class members with applications related to the listed schools.
The class action plaintiffs and the DOE stated that the DOE had determined that attendance at one of the listed institutions justifies presumptive relief allegedly based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the purportedly high rate of class members with applications related to the listed schools.
If the DOE determines that an institution does not satisfy the DOE's financial responsibility standards, depending on its composite score and other factors, that institution may establish its eligibility to participate in the Title IV Programs on an alternative basis by, among other things: • posting a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution's most recently completed fiscal year; or • posting a letter of credit in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently completed fiscal year accepting provisional certification; complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE's standard advance funding arrangement. 16 Index For the 2022, 2021, and 2020 fiscal years, we calculated our composite score to be 2.9, 3.0, and 2.7, respectively.
If the DOE determines that an institution does not satisfy the DOE's financial responsibility standards, depending on its composite score and other factors, that institution may establish its eligibility to participate in the Title IV Programs on an alternative basis by, among other things: • posting a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution's most recently completed fiscal year; or • posting a letter of credit in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently completed fiscal year accepting provisional certification; complying with additional DOE monitoring requirements and agreeing to receive Title IV Program funds under an arrangement other than the DOE's standard advance funding arrangement.
State Authorization To operate and offer postsecondary programs (including in-person and online programs, degree and diploma programs and certificate programs), and to be certified to participate in Title IV Programs, each of our schools must be authorized and maintain authorization from the state in which it is physically located.
State Authorization To operate and offer postsecondary educational programs and to be certified to participate in Title IV Programs, each of our schools must be authorized and maintain authorization from the state in which it is physically located.
In addition, we are removing certain functions from the campuses and centralizing them to remove distractions from the campuses while creating more efficient and effective services for our students. By simplifying, centralizing and standardizing our operations, we believe we will improve our margins and be more scalable. 1 Index • Replicate Programs and Expand Existing Areas of Study.
In addition, we are removing certain functions from the campuses and centralizing them to remove distractions from the campuses while creating more efficient and effective services for our students. By simplifying, centralizing and standardizing our operations, we believe we will improve our margins and be more scalable.
Our graduates are employed by a wide variety of companies, ranging from automotive and diesel dealers, to independent auto body paint and repair shops and trucking and construction companies. As of December 31, 2022, we offered programs in automotive technology at 12 of our campuses and most of these campuses offered other technical programs as well.
Our graduates are employed by a wide variety of companies, ranging from automotive and diesel dealers, to independent auto body paint and repair shops to trucking and construction companies. As of December 31, 2023, we offer programs in automotive technology at 12 campuses.
As of December 31, 2022, all of our schools offered diploma and certificate programs and nine of our schools are currently approved to offer associate’s degree programs.
As of December 31, 2023, all of our schools offer diploma and certificate programs and nine of our schools are currently approved to offer associate degree programs.
The new regulations under the 90/10 Rule could have a material adverse effect on us and other schools like ours. We are in the process of evaluating the impact of the new 90/10 Rule regulations on our business.
The new regulations under the 90/10 Rule could have a material adverse effect on us and other schools like ours. We continue to evaluate the impact of the new 90/10 Rule regulations on our business.
We enroll students continuously throughout the year, with our largest classes enrolling in late summer or early fall following high school graduation. As of December 31, 2022, we had 12,388 students enrolled at 22 campuses and our average enrollment for the fiscal year ended December 31, 2022 was 12,894 students. Retention.
We enroll students continuously throughout the year, with our largest classes enrolling in late summer or early fall following high school graduation. As of December 31, 2023, we had 13,270 students enrolled at 21 campuses and our average enrollment during the fiscal year ended December 31, 2023 was 12,941 students. Retention.
Programmatic accreditation is yet another approval necessary in certain circumstances. Specifically, it is the process through which specific programs are reviewed and approved by industry and program-specific accrediting entities.
“Business - Regulatory Environment – Negotiated Rulemaking.” 9 Index Programmatic accreditation is yet another approval necessary in certain circumstances. Specifically, it is the process through which specific programs are reviewed and approved by industry and program-specific accrediting entities.
The DOE also generally requires schools that offer a program through distance education to students in a state in which the school is not physically located to meet the requirements of the state in order to offer programs by distance education in the state. All of our schools are currently approved to offer both distance and in-person learning.
The DOE also generally requires schools that offer a program through distance education to students in a state in which the school is not physically located to meet the requirements of the state in order to offer programs by distance education in the state.
Referrals from current students, high school counselors and satisfied graduates and their employers have historically represented approximately 14% of our new student starts. During the fiscal year ended December 31, 2022, referrals were approximately 13% of our new student starts. Our school administrators actively work with our current students to encourage them to recommend our programs to prospective students.
Referrals from current students, high school counselors and satisfied graduates and their employers have historically represented approximately 14% of our new student starts. Our school administrators actively work with our current students to encourage them to recommend our programs to prospective students.
The new regulations also expand the types of conduct that could result in a discharge of student loans including: 1) an expanded list of substantial misrepresentations; 2) a new section regarding substantial omissions of fact; 3) breaches of contract; 4) a new section regarding aggressive and deceptive recruitment; or 5) state or federal judgments or final DOE actions that could result in a borrower defense claim.
However, the new regulations will make it easier for the DOE to recover from the institution the liabilities that the DOE elects to impose. 13 Index The new regulations also expand the types of conduct that could result in a discharge of student loans including: 1) an expanded list of substantial misrepresentations; 2) a new section regarding substantial omissions of fact; 3) breaches of contract; 4) a new section regarding aggressive and deceptive recruitment; or 5) state or federal judgments or final DOE actions that could result in a borrower defense claim.
We have calculated that for the fiscal year ended December 31, 2022 our institutions’ 90/10 Rule percentages ranged from 72% to 79%. For fiscal year 2022, none of our existing institutions derived more than 90% of its revenues from Title IV Programs. Our calculations are subject to review by the DOE.
We have calculated that for the fiscal year ended December 31, 2023 our institutions’ 90/10 Rule percentages ranged from approximately 79% to 84%. For fiscal year 2023, none of our existing institutions derived more than 90% of its revenues from Title IV Programs.
These scores are subject to determination by the DOE based on its review of our consolidated audited financial statements for the 2022, 2021, and 2020 fiscal years, but we believe it is likely that the DOE will determine that our institutions comply with the composite score requirement.
For the 2023 fiscal year, we calculated our composite score to be 3.0. Composite scores are subject to determination by the DOE based on its review of our consolidated audited financial statements, but we believe it is likely that the DOE will determine that our institutions comply with the composite score requirement.
See “Business – Regulatory Environment – State Authorization.” If the DOE publishes final regulations by November 1, 2023, the regulations typically would have a general effective date of July 1, 2024. If they are published after November 1, 2023, the regulations typically would have a general effective date of July 1, 2025 or a later date.
If the DOE publishes final regulations by November 1, 2024, the regulations typically would have a general effective date of July 1, 2025. If they are published after November 1, 2024, the regulations typically would have a general effective date of July 1, 2026 or a later date.
Also, all of our schools are currently offering both online and in-person learning and accrediting agencies and some state bodies require schools to obtain approval and meet certain requirements in order to offer programs via distance education in states where the school does not have a campus.
Accrediting agencies and some state bodies require schools to obtain approval and meet certain requirements in order to offer programs via distance education in states where the school does not have a campus.
The DOE may or may not attempt to seek recoupment from applicable schools relating to approval of borrower defense applications. If the DOE approves borrower defense applications concerning us and attempts to recoup from us the loan amounts in the approved applications, we would consider our options for challenging the legal and factual bases for such actions.
If the DOE approves borrower defense applications concerning us and attempts to recoup from us the loan amounts in the approved applications, we would consider our options for challenging the legal and factual bases for such actions.
As we moved to online delivery of instruction we saw a slight decline in our student retention rate, but we believe this is temporary and will improve as our as faculty becomes better skilled at hybrid teaching and to ensure that this happens, we have developed online teacher training for all faculty. 4 Index Job Placement We believe that assisting our graduates in securing employment after completing their program of study is critical to our mission as a post-secondary educational institution as well as to our ability to attract high quality students and enhance our reputation in the industry.
To ensure that this happens, we have developed online teacher training for all faculty. 4 Index Job Placement We believe that assisting our graduates in securing employment after completing their program of study is critical to our mission as a post-secondary educational institution as well as to our ability to attract high quality students and enhance our reputation in the industry.
The Company, which currently operates 22 campuses in 14 states, offers programs in skilled trades (which include HVAC, welding and computerized numerical control and electrical and electronic systems technology, among other programs), automotive technology, healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and information technology (which consists of information technology programs).
Lincoln Educational Services Corporation offers programs in skilled trades (which include HVAC, welding and computerized numerical control and electrical and electronic systems technology, among other programs), automotive technology, healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs) and hospitality services and information technology (which include culinary, therapeutic massage, cosmetology and aesthetics and information technology programs).
Some of the state education agencies and our accrediting commission also have requirements that may affect our schools' ability to open a new campus, establish an additional location of an existing institution or begin offering a new educational program.
Our expansion plans are based, in part, on our ability to add new educational programs at our existing schools. 20 Index Some of the state education agencies and our accrediting commission also have requirements that may affect our schools' ability to open a new campus, establish an additional location of an existing institution or begin offering a new educational program.
Marketing and Student Recruitment We utilize a variety of marketing and recruiting methods to attract students and increase enrollment. Our marketing and recruiting efforts are targeted at prospective students who are high school graduates entering the workforce, or who are currently underemployed or unemployed and require additional training to enter or re-enter the workforce. Marketing and Advertising.
Our marketing and recruiting efforts are targeted at prospective students who are high school graduates entering the workforce, or who are currently underemployed or unemployed and require additional training to enter or re-enter the workforce. Marketing and Advertising.
“Business - Regulatory Environment – Financial Responsibility Standards.” In September 2022, the DOE released the final cohort default rates for the 2019 federal fiscal year. These are the most recent final rates published by the DOE. The rates for our existing institutions for the 2019 federal fiscal year range from 1.9% to 2.9 %.
“Business - Regulatory Environment – Financial Responsibility Standards.” In September 2023, the DOE released the final cohort default rates for the 2020 federal fiscal year. These are the most recent final rates published by the DOE. The rates for our existing institutions for the 2020 federal fiscal year were zero.
As a result, since January 1, 2018, our diverse workforce percentage has increased from 33.5% to 42.9%. Further, the generational range of our workforce, as of December 31, 2022, was 26% Baby Boomers, 41% Gen Xers and 24% Millennials. The largest growth in the generational workforce makeup was in the Millennial and Gen Z groups.
As a result, since January 1, 2018, our diverse workforce participation percentage has increased from 34% to 44%. Further, the generational range of our workforce, as of December 31, 2023, was 23% Baby Boomers, 39% Gen Xers and 29% Millennials. The largest growth in the generational workforce makeup was in the Millennial and Gen Z groups.
In addition, Congress reviews and determines federal appropriations for Title IV Programs on an annual basis. Congress can also make changes in the laws affecting Title IV Programs in the annual appropriations bills and in other laws it enacts between the HEA reauthorizations such as its recent amendment to the 90/10 rule in the HEA.
Congress can also make changes in the laws affecting Title IV Programs in the annual appropriations bills and in other laws it enacts between the HEA reauthorizations such as its recent amendment to the 90/10 rule in the HEA. See Part I, Item 1.
Further, in order for a school to engage in educational or recruiting activities outside of its state of physical location, that school also may be required to obtain and maintain authorization from the states in which it is recruiting students and teaching programs. The level of regulatory oversight varies substantially from state to state and is extensive in some states.
Further, in order for a school to engage in educational or recruiting activities outside of its state of physical location, the school also may be required to obtain and maintain authorization from the states in which it is recruiting students or in which its students are receiving online instruction.
The HEA and the regulations of the DOE specify extensive criteria and numerous standards that we must satisfy in order to participate in federal financial aid programs under Title IV of the HEA (“Title IV Programs”).
“Business - Regulatory Environment – State Authorization,” “Regulatory Environment – Accreditation,” “Regulatory Environment – Regulation of Federal Student Financial Aid Programs,” and “Regulatory Environment – Other Financial Assistance Programs.” The HEA and the regulations of the DOE specify extensive criteria and numerous standards that we must satisfy in order to participate in federal financial aid programs under Title IV of the HEA (“Title IV Programs”).
State laws may establish standards for instruction, qualifications of faculty, location and nature of facilities and equipment, administrative procedures, marketing, recruiting, student outcomes reporting, disclosure obligations to students, limitations on mandatory arbitration clauses in enrollment agreements, financial operations, and other operational matters. Some states prescribe standards of financial responsibility and mandate that institutions post surety bonds.
State laws may establish standards for instruction, qualifications of faculty, location and nature of facilities and equipment, administrative procedures, marketing, recruiting, student outcomes reporting, disclosure obligations to students, limitations on mandatory arbitration clauses in enrollment agreements, requirements for distance learning including online and blended courses, financial operations, and other operational matters.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe cannot predict whether the settlement will be upheld on appeal, what actions the DOE might take if the settlement is upheld on appeal (including the ultimate timing or amount of borrower defense applications the DOE may grant in the future and the timing or amount of any possible liabilities that the DOE may seek to recover from the Company, if any), or what the outcome of our challenges to such actions will be, but such actions could have a material adverse effect on our business and results of operations.
Biggest changeWe cannot predict what other actions the DOE might take if the settlement is fully implemented, including the amount of borrower defense applications that the DOE might grant or the amount of any recoupment that the DOE might seek from us, if any. We also cannot predict the outcome of any challenges we might make to such actions.
We cannot predict the ultimate timing, content or impact of any regulations that DOE might publish on this topic. See Part I, Item 1.
We cannot predict the ultimate timing, content or impact of any regulations that the DOE might publish on this topic. See Part I, Item 1.
“Business - Regulatory Environment – State Authorization” and “Business – Regulatory Environment – Accreditation.” If any of our schools fail to comply with accrediting commission requirements, the institution and its main and/or branch campuses are subject to the loss of accreditation or may be placed on probation or a special monitoring or reporting status which, if the noncompliance with accrediting commission requirements is not resolved, could result in loss of accreditation.
“Business - Regulatory Environment – State Authorization” and “Business – Regulatory Environment – Accreditation.” If any of our schools fail to comply with accrediting or state requirements, the institution and its main and/or branch campuses are subject to the loss of accreditation or state authorization or may be placed on probation or a special monitoring or reporting status which, if the noncompliance with accrediting commission requirements is not resolved, could result in loss of accreditation.
Furthermore, our Amended and Restated Certificate of Incorporation and Bylaws: 32 Index • authorize the issuance of blank check Preferred Stock that could be issued by our board of directors to thwart a takeover attempt; • prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors; • require super-majority voting to effect amendments to certain provisions of our amended and restated certificate of incorporation; • limit who may call special meetings of both the board of directors and shareholders; • prohibit shareholder action by non-unanimous written consent and otherwise require all shareholder actions to be taken at a meeting of the shareholders; • establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by shareholders at shareholders’ meetings; and • require that vacancies on the board of directors, including newly created directorships, be filled only by a majority vote of directors then in office.
Furthermore, our Amended and Restated Certificate of Incorporation and Bylaws: • authorize the issuance of blank check Preferred Stock that could be issued by our Board of Directors to thwart a takeover attempt; • prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of stock to elect some directors; • require super-majority voting to effect amendments to certain provisions of our Amended and Restated Certificate of Incorporation; • limit who may call special meetings of both the Board of Directors and shareholders; • prohibit shareholder action by non-unanimous written consent and otherwise require all shareholder actions to be taken at a meeting of the shareholders; 34 Index • establish advance notice requirements for nominating candidates for election to the Board of Directors or for proposing matters that can be acted upon by shareholders at shareholders’ meetings; and • require that vacancies on the Board of Directors, including newly created directorships, be filled only by a majority vote of directors then in office.
The final regulations regarding Borrower Defense to Repayment and regarding closed school loan discharges are extensive and generally make it easier for borrowers to obtain discharges of student loans and for the DOE to assess liabilities and other sanctions on institutions based on the loan discharges.
The regulations regarding Borrower Defense to Repayment and regarding closed school loan discharges are extensive and generally make it easier for borrowers to obtain discharges of student loans and for the DOE to assess liabilities and other sanctions on institutions based on the loan discharges.
We cannot assure you that a breach, loss, or theft of personal information will not occur. 31 Index Changes in U.S. tax laws or adverse outcomes from examination of our tax returns could have an adverse effect upon our financial results. We are subject to income tax requirements in various jurisdictions in the United States.
We cannot assure you that a breach, loss, or theft of personal information will not occur. Changes in U.S. tax laws or adverse outcomes from examination of our tax returns could have an adverse effect upon our financial results. We are subject to income tax requirements in various jurisdictions in the United States.
RISKS RELATED TO OUR INDUSTRY Our failure to comply with the extensive regulatory requirements for participation in Title IV Programs and school operations could result in financial penalties, restrictions on our operations and loss of external financial aid funding, which could affect our revenues and impose significant operating restrictions upon us.
RISKS RELATED TO OUR INDUSTRY Our failure to comply with the extensive regulatory requirements applicable to our participation in Title IV Programs and our school operations could result in financial penalties, restrictions on our operations and loss of external financial aid funding, which could affect our revenues and impose significant operating restrictions upon us.
Our computer networks and those of our vendors that manage confidential information for us or provide services to our student may be vulnerable to computer hackers, organized cyberattacks and physical or electronic breaches or unauthorized access, acts of vandalism, ransomware, software viruses and other similar types of malicious activities.
Our computer networks and those of our vendors that manage confidential information for us or provide services to our students may be vulnerable to computer hackers, organized cyberattacks and physical or electronic breaches or unauthorized access, acts of vandalism, ransomware, software viruses and other similar types of malicious activities.
Our efforts to attract and enroll students result in us collecting, using and storing substantial amounts of personal information regarding applicants, our students, their families and alumni, including social security numbers and financial data. We also maintain personal information about our employees in the ordinary course of our activities.
Our efforts to attract and enroll students result in the Company collecting, using and storing substantial amounts of personal information regarding applicants, our students, their families and alumni, including social security numbers and financial data. We also maintain personal information about our employees in the ordinary course of our activities.
“Business - Regulatory Environment – Regulation of Federal Student Financial Aid Programs.” 23 Index Congress and the DOE may make changes to the laws and regulations applicable to, or reduce funding for, Title IV Programs, which could reduce our student population, revenues or profit margin.
“Business - Regulatory Environment – Regulation of Federal Student Financial Aid Programs.” Congress and the DOE may make changes to the laws and regulations applicable to, or reduce funding for, Title IV Programs, which could reduce our student population, revenues or profit margin.
“Business - Regulatory Environment – Substantial Misrepresentation” and “Business – Regulatory Environment – Negotiated Rulemaking.” If the DOE determines that one of our institutions has engaged in substantial misrepresentation or other prohibited conduct, the DOE may impose sanctions or other conditions upon the institution including, but not limited to, initiating an action to fine the institution or limit, suspend, or terminate its eligibility to participate in Title IV Programs and may seek to discharge students’ loans and impose liabilities upon the institution.
“Business - Regulatory Environment – Substantial Misrepresentation.” If the DOE determines that one of our institutions has engaged in substantial misrepresentation or other prohibited conduct, the DOE may impose sanctions or other conditions upon the institution including, but not limited to, initiating an action to fine the institution or limit, suspend, or terminate its eligibility to participate in Title IV Programs and may seek to discharge students’ loans and impose liabilities upon the institution.
However, there can be no assurance that the outcomes from these tax examinations will not have a material effect, either positive or negative, on our business, financial conditions and results of operation.
However, there can be no assurance that the outcomes from these tax examinations will not have a material effect, either positive or negative, on our business, financial conditions and results of operations.
If any of our schools fail to comply with applicable HEA or regulatory requirements, our regulators could take a variety of adverse actions against us, and our schools could be subject to, among other things, a) the loss of, or placement of material restrictions or conditions on (i) state licensure or accreditation, (ii) eligibility to participate in and receive funds under the Title IV Programs or other federal or state financial assistance programs, or (iii) capacity to grant degrees, diplomas and certificates or b) the imposition of liabilities or monetary penalties, any of which could have a material adverse effect on academic or operational initiatives, revenues or financial condition, and impose significant operating restrictions upon us.
If we or any of our schools fail to comply with applicable federal, state, or accrediting agency requirements, our regulators could take a variety of adverse actions against us, and our schools could be subject to, among other things, a) the loss of, or placement of material restrictions or conditions on (i) state licensure or accreditation, (ii) eligibility to participate in and receive funds under the Title IV Programs or other federal or state financial assistance programs, or (iii) capacity to grant degrees, diplomas and certificates or b) the imposition of liabilities or monetary penalties, any of which could have a material adverse effect on academic or operational initiatives, revenues or financial condition, and impose significant operating restrictions upon us.
“Business - Regulatory Environment.” If we are found to have not satisfied the HEA or the DOE's requirements for Title IV Programs funding, one or more of our institutions, including its additional locations, could be limited in its access to, or lose, Title IV Program funding, which could adversely affect our revenue, as we received approximately 74% of our revenue (calculated based on cash receipts) from Title IV Programs during the fiscal year ended December 31, 2022, and have a significant impact on our business and results of operations.
“Business - Regulatory Environment.” 23 Index If we are found to have not satisfied the HEA or the DOE's requirements for Title IV Programs funding, one or more of our institutions, including its additional locations, could be limited in its access to, or lose, Title IV Program funding, which could adversely affect our revenue, as we received approximately 81% of our revenue (calculated based on cash receipts) from Title IV Programs during the fiscal year ended December 31, 2023, and have a significant impact on our business and results of operations.
This could adversely affect our revenue, as we received approximately 74% of our revenue (calculated based on cash receipts) from Title IV Programs in 2022, which would have a significant impact on our business and results of operations.
This could adversely affect our revenue, as we received approximately 81% of our revenue (calculated based on cash receipts) from Title IV Programs in 2023, which would have a significant impact on our business and results of operations.
“Business – Regulatory Environment – Accreditation.” If the DOE declines to continue its recognition of ACCSC and if the subsequent period for obtaining accreditation from another DOE-recognized accrediting agency lapses before we obtain accreditation from another DOE-recognize accrediting agency (or if the DOE does not provide such a period for institutions to obtain other accreditation), our schools could lose their Title IV eligibility.
If the DOE declines to continue its recognition of ACCSC in the future and if the subsequent period for obtaining accreditation from another DOE-recognized accrediting agency lapses before we obtain accreditation from another DOE-recognized accrediting agency (or if the DOE does not provide such a period for institutions to obtain other accreditation), our schools could lose their Title IV eligibility.
“Business – Regulatory Environment – Scrutiny of the For-Profit Postsecondary Education Sector.” Any laws that are adopted that limit our or our students’ participation in Title IV Programs or in programs to provide funds for active duty service members and veterans or the amount of student financial aid for which our students are eligible, or any decreases in enrollment related to the congressional activity concerning this sector, could have a material adverse effect on our academic or operational initiatives, cash flows, results of operations, or financial condition. 28 Index Adverse publicity arising from scrutiny of us or other for-profit postsecondary schools may negatively affect us or our schools.
“Business – Regulatory Environment – Scrutiny of the For-Profit Postsecondary Education Sector.” Any laws that are adopted that limit our or our students’ participation in Title IV Programs or in programs to provide funds for active duty service members and veterans or the amount of student financial aid for which our students are eligible, or any decreases in enrollment related to the congressional activity concerning this sector, could have a material adverse effect on our academic or operational initiatives, cash flows, results of operations, or financial condition.
Although programmatic accreditation is not generally necessary for Title IV Program eligibility, such accreditation may be required to allow students to sit for certain licensure exams or to work in a particular profession or career or to meet other requirements.
Although programmatic accreditation is not generally necessary for Title IV Program eligibility, such accreditation may be required to allow students to sit for certain licensure exams or to work in a particular profession or career or to meet other requirements. Failure to obtain or maintain such programmatic accreditation may lead to a decline in enrollments in such programs.
See Part I, Item 1. “Business – Regulatory Environment – Compliance with Regulatory Standards and Effect of Regulatory Violations.” If we fail to demonstrate “administrative capability” to the DOE, our business could suffer.
See Part I, Item 1. “Business – Regulatory Environment – Compliance with Regulatory Standards and Effect of Regulatory Violations” and “Business – Regulatory Environment – Other Financial Assistance Programs.” If we fail to demonstrate “administrative capability” to the DOE, our business could suffer.
DOE regulations specify extensive criteria an institution must satisfy to establish that it has the requisite “administrative capability” to participate in Title IV Programs, and the DOE plans to reinitiate a rulemaking process that may expand the number and scope of these criteria. For a description of these criteria, see Part I, Item 1.
DOE regulations specify extensive criteria an institution must satisfy to establish that it has the requisite “administrative capability” to participate in Title IV Programs, and the DOE recently published new regulations that expand the number and scope of these criteria. For a description of these criteria, see Part I, Item 1.
The loss of the services of any of our key personnel, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could have an adverse effect on our ability to operate our business efficiently and to execute our growth strategy.
The loss of the services of any of our key personnel, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could have an adverse effect on our ability to operate our business efficiently and to execute our growth strategy. Our total assets include a substantial amount of goodwill.
More recently, the DOE announced its intent to commence a negotiated rulemaking process in April 2023 on a number of topics including plans to amend the regulations on the requirements for institutions to return unearned Title IV funds to students who withdraw from their educational programs before completing them .
More recently, the DOE is engaged in a negotiated rulemaking process on a number of topics including plans to amend the regulations on the requirements for institutions to return unearned Title IV funds to students who withdraw from their educational programs before completing them .
The parties also stated that the DOE has determined that attendance at one of the institutions on the list justifies presumptive relief based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the high rate of class members with applications related to the listed schools.
The class action plaintiffs and the DOE stated that the DOE had determined that attendance at one of the listed institutions justifies presumptive relief allegedly based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the purportedly high rate of class members with applications related to the listed schools.
In addition, if we are unable to adequately anticipate the requirements of the employers we serve, we may offer programs that do not teach skills useful to prospective employers, which could affect our placement rates and our ability to attract and retain students, causing our revenues to be adversely affected.
In addition, if we are unable to adequately anticipate the requirements of the employers we serve, we may offer programs that do not teach skills useful to prospective employers, which could affect our placement rates and our ability to attract and retain students, causing our revenues to be adversely affected. 30 Index Competition could decrease our market share and cause us to lower our tuition rates.
This strong competition could adversely affect our business. 29 Index We may be required to reduce tuition or increase spending in response to competition in order to retain or attract students or pursue new market opportunities. As a result, our market share, revenues and operating margin may be decreased.
We may be required to reduce tuition or increase spending in response to competition in order to retain or attract students or pursue new market opportunities. As a result, our market share, revenues and operating margin may be decreased.
In addition, some of our competitors have a larger network of schools and campuses than we do, enabling them to recruit students more effectively from a wider geographic area.
In addition, some of our competitors have a larger network of schools and campuses than we do, enabling them to recruit students more effectively from a wider geographic area. This strong competition could adversely affect our business.
Competition could decrease our market share and cause us to lower our tuition rates. The post-secondary education market is highly competitive. We compete for students and faculty with traditional public and private two-year and four-year colleges and universities and other proprietary schools, many of which have greater financial resources than we do.
The post-secondary education market is highly competitive. We compete for students and faculty with traditional public and private two-year and four-year colleges and universities and other proprietary schools, many of which have greater financial resources than we do.
The DOE is currently engaged in rulemaking processes and intends to initiate additional rulemaking processes in 2023 that are expected to result in new regulations on a broad range of topics that could adversely impact institutions including our institutions. See Part I, Item 1.
The DOE recently published new regulations on a variety of topics with a general effective date of July 1, 2024 and is currently engaged in additional rulemaking processes in 2024 that are expected to result in new regulations on a broad range of topics that could adversely impact institutions including our institutions. See Part I, Item 1.
The DOE may or may not attempt to seek recoupment from applicable schools relating to approval of borrower defense applications. If the DOE approves borrower defense applications concerning us and attempts to recoup from us the loan amounts in the approved applications, we would consider our options for challenging the legal and factual bases for such actions.
If the DOE approves borrower defense applications concerning us and attempts to recoup from us the loan amounts in the approved applications, we would consider our options for challenging the legal and factual bases for such actions.
In order to maintain our growth, we will need to attract a larger percentage of students in existing markets and increase our addressable market by adding locations in new markets and rolling out new academic programs. Any failure to accomplish this may have a material adverse effect on our future growth.
In order to maintain our growth, we will need to attract a larger percentage of students in existing markets and increase our addressable market by adding locations in new markets and rolling out new academic programs.
We cannot predict how the DOE would interpret and enforce current or future regulations or how these regulations, or any regulations that may arise out of a negotiated rulemaking process or any other regulations that DOE may promulgate, may impact our schools’ participation in Title IV Programs; however, current or future regulations could have a material adverse effect on our schools’ business and results of operations, and the broad sweep of the recent rules and the rules that the DOE is currently developing may, in the future, require our schools to submit a letter of credit based on expanded standards of financial responsibility. 25 Index If we or our eligible institutions do not meet the financial responsibility standards prescribed by the DOE, we may be required to post letters of credit or our eligibility to participate in Title IV Programs could be terminated or limited, which could significantly reduce our student population and revenues.
We cannot predict how the DOE would interpret and enforce current or future regulations or how these regulations, or any regulations that may arise out of a negotiated rulemaking process or any other regulations that DOE may promulgate, may impact our schools’ participation in Title IV Programs; however, current or future regulations could have a material adverse effect on our schools’ business and results of operations, and the broad sweep of the recent rules and the rules that the DOE is currently developing may, in the future, require our schools to submit a letter of credit based on expanded standards of financial responsibility.
If any of our institutions loses eligibility to participate in Title IV Programs, that loss would also adversely affect our students’ access to various government-sponsored student financial aid programs, and would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations.
If any of our institutions loses eligibility to participate in Title IV Programs, that loss would also adversely affect our students’ access to various government-sponsored student financial aid programs, and would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations. 27 Index Our institutions would lose eligibility to participate in Title IV Programs if their former students defaulted on repayment of their federal student loans in excess of specified levels, which could reduce our student population and revenues.
The DOE is currently engaged in a process to establish new regulations that are expected to increase the number and scope of regulatory requirements applicable to our schools. See Part I, Item 1.
The DOE continues to engage in a process to establish new regulations that have increased, and will continue to increase, the number and scope of regulatory requirements applicable to our schools. See Part I, Item 1.
Congress or by states that significantly reduce funding for Title IV Programs or other student financial assistance programs, or the ability of our students to participate in these programs, or establish different or more stringent requirements for our schools to participate in those programs, could have a significant impact on our student population, results of operations and cash flows.
Congress or by states that significantly reduce funding for Title IV Programs or other student financial assistance programs, or the ability of our students to participate in these programs, or establish different or more stringent requirements for our schools to participate in those programs, could have a significant impact on our student population, results of operations and cash flows. 31 Index We cannot predict our future capital needs, and if we are unable to secure additional financing when needed, our operations and revenues would be adversely affected.
Failure to obtain or maintain such programmatic accreditation may lead to a decline in enrollments in such programs. 26 Index Our institutions would lose eligibility to participate in Title IV Programs if the percentage of their revenues derived from those programs exceeds 90%, which could reduce our student population and revenues.
Our institutions would lose eligibility to participate in Title IV Programs if the percentage of their revenues derived from those programs exceeds 90%, which could reduce our student population and revenues.
In recent years, Congress, the DOE, state legislatures, accrediting agencies, the CFPB, the FTC, state attorneys general and the media have scrutinized the for-profit postsecondary education sector. See Part I, Item 1.
Adverse publicity arising from scrutiny of us or other for-profit postsecondary schools may negatively affect us or our schools. In recent years, Congress, the DOE, state legislatures, accrediting agencies, the CFPB, the FTC, state attorneys general and the media have scrutinized the for-profit postsecondary education sector. See Part I, Item 1.
“Business – Regulatory Environment – Negotiated Rulemaking.” Any adverse action by the DOE or increased regulatory burdens as a result of the provisional status of one of our institutions could have a material adverse effect on enrollments and our revenues, financial condition, cash flows and results of operations.
“Business – Regulatory Environment – Regulation of Federal Student Financial Aid Programs.” Any adverse action by the DOE or increased regulatory burdens as a result of the provisional status of one of our institutions could have a material adverse effect on enrollments and our revenues, financial condition, cash flows and results of operations. 28 Index Regulatory agencies or third parties may conduct compliance reviews, bring claims or initiate litigation against us.
Due to the nature of our business, we face significant competition in the attraction and retention of personnel who possess the skill sets that we seek. In addition, key personnel may leave us and subsequently compete against us. Furthermore, we do not currently carry "key man" life insurance on any of our employees.
In addition, key personnel may leave us and subsequently compete against us. Furthermore, we do not currently carry "key man" life insurance on any of our employees.
Because we operate in a highly regulated industry, we are subject to compliance reviews and claims of noncompliance and lawsuits by government agencies and third parties.
If the results of these reviews or claims are unfavorable to us, our results of operations and financial condition could be adversely affected. Because we operate in a highly regulated industry, we are subject to compliance reviews and claims of noncompliance and lawsuits by government agencies and third parties.
We are subject to privacy and information security laws and regulations due to our collection and use of personal information, and any violations of those laws or regulations, or any breach, theft or loss of that information, could adversely affect our reputation and operations.
We may be required to expend significant resources to protect against system errors, failures or disruptions or to repair problems caused by any actual errors, disruptions or failures. 32 Index We are subject to privacy and information security laws and regulations due to our collection and use of personal information, and any violations of those laws or regulations, or any breach, theft or loss of that information, could adversely affect our reputation and operations.
The new regulations also could result in further scrutiny of marketing and recruiting practices by institutions like our schools and could increase the chances of the DOE finding practices to be noncompliant and imposing sanctions based on the alleged noncompliance. 27 Index All of our institutions are provisionally certified by the DOE, which may make them more vulnerable to unfavorable DOE action and place additional regulatory burdens on its operations.
The regulations also could result in further scrutiny of marketing and recruiting practices by institutions like our schools and could increase the chances of the DOE finding practices to be noncompliant and imposing sanctions based on the alleged noncompliance.
Any obligation to post one or more letters of credit would increase our costs of regulatory compliance.
See Part I, Item 1. “Business - Regulatory Environment – Financial Responsibility Standards.” Any obligation to post one or more letters of credit would increase our costs of regulatory compliance.
The settlement also requires the DOE to review borrower defense applications submitted after June 22, 2022 and before November 16, 2022 within 36 months of the final settlement date. If the DOE grants some or all of these applications, the DOE also could attempt to recoup from us the loan amounts relating to these applications as well.
The DOE may or may not attempt to seek recoupment from applicable schools relating to approval of borrower defense applications. The settlement also requires the DOE to review and decide borrower defense applications submitted after June 22, 2022 and before November 16, 2022 within 36 months of the final settlement date.
The DOE intends to reinitiate the rulemaking process that is considering, among other issues, establishing rules to authorize additional conditions and restrictions on provisionally certified institutions and expanding existing regulations regarding administrative capability and financial responsibility. See Part I, Item 1.
The DOE published final regulations with a general effective date of July 1, 2024 that, among other issues, establish rules to authorize additional conditions and restrictions on provisionally certified institutions and expand existing regulations regarding administrative capability and financial responsibility. See Part I, Item 1.
The implementation of new Borrower Defense to Repayment regulations by the DOE and the enforcement of the existing Borrower Defense to Repayment regulations could have a material adverse effect on our business and results of operations. See Part I, Item 1.
The implementation and enforcement of these Borrower Defense to Repayment and closed school loan discharge regulations could have a material adverse effect on our business and results of operations. See Part I, Item 1. “Business - Regulatory Environment – Borrower Defense to Repayment Regulations” and “Business – Regulatory Environment – Closed School Loan Discharges.” 24 Index The U.S.
Our inability to obtain a required letter of credit or limitations on, or termination or revocation of, our participation in Title IV Programs could limit our students’ access to various government-sponsored student financial aid programs, which could significantly reduce our student population and revenues.
Our inability to obtain a required letter of credit or limitations on, or termination or revocation of, our participation in Title IV Programs could limit our students’ access to various government-sponsored student financial aid programs, which could significantly reduce our student population and revenues. 26 Index We are subject to fines and other sanctions if we make incentive payments to individuals involved in certain recruiting, admissions or financial aid activities, which could increase our cost of regulatory compliance and adversely affect our results of operations.
We cannot predict our future capital needs, and if we are unable to secure additional financing when needed, our operations and revenues would be adversely affected. We may need to raise additional capital in the future to fund acquisitions, working capital requirements, expand our markets and program offerings or respond to competitive pressures or perceived opportunities.
We may need to raise additional capital in the future to fund acquisitions, working capital requirements, expand our markets and program offerings or respond to competitive pressures or perceived opportunities. We cannot be sure that additional financing will be available to us on favorable terms, or at all.
The CFPB has exercised supervisory authority over private education loan providers. The CFPB has initiated investigations into the lending practices of institutions in the for-profit education sector. Any new legislation, regulations, or investigations regarding private student lending could limit the availability of private student loans to our students, which could have a significant impact on our business and operations.
Any adverse legislation, regulations, or investigations regarding private student lending could limit the availability of private student loans to our students or lead to sanctions or liabilities, which could have a significant impact on our business and operations.
Cal.)) that could result in the automatic granting of all pending borrower defense applications submitted to the DOE on or before June 22, 2022 concerning our institutions and, potentially, could lead to the DOE seeking recoupment from us of all loan amounts in the granted applications.
Cal.)) has approved a class action settlement that could result in the granting of all borrower defense applications submitted to the DOE concerning our institutions and, potentially, could lead to the DOE seeking recoupment from us of all loan amounts in the granted applications, even though we have appealed the District Court’s judgment approving the settlement.
As of December 31, 2022, the teaching professionals at six of our campuses are represented by unions and covered by collective bargaining agreements that expire between 2023 and 2025.
In addition, we contribute to multiemployer benefit plans that could result in liabilities to us if these plans are terminated or we withdraw from them. As of December 31, 2023, the teaching professionals at six of our campuses are represented by unions and covered by collective bargaining agreements that expire between 2024 and 2026.
Our success has depended, and will continue to depend, largely on the skills, efforts and motivation of our executive officers who generally have significant experience within the post-secondary education industry. Our success also depends in large part upon our ability to attract and retain highly qualified faculty, school directors, administrators and corporate management.
We may not be able to retain our key personnel or hire and retain the personnel we need to sustain and grow our business. Our success has depended, and will continue to depend, largely on the skills, efforts and motivation of our executive officers who generally have significant experience within the post-secondary education industry.
On June 22, 2022, the DOE and the plaintiffs in a lawsuit before a federal court in California submitted a proposed settlement agreement to the court. The plaintiffs contend, among other things, that the DOE failed to timely decide and resolve Borrower Defense to Repayment applications submitted to the DOE.
On June 22, 2022, the plaintiff student loan borrowers in a class action against the DOE in federal court in California ( Sweet v. Cardona , No. 3:19-cv-3674 (N.D. Cal.)) and the DOE announced a proposed settlement agreement to resolve claims that the DOE has failed to timely decide Borrower Defense to Repayment applications submitted to the DOE.
Under the proposed settlement, the DOE would agree to discharge loans and refund all prior loan payments to each class member with loan debt associated with an institution on the list (which includes our institutions), including borrowers whose applications the DOE previously denied after October 30, 2019.
First, it set forth a list of approximately 150 institutions, including Lincoln Technical Institute and Lincoln College of Technology, and, under the settlement, the DOE would agree to discharge loans and refund prior loan payments to class members with loan debt associated with an institution on the list (which includes Lincoln institutions).
We cannot be sure that additional financing will be available to us on favorable terms, or at all. If adequate funds are unavailable when required or on acceptable terms, we may be forced to forego attractive acquisition opportunities, cease operations.
If adequate funds are unavailable when required or on acceptable terms, we may be forced to forego attractive acquisition opportunities, or cease operations. Even if we are able to continue our operations, our ability to increase student enrollment and revenues would be adversely affected.
The current regulations also establish processes for the DOE to seek recovery from the institution of the amount of discharged loans. On November 1, 2022, the DOE published final regulations on Borrower Defense to Repayment and other topics with a general effective date of July 1, 2023.
The current regulations also establish processes for the DOE to seek recovery from the institution of the amount of discharged loans.
All of our institutions are provisionally certified by the DOE. See Part I, Item 1.
All of our institutions are provisionally certified by the DOE, which may make them more vulnerable to unfavorable DOE action and place additional regulatory burdens on its operations. All of our institutions are provisionally certified by the DOE. See Part I, Item 1.
Strikes by our employees may disrupt our ability to hold classes as well as our ability to attract and retain students, which could materially adversely affect our operations. In addition, we contribute to multiemployer benefit plans that could result in liabilities to us if these plans are terminated or we withdraw from them.
“Financial Statements and Supplemental Data - Notes to Consolidated Financial Statements – Note 7 Goodwill.” Strikes by our employees may disrupt our ability to hold classes as well as our ability to attract and retain students, which could materially adversely affect our operations.
We cannot predict the ultimate timing, content or impact of any regulations that DOE might publish on this topic. Programmatic accreditation is the process through which specific programs are reviewed and approved by industry- and program-specific accrediting entities.
“Business - Regulatory Environment – Accreditation” and “Regulatory Environment – State Authorization.” Programmatic accreditation is the process through which specific programs are reviewed and approved by industry- and program-specific accrediting entities.
“Business - Regulatory Environment – Borrower Defense to Repayment Regulations” and “Business – Regulatory Environment – Closed School Loan Discharges.” We have appealed a class action settlement approved by the U.S. District Court for the Northern District of California (Sweet v. Cardona, No. 3:19-cv-3674 (N.D.
District Court for the Northern District of California ( Sweet v. Cardona , No. 3:19-cv-3674 (N.D.
More recently, the DOE announced its intent to commence a negotiated rulemaking process in April 2023 on a number of topics including amendments to the regulations on accreditation, including regulations associated with the standards relating to the DOE’s recognition of accrediting agencies and accreditation procedures as a component of institutional eligibility for participation in the Title IV Program.
More recently, the DOE commenced a negotiated rulemaking process in January 2024 on a number of topics including amendments to the regulations on accreditation and state authorization The proposals currently under discussion include amended regulations regarding the standards relating to the DOE’s recognition of accrediting agencies and using a risk-based approach for prioritizing DOE review of accreditors which could lead to heightened scrutiny of certain accreditors including our institutional accrediting body, ACCSC.
The proposed settlement agreement provides a separate process for reviewing claims associated with schools that are not on the list.
Second, the proposed settlement included new procedures for DOE to resolve pending borrower defense claims associated with other schools not on the list.
Removed
If approved, the settlement would result in full discharge and refund payments to covered student borrowers who have asserted a Borrower Defense to Repayment to the DOE and whose borrower defense claims have not yet been granted or denied on the merits. The lawsuit, Sweet v. Cardona, No. 3:19-cv-3674 (N.D.
Added
The proposed settlement included three categories of relief for student loan borrowers.
Removed
Cal.), is a class action filed on June 25, 2019 against the DOE in the U.S. District Court for the Northern District of California submitted by a group of students, none of whom attended any of our institutions. We were not a party to the lawsuit when it was filed.
Added
Third, for any student loan borrower who submitted a borrower defense application after June 22, 2022 and before the final approval of the settlement, the proposed settlement would require the DOE to review the applications under the DOE’s 2016 regulatory standards and issue decisions within 36 months, or else the applications would be discharged in full.
Removed
The plaintiffs requested that the court compel the DOE to start approving or denying the pending applications.
Added
At the time the plaintiffs and DOE announced the proposed settlement, Lincoln was not a party to the lawsuit and none of the named plaintiffs had attended a Lincoln institution.
Removed
The court granted class certification and defined the class of plaintiffs generally to include all people who borrowed a Title IV Direct loan or FFEL loan, who have asserted a Borrower Defense to Repayment claim to the DOE, and whose borrower defense claim has not been granted or denied on the merits.
Added
In August 2022, Lincoln and three other schools were granted permission to intervene in the lawsuit to protect their interests in the finalization and implementation of any settlement agreement the court might approve.
Removed
We have not received notice or confirmation directly from the DOE of the number of student borrowers who have submitted Borrower Defense to Repayment claims related to our institutions. The proposed settlement agreement includes a long list of institutions, including Lincoln Technical Institute and Lincoln College of Technology.
Added
In October 2022, the four intervening schools, including Lincoln, filed objections to the final approval of the settlement, asserting reputational harms from the schools’ inclusion on the settlement’s list of schools and denial of schools’ due process rights under the DOE’s borrower defense regulations.
Removed
The DOE and the plaintiffs stated in a court filing that this provision is intended to provide for automatic relief for students at the listed schools which the DOE estimates to total 200,000 class members.
Added
On November 16, 2022, the federal district court overruled the four schools’ objections and approved the settlement as proposed.
Removed
We anticipate that the DOE believes that the class includes the borrowers with claims to which we have submitted responses to the DOE although it is possible that the class also includes borrowers with claims for which we have not received notice from the DOE or an opportunity to respond.
Added
As a result of this final approval, the DOE has estimated that approximately 196,000 student loan borrowers who attended one of the listed schools (including Lincoln institutions) will receive automatic student loan discharges; that another approximately 100,000 student loan borrowers who attended other schools not on the list would receive decisions under new procedures; and that approximately 250,000 student loan borrowers who submitted borrower defense applications between June 22, 2022 and November 16, 2022 would receive decisions under the DOE’s 2016 regulatory standards within 36 months or else receive automatic student loan discharges.
Removed
It is unclear whether the DOE would seek to impose liabilities on us or other schools or take other actions or impose other sanctions on us or other schools based on relief provided to students under the proposed settlement agreement (particularly if the DOE provides relief without evaluating or accounting for legal and factual information provided to the DOE by us and other schools or without providing us and other schools with notice and an opportunity to respond to some of the claims). 24 Index In July 2022, the Company and certain other school companies submitted motions to intervene in the lawsuit in order to protect our interests in the finalization and implementation of any settlement agreement that the court might approve.
Added
On January 13, 2023, Lincoln appealed the settlement’s final approval to the U.S. Court of Appeals for the Ninth Circuit. Two of the three other intervenor schools also appealed on the same date.
Removed
We noted in the motion that the proposed settlement agreement introduced, for the first time, the prospect that the DOE would “automatically” and fully discharge loans and refund payments to student borrowers without adjudication of the merits of the students’ borrower-defense applications in accordance with the DOE’s borrower-defense regulations and without ensuring that we and other institutions can defend against allegations asserted in individual borrower-defense applications.
Added
The three appealing schools also sought to stay the implementation of the settlement while their appeals were being decided, but the requested stay was denied by the district court, the Ninth Circuit, and the U.S. Supreme Court. As a result, the DOE is implementing the settlement relief while the three schools appeal the settlement’s final approval.
Removed
In addition, we also asserted that it would be unlawful and inappropriate if the DOE sought recoupment against us based on loans that were forgiven under the proposed settlement agreement without providing us with an opportunity to address the claims or accounting for our responses to the claims already submitted which we believe is required by the regulations.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+5 added−2 removed0 unchanged
Biggest changeThe following table provides information relating to our facilities as of December 31, 2022, including our corporate office: Location Brand Approximate Square Footage Las Vegas, Nevada Euphoria Institute 23,000 Columbia, Maryland Lincoln College of Technology 111,000 Denver, Colorado Lincoln College of Technology 213,000 Grand Prairie, Texas Lincoln College of Technology 157,000 Indianapolis, Indiana Lincoln College of Technology 126,000 Marietta, Georgia Lincoln College of Technology 30,000 Melrose Park, Illinois Lincoln College of Technology 88,000 Allentown, Pennsylvania Lincoln Technical Institute 25,000 Atlant, Georgia* Lincoln Technical Institute 56,000 East Windsor, Connecticut Lincoln Technical Institute 289,000 Iselin, New Jersey Lincoln Technical Institute 32,000 Lincoln, Rhode Island Lincoln Technical Institute 39,000 Mahwah, New Jersey Lincoln Technical Institute 79,000 Moorestown, New Jersey Lincoln Technical Institute 35,000 New Britain, Connecticut Lincoln Technical Institute 36,000 Paramus, New Jersey Lincoln Technical Institute 30,000 Philadelphia, Pennsylvania Lincoln Technical Institute 30,000 Queens, New York Lincoln Technical Institute 48,000 Shelton, Connecticut Lincoln Technical Institute and Lincoln Culinary Institute 57,000 Somerville, Massachusetts** Lincoln Technical Institute 33,000 South Plainfield, New Jersey Lincoln Technical Institute 60,000 Union, New Jersey Lincoln Technical Institute 56,000 Nashville, Tennessee*** Lincoln College of Technology 350,000 Parsippany, New Jersey Corporate Office 17,0 We believe that our facilities are suitable for their present intended purposes. * On June 30, 2022, the Company executed a lease for a 55,000 square foot facility to house a second Atlanta area campus.
Biggest changeThe following table provides information relating to our facilities as of December 31, 2023, including our corporate office: Current Locations Brand Approximate Square Footage Las Vegas, Nevada Euphoria Institute 23,000 Columbia, Maryland Lincoln College of Technology 111,000 Denver, Colorado Lincoln College of Technology 213,000 Grand Prairie, Texas Lincoln College of Technology 157,000 Indianapolis, Indiana Lincoln College of Technology 126,000 Marietta, Georgia Lincoln College of Technology 30,000 Melrose Park, Illinois Lincoln College of Technology 88,000 Allentown, Pennsylvania Lincoln Technical Institute 25,000 East Windsor, Connecticut Lincoln Technical Institute 289,000 Iselin, New Jersey Lincoln Technical Institute 32,000 Lincoln, Rhode Island Lincoln Technical Institute 66,000 Mahwah, New Jersey Lincoln Technical Institute 79,000 Moorestown, New Jersey Lincoln Technical Institute 48,000 New Britain, Connecticut Lincoln Technical Institute 36,000 Paramus, New Jersey Lincoln Technical Institute 30,000 Philadelphia, Pennsylvania Lincoln Technical Institute 30,000 Queens, New York Lincoln Technical Institute 48,000 Shelton, Connecticut Lincoln Technical Institute and Lincoln Culinary Institute 57,000 South Plainfield, New Jersey Lincoln Technical Institute 60,000 Union, New Jersey Lincoln Technical Institute 56,000 Nashville, Tennessee Lincoln College of Technology 292,000 Parsippany, New Jersey Corporate Office 17,000 Future Locations Brand Approximate Square Footage Houston, Texas 1 Lincoln College of Technology 100,000 Levittown, Pennsylania 3 Lincoln Technical Institute 90,000 East Point, Georgia 4 Lincoln Technical Institute 55,000 Nashville, Tennessee 2 Lincoln College of Technology 120,000 We believe that our facilities are suitable for their intended purposes. 1 On October 31, 2023, the Company entered into a lease for approximately 100,000 square feet of space to serve as the Company’s new campus in Houston, Texas.
As of December 31, 2022, all of our existing leases expire between 2023 and 2041.
As of December 31, 2023, all of our existing leases expire between 2024 and 2045.
ITEM 2. PROPERTIES As of December 31, 2022, we leased all of our facilities, except for our campus in Nashville, Tennessee. We continue to reevaluate our facilities to maximize our facility utilization and efficiency and to allow us to introduce new programs and attract more students.
ITEM 2. PROPERTIES As of December 31, 2023, we leased all of our facilities, except the Levittown, Pennsylvania campus, for which we entered into a sale lease-back transaction on January 30, 2024. We continue to reevaluate our facilities to maximize our facility utilization and efficiency and to allow us to introduce new programs and attract more students.
Removed
The build-out is progressing according to plan. For the year ended December 31, 2022, the Company incurred approximately $0.4 million in capital expenditures, mostly relating to architectural fees and approximately $0.3 million in rent. ** On November 3, 2022, the Board of Directors approved a plan to close the Somerville, Massachusetts campus by the end of 2023.
Added
The lease term commenced on January 2, 2024, with an initial lease term of 21-years and 6 months with three five-year renewal options. 2 On October 18, 2023, the Company entered into a lease for approximately 120,000 square feet of space. to serve as the Company’s new Nashville, Tennessee campus.
Removed
Total costs to close the campus including the teach-out of the remaining students, are expected to be approximately $2.0 million. *** The Nashville, Tennessee campus is currently subject to a property sale agreement. See Part II. Item 8. “Financial Statements and Supplemental Data - Notes to Consolidated Financial Statements – Note 7 Property Sale Agreements.”
Added
The lease term commenced on November 1, 2023, with an initial lease term of 15-years with two five-year renewal options. 3 On September 28, 2023, the Company purchased a 90,000 square foot property located at 311 Veterans Highway, Levittown, Pennsylvania for approximately $10.2 million and, subsequently on January 30, 2024, entered into a sale-leaseback transaction for this property.
Added
As of December 31, 2023, this property was classified as held-for-sale on the Consolidated Balance Sheets. 4 On June 30, 2022, the Company executed a lease for approximately 55,000 square feet of space to serve as the Company’s new campus, in East Point, Georgia.
Added
The lease term commenced in August 2022 with an initial lease term of 12 years term with two five-year renewal options. The Company had no involvement in the construction or design of the facilities on the property and was not deemed to be in control of the asset prior to the lease commencement date.
Added
For the year ended December 31, 2023, the Company incurred approximately $0.8 million in rent expenses. 37 Index

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

11 edited+13 added−28 removed0 unchanged
Biggest changeWe cannot predict whether the settlement will be upheld on appeal, what actions the DOE might take if the settlement is upheld on appeal (including the ultimate timing or amount of borrower defense applications the DOE may grant in the future and the timing or amount of any possible liabilities that the DOE may seek to recover from the Company, if any), or what the outcome of our challenges to such actions will be, but such actions could have a material adverse effect on our business and results of operations.
Biggest changeWe cannot predict what other actions the DOE might take if the settlement is fully implemented, including the amount of borrower defense applications that the DOE might grant or the amount of any recoupment that the DOE might seek from us, if any. We also cannot predict the outcome of any challenges we might make to such actions.
In addition to these matters, in the ordinary conduct of our business, we are subject to additional periodic lawsuits, investigations, regulatory proceedings and other claims, including, but not limited to, claims involving students or graduates, routine employment matters and business disputes.
In addition to the foregoing, in the ordinary conduct of our business, we are subject to additional periodic lawsuits, investigations, regulatory proceedings and other claims, including, but not limited to, claims involving students or graduates, routine employment matters and business disputes.
The parties also stated that the DOE has determined that attendance at one of the institutions on the list justifies presumptive relief based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the high rate of class members with applications related to the listed schools.
The class action plaintiffs and the DOE stated that the DOE had determined that attendance at one of the listed institutions justifies presumptive relief allegedly based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the purportedly high rate of class members with applications related to the listed schools.
We cannot predict the ultimate resolution of these lawsuits, investigations, regulatory proceedings and other claims asserted against us, but we do not believe that any of these matters will have a material adverse effect on our business, financial condition, results of operations or cash flows.
We cannot predict the ultimate resolution of these lawsuits, investigations, regulatory proceedings and other claims asserted against us, but we do not believe that any of these matters will have a material adverse effect on our business, financial condition, results of operations or cash flows. 38 Index ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II.
The DOE may or may not attempt to seek recoupment from applicable schools relating to approval of borrower defense applications. If the DOE approves borrower defense applications concerning us and attempts to recoup from us the loan amounts in the approved applications, we would consider our options for challenging the legal and factual bases for such actions.
If the DOE approves borrower defense applications concerning us and attempts to recoup from us the loan amounts in the approved applications, we would consider our options for challenging the legal and factual bases for such actions.
The settlement also requires the DOE to review borrower defense applications submitted after June 22, 2022 and before November 16, 2022 within 36 months of the final settlement date. If the DOE grants some or all of these applications, the DOE also could attempt to recoup from us the loan amounts relating to these applications as well.
The DOE may or may not attempt to seek recoupment from applicable schools relating to approval of borrower defense applications. The settlement also requires the DOE to review and decide borrower defense applications submitted after June 22, 2022 and before November 16, 2022 within 36 months of the final settlement date.
In July 2022, the Company and certain other school companies submitted motions to intervene in the lawsuit in order to protect our interests in the finalization and implementation of any settlement agreement that the court might approve.
In August 2022, Lincoln and three other schools were granted permission to intervene in the lawsuit to protect their interests in the finalization and implementation of any settlement agreement the court might approve.
Under the proposed settlement, the DOE would agree to discharge loans and refund all prior loan payments to each class member with loan debt associated with an institution on the list (which includes our institutions), including borrowers whose applications the DOE previously denied after October 30, 2019.
First, it set forth a list of approximately 150 institutions, including Lincoln Technical Institute and Lincoln College of Technology, and, under the settlement, the DOE would agree to discharge loans and refund prior loan payments to class members with loan debt associated with an institution on the list (which includes Lincoln institutions).
If the DOE disagrees with our legal and factual grounds for contesting the applications, the DOE may impose liabilities on the Company based on the discharge of the loans at issue in the pending applications, which could have a material adverse effect on our business and results of operations.
Such actions could have a material adverse effect on our business and results of operations. Even if the Ninth Circuit rules in our favor and if the approval of the settlement is overturned, the DOE already may have discharged by that time the loans associated with some or all of the pending applications.
On June 22, 2022, the DOE and the plaintiffs in a lawsuit before a federal court in California submitted a proposed settlement agreement to the court. The plaintiffs contend, among other things, that the DOE failed to timely decide and resolve Borrower Defense to Repayment applications submitted to the DOE.
Cal.)) and the DOE announced a proposed settlement agreement to resolve claims that the DOE has failed to timely decide Borrower Defense to Repayment applications submitted to the DOE. The proposed settlement included three categories of relief for student loan borrowers.
The proposed settlement agreement provides a separate process for reviewing claims associated with schools that are not on the list.
Second, the proposed settlement included new procedures for DOE to resolve pending borrower defense claims associated with other schools not on the list.
Removed
ITEM 3. LEGAL PROCEEDINGS In April 2021, the Company received communication from the DOE indicating that the DOE was in receipt of a number of borrower defense applications containing allegations concerning our schools and requiring that the DOE undertake a fact-finding process pursuant to DOE regulations.
Added
ITEM 3. LEGAL PROCEEDINGS On June 22, 2022, the plaintiff student loan borrowers in a class action against the DOE in federal court in California ( Sweet v. Cardona , No. 3:19-cv-3674 (N.D.
Removed
Among other things, the communication outlines a process by which the DOE would provide to us the applications and provide us with the opportunity to submit responses to them. Further, the communication outlined certain information requests, relating to the period between 2007 and 2013, in connection with the DOE’s preliminary review of the borrower defense applications.
Added
Third, for any student loan borrower who submitted a borrower defense application after June 22, 2022 and before the final approval of the settlement, the proposed settlement would require the DOE to review the applications under the DOE’s 2016 regulatory standards and issue decisions within 36 months, or else the applications would be discharged in full.
Removed
Based upon publicly available information, it appears that the DOE has undertaken similar reviews of other educational institutions which have also been the subject of various borrower defense applications.
Added
At the time the plaintiffs and DOE announced the proposed settlement, Lincoln was not a party to the lawsuit and none of the named plaintiffs had attended a Lincoln institution.
Removed
We have received the borrower application claims and have completed the process of thoroughly reviewing and responding to each borrower application as well as providing information in response to the DOE’s requests. We are not able to predict the outcome of the DOE’s review at this time.
Added
In October 2022, the four intervening schools, including Lincoln, filed objections to the final approval of the settlement, asserting reputational harms from the schools’ inclusion on the settlement’s list of schools and denial of schools’ due process rights under the DOE’s borrower defense regulations.
Removed
If the proposed Borrower Defense to Repayment regulations take effect on July 1, 2023, and if any or all of the Borrower Defense to Repayment applications remain pending, the DOE could attempt to apply the new regulations to the pending applications which could increase the likelihood of the DOE granting the application because the proposed regulations are more favorable to borrowers. 34 Index In August 2022, the Company received a communication from the DOE regarding a single borrower defense application submitted on behalf of a group of students who were enrolled in a single educational program at two of our schools in Massachusetts between 2010 and 2013.
Added
On November 16, 2022, the federal district court overruled the four schools’ objections and approved the settlement as proposed.
Removed
We have responded to the DOE’s letter, notwithstanding the absence of a response to our request for additional information about the student claims. We are waiting for the DOE’s reply to our response and to our request for information concerning the student claims. We are not able to predict the outcome of the DOE’s review at this time.
Added
As a result of this final approval, the DOE has estimated that approximately 196,000 student loan borrowers who attended one of the listed schools (including Lincoln institutions) will receive automatic student loan discharges; that another approximately 100,000 student loan borrowers who attended other schools not on the list would receive decisions under new procedures; and that approximately 250,000 student loan borrowers who submitted borrower defense applications between June 22, 2022 and November 16, 2022 would receive decisions under the DOE’s 2016 regulatory standards within 36 months or else receive automatic student loan discharges.
Removed
If the DOE disagrees with our legal and factual grounds for contesting the application, the DOE may impose liabilities on the Company based on the discharge of the loans at issue in the pending application which could have a material adverse effect on our business and results of operations.
Added
On January 13, 2023, Lincoln appealed the settlement’s final approval to the U.S. Court of Appeals for the Ninth Circuit. Two of the three other intervenor schools also appealed on the same date.
Removed
If approved, the settlement would result in full discharge and refund payments to covered student borrowers who have asserted a Borrower Defense to Repayment to the DOE and whose borrower defense claims have not yet been granted or denied on the merits. The lawsuit, Sweet v. Cardona, No. 3:19-cv-3674 (N.D.
Added
The three appealing schools also sought to stay the implementation of the settlement while their appeals were being decided, but the requested stay was denied by the district court, the Ninth Circuit, and the U.S. Supreme Court. As a result, the DOE is implementing the settlement relief while the three schools appeal the settlement’s final approval.
Removed
Cal.), is a class action filed on June 25, 2019 against the DOE in the U.S. District Court for the Northern District of California submitted by a group of students, none of whom attended any of our institutions. We were not a party to the lawsuit when it was filed.
Added
Lincoln and the two other appealing schools filed their opening appellate brief in the Ninth Circuit on May 3, 2023. The plaintiffs and the DOE filed their opposition appellate briefs on August 2, 2023. Lincoln and the two other appealing schools filed their reply appellate brief on September 22, 2023.
Removed
The plaintiffs requested that the court compel the DOE to start approving or denying the pending applications.
Added
The Ninth Circuit heard oral argument on December 5, 2023, and is currently considering the appeal.
Removed
The court granted class certification and defined the class of plaintiffs generally to include all people who borrowed a Title IV Direct loan or FFEL loan, who have asserted a Borrower Defense to Repayment claim to the DOE, and whose borrower defense claim has not been granted or denied on the merits.
Added
It is not possible at this time to predict whether the settlement will be upheld on appeal, what actions the DOE might take if the settlement is upheld on appeal, or whether the DOE or other agencies might take actions against Lincoln institutions before the appeal is decided.
Removed
We have not received notice or confirmation directly from the DOE of the number of student borrowers who have submitted Borrower Defense to Repayment claims related to our institutions. The proposed settlement agreement includes a long list of institutions, including Lincoln Technical Institute and Lincoln College of Technology.
Added
We have seen evidence that the DOE already may have discharged some of the loans associated with some of the pending applications, but the DOE has not furnished definitive data to us necessary to determine the extent to which applications have been granted.
Removed
The DOE and the plaintiffs stated in a court filing that this provision is intended to provide for automatic relief for students at the listed schools which the DOE estimates to total 200,000 class members.
Added
If the DOE grants some or all of these applications, the DOE also could attempt to recoup from us the loan amounts relating to these applications.
Removed
We anticipate that the DOE believes that the class includes the borrowers with claims to which we have submitted responses to the DOE although it is possible that the class also includes borrowers with claims for which we have not received notice from the DOE or an opportunity to respond.
Removed
It is unclear whether the DOE would seek to impose liabilities on us or other schools or take other actions or impose other sanctions on us or other schools based on relief provided to students under the proposed settlement agreement (particularly if the DOE provides relief without evaluating or accounting for legal and factual information provided to the DOE by us and other schools or without providing us and other schools with notice and an opportunity to respond to some of the claims).
Removed
We noted in the motion that the proposed settlement agreement introduced, for the first time, the prospect that the DOE would “automatically” and fully discharge loans and refund payments to student borrowers without adjudication of the merits of the students’ borrower-defense applications in accordance with the DOE’s borrower-defense regulations and without ensuring that we and other institutions can defend against allegations asserted in individual borrower-defense applications.
Removed
In addition, we also asserted that it would be unlawful and inappropriate if the DOE sought recoupment against us based on loans that were forgiven under the proposed settlement agreement without providing us with an opportunity to address the claims or accounting for our responses to the claims already submitted which we believe is required by the regulations.
Removed
We also asserted that the lawsuit and the potential loan discharges could result in reputational harm to us and our institutions and could result in other actions against us by other federal and state agencies or by current and former students.
Removed
The court granted preliminary approval of the proposed settlement agreement on August 4, 2022, and also granted our motion for permissive intervention for the purpose of objecting to and opposing the class action settlement. On September 22, 2022, the DOE and the plaintiffs filed a joint motion for final approval of the settlement.
Removed
In that joint motion, the DOE and the plaintiffs reported that approximately 179,000 new borrower defense applications had been submitted to the DOE as of September 20, 2022.
Removed
We and the three other intervenor schools filed briefs opposing final approval. 35 Index In an Order dated November 16, 2022, District Court Judge William Alsup granted final approval of the settlement agreement.
Removed
Subsequently, we, and two other school companies that intervened, filed notices of appeal and asked the district court to stay the settlement from taking effect until the appeals were decided and the district court did temporarily stay any loan discharges and refunds under the settlement pending the decision.
Removed
Plaintiffs and the DOE thereafter filed oppositions to our stay request and, after a hearing, the district court denied our stay request, but extended the temporary stay of loan discharges and refunds associated with the three school companies for seven days to allow us to file a motion for a stay with the U.S.
Removed
Court of Appeals for the Ninth Circuit. On February 27, 2023, we and the two other school companies that appealed filed a joint motion for a stay with the Ninth Circuit which we expect the plaintiffs and the DOE will oppose. We expect that the Ninth Circuit will decide our stay motion in the coming weeks.
Removed
Regardless of the outcome of our stay request, we intend to ask the Ninth Circuit to overturn the district court’s judgment approving the final settlement.
Removed
If the settlement agreement is upheld on appeal, or if the courts deny our stay requests, the DOE is expected to automatically approve all of the pending borrower defense applications concerning us that were submitted to the DOE on or before June 22, 2022 and to provide such automatic approval without evaluating or accounting for any of the legal or factual grounds that we provided for contesting the applications that were provided to us.
Removed
On June 7, 2022, the Massachusetts Attorney General’s Office (“AGO”) issued a civil investigative demand (“CID”) indicating its intention to investigate possible unfair or deceptive methods, acts, or practices in violation of state law relating to allegations against our Massachusetts school to such effect in connection with that school’s policies regarding fee refunds and associated disclosures to students and prospective students.
Removed
The CID has requested that we provide to the AGO certain documentation generally from the period from January 1, 2020 to the present. We have provided the documents requested and are cooperating with the investigation. We are not able to predict the outcome or materiality of the foregoing matters at this time.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed6 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publically Announced Plan Maximum Dollar Value of Shares Remaining to be Purchased Under the Plan October 1, 2022 to October 31, 2022 342,808 $ 5.29 342,808 $ 21,451,492 November 1, 2022 to November 30, 2022 123,689 6.25 123,689 20,678,160 December 1, 2022 to December 31, 2022 22,514 5.48 22,514 20,554,775 Total 489,011 5.55 489,011 For more information on the share repurchase program, See Part II.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publically Announced Plan Maximum Dollar Value of Shares Remaining to be Purchased Under the Plan October 1, 2023 to October 31, 2023 - $ - - $ 29,663,667 November 1, 2023 to November 30, 2023 - - - - December 1, 2023 to December 31, 2023 - - - - Total - - - For more information on the share repurchase program, See Part II.
Subsequently, on February 27, 2023, the Board of Directors extended the share repurchase program for an additional 12 months and authorized the repurchase of an additional $10 million of the Company’s Common Stock, for an aggregate of up to $30.6 million in additional repurchases.
Subsequently, on February 27, 2023, the Board of Directors extended the share repurchase program for an additional 12 months and authorized the repurchase of an additional $10.0 million of the Company’s Common Stock, for an aggregate of up to $30.6 million in additional repurchases.
Item 8. “Financial Statements and Supplemental Data - Notes to Consolidated Financial Statements – Note 11 Stockholders Equity.” 37 Index Equity Compensation Plan Information We have various equity compensation plans under which equity securities are authorized for issuance.
Item 8. “Financial Statements and Supplemental Data - Notes to Consolidated Financial Statements – Note 12 Stockholders Equity.” 39 Index Equity Compensation Plan Information We have various equity compensation plans under which equity securities are authorized for issuance.
Information regarding these securities as of December 31, 2022, are as follows: Plan Category Number of Securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) Equity compensation plans approved by security holders - $ - 840,807 Equity compensation plans not approved by security holders - - - Total - $ - 840,807
Information regarding these securities as of December 31, 2023, is as follows: Plan Category Number of Securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) Equity compensation plans approved by security holders - $ - 127,507 Equity compensation plans not approved by security holders - - - Total - $ - 127,507
The following table presents the number and average price of shares purchased during the three months ended December 31, 2022. The remaining authorized amount for share repurchases under the program at December 31, 2022 was approximately $20.6 million.
The following table presents the number and average price of shares purchased during the three months ended December 31, 2023. The remaining authorized amount for share repurchases under the program at December 31, 2023 was approximately $29.7 million.
On March 3, 2023, the last reported sale price of our Common Stock on the Nasdaq Global Select Market was $6.19 per share. As of March 3, 2023, based on the information provided by Continental Stock Transfer & Trust Company, there were 36 shareholders of record of our Common Stock.
On February 29, 2024, the last reported sale price of our Common Stock on the Nasdaq Global Select Market was $10.06 per share. As of February 29, 2024, based on the information provided by Continental Stock Transfer & Trust Company, there were 42 shareholders of record of our Common Stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+77 added−74 removed48 unchanged
Biggest changeAdjustments to reconcile segment results to consolidated results are included under the caption “Corporate,” which primarily includes unallocated corporate activity. 45 Index The following table presents results for the activity for our reportable operating segments for the fiscal years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 % Change Revenue: Transportation and Skilled Trades $ 249,905 $ 240,531 3.9 % Healthcare and Other Professions 91,535 87,998 4.0 % Transitional 6,847 6,807 0.6 % Total $ 348,287 $ 335,336 3.9 % Operating Income (Loss): Transportation and Skilled Trades $ 42,335 $ 52,055 -18.7 % Healthcare and Other Professions 7,189 11,740 -38.8 % Transitional (430 ) 105 -509.5 % Corporate (32,816 ) (14,639 ) -124.2 % Total $ 16,278 $ 49,261 -67.0 % Starts: Transportation and Skilled Trades 9,831 10,291 -4.5 % Healthcare and Other Professions 4,710 4,666 0.9 % Transitional 379 445 -14.8 % Total 14,920 15,402 -3.1 % Average Population: Transportation and Skilled Trades 8,629 8,505 1.5 % Leave of Absence - COVID-19 - (12 ) 100.0 % Transportation and Skilled Trades Excluding Leave of Absence - COVID-19 8,629 8,493 1.6 % Healthcare and Other Professions 3,973 4,123 -3.6 % Leave of Absence - COVID-19 - (33 ) 100.0 % Healthcare and Other Professions Excluding Leave of Absence - COVID-19 3,973 4,090 -2.9 % Transitional 292 316 -7.6 % Leave of Absence - COVID-19 - - 0.0 % Transitional Excluding Leave of Absence - COVID-19 292 316 -7.6 % Total 12,894 12,944 -0.4 % Total Excluding Leave of Absense - COVID-19 12,894 12,899 0.0 % End of Period Population: Transportation and Skilled Trades 8,237 8,648 -4.8 % Healthcare and Other Professions 3,959 4,093 -3.3 % Transitional 192 318 -39.6 % Total 12,388 13,059 -5.1 % Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Transportation and Skilled Trades Operating income was $42.3 million and $52.1 million for the fiscal years ended December 31, 2022 and 2021, respectively.
Biggest changeThe following table presents results for the activity for our reportable operating segments for the fiscal years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 % Change Revenue: Campus Operations $ 376,602 $ 341,440 10.3 % Transitional 1,468 6,847 -78.6 % Total $ 378,070 $ 348,287 8.6 % Operating Income (Loss): Campus Operations $ 47,579 $ 49,524 -3.9 % Transitional (1,914 ) (430 ) -345.1 % Corporate (12,307 ) (32,816 ) 62.5 % Total $ 33,358 $ 16,278 104.9 % Starts: Campus Operations 16,199 14,541 11.4 % Transitional - 379 -100.0 % Total 16,199 14,920 8.6 % Average Population: Campus Operations 12,875 12,602 2.2 % Transitional 66 292 -77.4 % Total 12,941 12,894 0.4 % End of Period Population: Campus Operations 13,270 12,196 8.8 % Transitional - 192 -100.0 % Total 13,270 12,388 7.1 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Campus Operations Operating income was $47.6 million and $49.5 million for the fiscal years ended December 31, 2023 and 2022, respectively.
Goodwill. Goodwill represents the excess of purchase price over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. Lincoln tests goodwill for impairment annually, in the fourth quarter of each year, unless there are events or changes in circumstances that indicate an impairment may have occurred.
Goodwill represents the excess of purchase price over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. Lincoln tests goodwill for impairment annually, in the fourth quarter of each year, unless there are events or changes in circumstances that indicate an impairment may have occurred.
Initially, the Credit Facility was comprised of four facilities: (1) a $20 million senior secured term loan maturing on December 1, 2024 (the “Term Loan”), with monthly interest and principal payments based on a 120-month amortization with the outstanding balance due on the maturity date; (2) a $10 million senior secured delayed draw term loan maturing on December 1, 2024 (the “Delayed Draw Term Loan”), with monthly interest payments for the first 18 months and thereafter monthly payments of interest and principal based on a 120-month amortization and all balances due on the maturity date; (3) a $15 million senior secured committed revolving line of credit providing a sublimit of up to $10 million for standby letters of credit maturing on November 13, 2022 (the “Revolving Loan”), with monthly payments of interest only; and (4) a $15 million senior secured non-restoring line of credit maturing on January 31, 2021 (the “Line of Credit Loan”).
Initially, the Credit Facility was comprised of four facilities: (1) a $20.0 million senior secured term loan maturing on December 1, 2024 (the “Term Loan”), with monthly interest and principal payments based on a 120-month amortization, with the outstanding balance due on the maturity date; (2) a $10.0 million senior secured delayed draw term loan maturing on December 1, 2024 (the “Delayed Draw Term Loan”), with monthly interest payments for the first 18 months and thereafter monthly payments of interest and principal based on a 120-month amortization and all balances due on the maturity date; (3) a $15.0 million senior secured committed revolving line of credit providing a sublimit of up to $10.0 million for standby letters of credit maturing on November 13, 2022 (the “Revolving Loan”), with monthly payments of interest only; and (4) a $15.0 million senior secured non-restoring line of credit maturing on January 31, 2021 (the “Line of Credit Loan”).
Significant judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated financial position or results of operations.
Significant judgment is required in determining the future tax consequences of events that have been recognized in our Consolidated Financial Statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the Company’s consolidated financial position or results of operations.
The HEA requires institutions to use the cash basis of accounting when determining its compliance with the 90/10 Rule. See Part I, Item 1. “Business - Regulatory Environment.” 39 Index We extend credit for tuition and fees to many of our students that attend our campuses.
The HEA requires institutions to use the cash basis of accounting when determining its compliance with the 90/10 Rule. See Part I, Item 1. “Business - Regulatory Environment.” We extend credit for tuition and fees to many of our students that attend our campuses.
Credit Facility On November 14, 2019, the Company entered into a senior secured credit agreement (the “Credit Agreement”) with its lender, Sterling National Bank (the “Lender”), providing for borrowing in the aggregate principal amount of up to $60 million (the “Credit Facility”).
Credit Facility On November 14, 2019, the Company entered into a senior secured credit agreement (the “Sterling Credit Agreement”) with its lender, Sterling National Bank (the “Lender”), providing for borrowing in the aggregate principal amount of up to $60.0 million (the “Credit Facility”).
The gap amount has continued to increase over the last several years as we have raised tuition on average for the last several years by 2-3% per year. The additional financing that we are providing to students may expose us to greater credit risk and can impact our liquidity.
The gap amount has continued to increase over the last several years as we have raised tuition on average for the last several years by 2-3% per year. The additional extension of credit that we are providing to students may expose us to greater credit risk and can impact our liquidity.
The majority of students enrolled at our schools rely on funds received under various government-sponsored student financial aid programs to pay a substantial portion of their tuition and other education-related expenses. The most significant source of student financing is Title IV Programs, which represented approximately 74% of our cash receipts relating to revenues in 2022.
The majority of students enrolled at our schools rely on funds received under various government-sponsored student financial aid programs to pay a substantial portion of their tuition and other education-related expenses. The most significant source of student financing is Title IV Programs, which represented approximately 81% of our cash receipts relating to revenues in 2023.
Our diploma/certificate programs range in duration from 19 to 136 weeks, our associate’s degree programs range in duration from 73 to 92 weeks, and students attend classes for different amounts of time per week depending on the school and program in which they are enrolled. Because we start new students every month, our total student population changes monthly.
Our diploma/certificate programs range in duration from 19 to 104 weeks, our associate’s degree programs range in duration from 69 to 92 weeks, and students attend classes for different amounts of time per week depending on the school and program in which they are enrolled. Because we start new students every month, our total student population changes monthly.
We have elected not to provide disclosure about transaction prices allocated to unsatisfied performance obligations if original contract durations are less than one-year, or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date in accordance with ASC Topic 606, Revenue from Contract with Customers .
We have elected not to provide disclosure about transaction prices allocated to unsatisfied performance obligations if original contract durations are less than one-year, or if we have the right to consideration from a student in an amount that corresponds directly with the value provided to the student for performance obligations completed to date in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contract with Customers .
The largest of these programs are Title IV Programs which represented approximately 74% and 75% of our revenue on a cash basis while the remainder is primarily derived from state grants and cash payments made by students during fiscal years 2022 and 2021, respectively.
The largest of these programs are Title IV Programs which represented approximately 81% and 74% of our revenue on a cash basis while the remainder is primarily derived from state grants and cash payments made by students during fiscal years 2023 and 2022, respectively.
In evaluating the realizability of deferred income tax assets we considered, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits.
In evaluating the realizability of deferred income tax assets, the Company considers, among other things, historical levels of income, expected future income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits.
A 1% increase in our bad debt expense as a percentage of revenues for the fiscal years ended December 31, 2022 and 2021 would have resulted in an increase in bad debt expense of $3.5 million and $3.4 million, respectively.
A 1% increase in our bad debt expense as a percentage of revenues for the fiscal years ended December 31, 2023 and 2022 would have resulted in an increase in bad debt expense of $3.8 million and $3.5 million, respectively.
We had no off-balance sheet arrangements as of December 31, 2022, except for existing surety bonds. We are required to post surety bonds on behalf of our campuses and education representatives with multiple states to maintain authorization to conduct our business. At December 31, 2022, we posted surety bonds in the aggregate amount of approximately $15.3 million.
We had no off-balance sheet arrangements as of December 31, 2023, except for existing surety bonds. We are required to post surety bonds on behalf of our campuses and education representatives with multiple states to maintain authorization to conduct our business. At December 31, 2023, we posted surety bonds in the aggregate amount of approximately $16.0 million.
However, we believe that these risks are somewhat mitigated by the following: • our internal financing is provided to students only after all other funding resources have been exhausted; thus, by the time this funding is available, students have completed approximately two-thirds of their curriculum and are more likely to graduate and, as a consequence, more likely to pay outstanding tuition amounts; • funding for students who interrupt their education is typically covered by Title IV Program funds as long as they have been properly packaged for financial aid; and • the requirement that students meet creditworthiness criteria to demonstrate a student’s ability to pay.
However, we believe that these risks are somewhat mitigated by the following: • our internal extension of credit is provided to students only after all other funding resources have been exhausted; thus, by the time this funding is available, students have completed approximately two-thirds of their curriculum and are more likely to graduate and, as a consequence, more likely to pay outstanding tuition amounts; • funding for students who interrupt their education is typically covered by Title IV Program funds as long as they have been properly packaged for financial aid.
Our bad debt expense as a percentage of revenues for the fiscal years ended December 31, 2022 and 2021 was 10.0% and 8.0%, respectively.
Our bad debt expense as a percentage of revenues for the fiscal years ended December 31, 2023 and 2022 was 11.0% and 10.0%, respectively.
The full loan amount is not guaranteed unless the student completes the program. The institutional loans are considered commitments because the students are required to fund their education using these funds and they are not reported in our consolidated financial statements.
The full extension of credit amount is not guaranteed unless the student completes the program. The institutional extensions of credit are considered commitments because the students are required to fund their education using these funds and they are not reported in our Consolidated Financial Statements.
These off-balance sheet arrangements do not adversely impact our liquidity or capital resources. As of the fiscal year ended December 31, 2022 and 2021, we had outstanding loan principal commitments to our active students of $30.5 million and $30.0 million, respectively. These are institutional loans and no cash is advanced to students.
These off-balance sheet arrangements do not adversely impact our liquidity or capital resources. As of the fiscal year ended December 31, 2023 and 2022, we had outstanding extensions of credit commitments to our active students of $33.6 million and $30.5 million, respectively. These are institutional extensions of credit and no cash is advanced to students.
If we determine that impairment has occurred, we record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. As of December 31, 2022, goodwill was approximately $14.5 million, or 5.0%, of our total assets.
If we determine that impairment has occurred, we record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. As of December 31, 2023, goodwill was approximately $10.7 million, or 3.1%, of our total assets.
The Company, which currently operates 22 schools in 14 states, offers programs in skilled trades (which include HVAC, welding and computerized numerical control and electrical and electronic systems technology, among other programs), automotive technology, healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs), hospitality services (which include culinary, therapeutic massage, cosmetology and aesthetics) and information technology (which includes information technology).
Lincoln Educational Services Corporation offers programs in skilled trades (which include HVAC, welding and computerized numerical control and electrical and electronic systems technology, among other programs), automotive technology, healthcare services (which include nursing, dental assistant and medical administrative assistant, among other programs) and hospitality services and information technology (which include culinary, therapeutic massage, cosmetology and aesthetics and information technology programs).
Excluding Transitional segment educational services and facilities expense of $3.2 million and $3.1 million for each year ended December 31, 2022 and 2021, respectively, our educational services and facilities expense would have increased $9.7 million. Increased costs were primarily concentrated in instructional expense and facilities expense.
Excluding the Transitional segment educational services and facilities expense of $1.9 million and $3.2 million for the fiscal year ended December 31, 2023 and 2022, respectively, our educational services and facilities expense would have increased $14.9 million, or 10.2%. Increased costs were primarily concentrated in instructional expense, facilities expense and books and tools expense.
The following chart summarizes the principal elements of our cash flow for each of the two fiscal years in the period ended December 31, 2022: Cash Flow Summary Year Ended December 31, 2022 2021 (In thousands) Net cash provided by operating activities $ 882 $ 27,447 Net cash (used in) provided by investing activities $ (21,354 ) $ 37,848 Net cash used in financing activities $ (12,548 ) $ (20,014 ) As of December 31, 2022, the Company had $50.3 million in cash and cash equivalents and restricted cash, in addition to $14.7 million in short-term investments, compared to $83.3 million cash and cash equivalents in the prior year.
The following chart summarizes the principal elements of our cash flow for each of the two fiscal years in the period ended December 31, 2023: Cash Flow Summary Year Ended December 31, 2023 2022 (In thousands) Net cash provided by operating activities $ 25,558 $ 882 Net cash provided by (used in) investing activities $ 7,369 $ (21,354 ) Net cash used in financing activities $ (2,945 ) $ (12,548 ) 49 Index As of December 31, 2023, the Company had $80.3 million in cash and cash equivalents and restricted cash, compared to $50.3 million in cash and cash equivalents and restricted cash, including $14.7 million in short-term investments as of December 31, 2022.
Property Sale Agreements Property Sale Agreement - Nashville, Tennessee Campus On September 24, 2021, Nashville Acquisition, LLC, a subsidiary of the Company (“Nashville Acquisition”), entered into a Contract for the Purchase of Real Estate (the “Nashville Contract”) to sell the property located at 524 Gallatin Avenue, Nashville, Tennessee 37206, at which the Company operates its Nashville campus, to SLC Development, LLC, a subsidiary of Southern Land Company (“SLC”), for an aggregate sale price of $34.5 million, subject to customary adjustments at closing.
Property Sale Agreement - Nashville, Tennessee Campus On September 24, 2021, Nashville Acquisition, L.L.C., a subsidiary of the Company, entered into a Contract for the Purchase of Real Estate (the “Nashville Contract”) to sell the nearly 16-acre property located at 524 Gallatin Avenue, Nashville, Tennessee 37206, at which the Company operates its Nashville campus, to SLC Development, LLC, a subsidiary of Southern Land Company (“SLC”).
Contractual Obligations Current portion of Long-Term Debt, Long-Term Debt and Lease Commitments. As of December 31, 2022, we have no debt outstanding. We lease offices, educational facilities and various items of equipment for varying periods through the year 2041 under basic annual rentals.
As of December 31, 2023, we have no debt outstanding. We lease offices, educational facilities and various items of equipment for varying periods through the year 2045 under basic annual rentals.
Selling, general and administrative expenses also includes the cost of all student services including financial aid and career services. All marketing and student enrollment expenses are recognized in the period incurred.
Selling, general and administrative expenses also includes the cost of all student services including financial aid and career services.
The goodwill is allocated among nine reporting units within the Transportation and Skilled Trades Segment. When we perform our annual goodwill impairment assessment we have the option to perform a qualitative assessment based on a number of factors impacting our reporting units (step 0).
When we perform our annual goodwill impairment assessment we have the option to perform a qualitative assessment based on a number of factors impacting our reporting units (Step 0).
On May 24, 2022, the Company announced that its Board of Directors had authorized a share repurchase program of up to $30.0 million of the Company’s outstanding Common Stock. The repurchase program was authorized for 12 months. As of December 31, 2022, the Company had repurchased 1,572,414 shares at a cost of approximately $9.4 million.
On May 24, 2022, the Company announced that its Board of Directors had authorized a share repurchase program of up to $30.0 million of the Company’s outstanding Common Stock. The share repurchase program was authorized for 12 months.
As a result, it is extremely difficult to predict the number of students that will need us to extend credit to them. 41 Index Because a substantial portion of our revenues 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 schools to participate in Title IV Programs could have a material effect on the realizability of our receivables.
Because a substantial portion of our revenues 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 schools to participate in Title IV Programs could have a material effect on the realizability of our receivables. Goodwill.
Results of Operations for the Two Years Ended December 31, 2022 and December 31, 2021 The following table sets forth selected consolidated statements of operations data as a percentage of revenues for each of the periods indicated: Year Ended Dec 31, 2022 2021 Revenue 100.0 % 100.0 % Costs and expenses: Educational services and facilities 42.7 % 41.4 % Selling, general and administrative 52.4 % 50.4 % Gain on sale of assets -0.1 % -6.7 % Impairment of long-lived assets 0.3 % 0.2 % Total costs and expenses 95.3 % 85.3 % Operating income 4.7 % 14.7 % Interest expense, net 0.0 % -0.6 % Income from operations before income taxes 4.7 % 14.1 % Provision for income taxes 1.1 % 3.7 % Net income 3.6 % 10.4 % Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Consolidated Results of Operations Revenue.
During the fiscal years ended December 31, 2023 and 2022, we did not record any interest and penalties expense associated with uncertain tax positions, as we do not have any uncertain tax positions. 45 Index Results of Operations for the Two Years Ended December 31, 2023 and December 31, 2022 The following table sets forth selected consolidated statements of operations data as a percentage of revenues for each of the periods indicated: Year Ended Dec 31, 2023 2022 Revenue 100.0 % 100.0 % Costs and expenses: Educational services and facilities 42.9 % 42.7 % Selling, general and administrative 55.3 % 52.4 % Gain on sale of assets -8.2 % -0.1 % Impairment of goodwill and long-lived assets 1.1 % 0.3 % Total costs and expenses 91.2 % 95.3 % Operating income 8.8 % 4.7 % Interest expense, net 0.6 % 0.0 % Income from operations before income taxes 9.4 % 4.7 % Provision for income taxes 2.6 % 1.1 % Net income 6.8 % 3.6 % Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Consolidated Results of Operations Revenue.
Our expenses, however, typically do not vary significantly over the course of the year with changes in our student population and revenue. 50 Index Effect of Inflation Inflation has not had a material effect on our operations except for some inflationary pressures on certain instructional expenses including consumables and in instances where potential students have not wanted to incur additional debt or increased travel expense.
Effect of Inflation Inflation has not had a material effect on our operations except for some inflationary pressures on certain instructional expenses including consumables and in instances where potential students have not wanted to incur additional debt or increased travel expense.
When we perform our quantitative impairment test we believe the most critical assumptions and estimates in determining the estimated fair value of our reporting units include, but are not limited to, future tuition revenues, operating costs, working capital changes, capital expenditures and a discount rate.
If we conclude based on our qualitative review that it is more likely than not that the fair value of the reporting unit is less than the carrying value, we proceed with a quantitative impairment test. 44 Index When we perform our quantitative impairment test we believe the most critical assumptions and estimates in determining the estimated fair value of our reporting units include, but are not limited to, future tuition revenues, operating costs, working capital changes, capital expenditures and a discount rate.
Five of the campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas.
Five of the campuses are destination schools, which attract students from across the United States and, in some cases, from abroad. The Company’s other campuses primarily attract students from their local communities and surrounding areas. All of the campuses are nationally accredited and are eligible to participate in federal financial aid programs administered by the U.S.
The decrease in cash position from the prior year was the result of several factors, including incentive compensation payments, share repurchases made under the share repurchase program and one -time costs incurred in connection with the teach-out of our Somerville, Massachusetts campus.
Also contributing to the change in cash year-over-year were incentive compensation payments, share repurchases made under the share repurchase program, and one-time costs incurred in connection with the teach-out of our Somerville, Massachusetts campus.
All of the campuses are nationally accredited and are eligible to participate in federal financial aid programs administered by the DOE and applicable state education agencies and accrediting commissions which allow students to apply for and access federal student loans as well as other forms of financial aid.
Department of Education (the “DOE”) and applicable state education agencies and accrediting commissions which allow students to apply for and access federal student loans as well as other forms of financial aid.
Excluding our Transitional segment, which had selling, general and administrative expense of $4.1 million and $3.6 million for each of the fiscal years ended December 31, 2022 and 2021, respectively, our selling, general and administrative expense would have increased $13.0 million.
Excluding the Transitional segment selling, general and administrative expense of $1.5 million and $4.1 million for the fiscal year ended December 31, 2023 and 2022, respectively, our selling general and administrative expense would have increased $29.3 million, or 16.4%.
The change year-over-year was mainly driven by the following factors: • Revenue increased $9.4 million, or 3.9% to $249.9 million for the fiscal year ended December 31, 2022 from $240.5 million in the prior year.
The change year-over-year was mainly driven by the following factors: • Revenue increased $35.2 million, or 10.3% to $376.6 million for the fiscal year ended December 31, 2023 from $341.4 million in the prior year comparable period.
Selling, general and administrative expense, as a percentage of revenue, increased to 52.4% from 50.4% for the fiscal years ended December 31, 2022 and 2021, respectively. 44 Index Gain on sale of assets. Gain on the sale of assets was $0.2 million and $22.5 million for each of the fiscal years ended December 31, 2022 and 2021, respectively.
Selling, general and administrative expense, as a percentage of revenue, increased to 55.3% from 52.4% for the fiscal year ended December 31, 2023 and 2022, respectively. Gain on sale of assets.
Under Title IV Programs, the government funds a certain portion of a student’s tuition, with the remainder, referred to as “the gap,” financed by the students themselves under private party loans and extended financing agreements offered by us.
Under Title IV Programs, the government funds a certain portion of a student’s tuition, with the remainder, referred to as “the gap,” financed by the students themselves under third party private party loans and once these financial options have been fully exhausted, the Company may offer extended payment plans.
On February 27, 2023, the Board of Directors extended the share repurchase program for an additional 12 months and authorized the repurchase of an additional $10 million of the Company’s Common Stock, for an aggregate of up to $30.6 million in additional repurchases. Our primary source of cash is tuition collected from our students.
On February 27, 2023, the Board of Directors extended the share repurchase program for an additional 12 months and authorized the repurchase of an additional $10.0 million of the Company’s Common Stock, for an aggregate of up to $30.6 million in additional repurchases. As of December 31, 2023, the Company has approximately $29.7 million remaining for repurchases.
Income taxes. W e assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable.
In accordance with ASC 740, the Company assesses our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable.
Educational services and facilities expense, as a percentage of revenue, increased to 42.7% from 41.4% for the fiscal years ended December 31, 2022 and 2021, respectively. Selling, general and administrative expense. Our selling, general and administrative expense increased $13.5 million, or 8.0% to $182.4 million for the year ended December 31, 2022 from $168.9 million in the prior year.
Educational services and facilities expense, as a percentage of revenue, increased to 42.9% from 42.7% for the fiscal years ended December 31, 2023 and 2022, respectively. 46 Index Selling, general and administrative expense.
GENERAL Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our”, and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults.
GENERAL Lincoln Educational Services Corporation and its subsidiaries (collectively, the “Company”, “we”, “our” and “us”, as applicable) provide diversified career-oriented post-secondary education to recent high school graduates and working adults. The Company, which currently operates 21 campuses, in 13 states has added two additional campuses, one located in East Point, Georgia and the other in Houston, Texas.
The increase was primarily driven by additional bad debt expense, marketing investments, sales expense and student services expenses discussed in the consolidated results of operations above, • Impairment was $1.0 million and zero for the years ended December 31, 2022 and 2021, respectively as discussed in the consolidated results above.
The increase was primarily driven by an increase in administrative costs, marketing investments and student services, all of which are discussed above in the Consolidated Results of Operations. • Impairment of goodwill and long-lived assets was $4.2 million and $1.0 million for the fiscal years ended December 31, 2023 and 2022, respectively, as discussed above in the Consolidated Results of Operations.
The Company reviews the carrying value of its long-lived assets and identifiable intangibles for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. For other long-lived assets, including right-of-use lease assets, the Company evaluates assets for recoverability when there is an indication of potential impairment.
For the year ended December 31, 2022, there were no impairments related to goodwill. Impairment of Long-Lived Assets . The Company reviews the carrying value of its long-lived assets and identifiable intangibles for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.
Changes in, among other things, income tax legislation, statutory income tax rates, or future income levels could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods. On August 16, 2022, the Inflation Reduction Act (the “Inflation Act”) was enacted and signed into law.
Changes in, among other things, income tax legislation, statutory income tax rates or future income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.
The funds were subsequently received in January 2023. 48 Index Investing Activities Net cash used in investing activities was $21.4 million for the year ended December 31, 2022 compared to net cash provided by investing activities of $37.8 million in the prior year comparable period.
Increases in accounts receivable were primarily driven by a $29.8 million increase in revenue year-over-year. Investing Activities Net cash provided by investing activities was $7.3 million for the fiscal year ended December 31, 2023 compared to net cash used in investing activities of $21.4 million in the prior year comparable period.
On December 31, 2022, as a result of impairment testing it was determined that there was a long-lived asset impairment of $1.0 million.
As a result of the Nashville sale discussed above, the Company also recorded a pre-tax non-cash impairment charge of $0.4 million relating to long-lived assets. On December 31, 2022, as a result of impairment testing it was determined that there was a long-lived asset impairment of $1.0 million.
Revenue increased $13.0 million, or 3.9% to $348.3 million for the fiscal year ended December 31, 2022 from $335.3 million in the prior year. Excluding Transitional segment revenue, which remained essentially flat at $6.8 million for each year ended December 31, 2022 and 2021, respectively, our revenue would have increased $12.9 million.
Revenue increased $29.8 million, or 8.6% to $378.1 million for the fiscal year ended December 31, 2023 from $348.3 million in the prior year comparable period. Excluding the Transitional segment revenue of $1.5 million and $6.8 million for the fiscal year ended December 31, 2023 and 2022, respectively, our revenue would have increased $35.2 million, or 10.3%.
As such, the aforementioned $0.7 million impairment was recorded and the assets carrying value was reduced. This property was sold during the second quarter of 2022, generating net proceeds of approximately $2.4 million and resulting in a gain on sale of asset of $0.2 million. There were no other long-lived asset impairments for the fiscal year ended December 31, 2021.
Gain on sale of assets was $0.2 million for the fiscal year ended December 31, 2022, resulting from the sale of the Suffield, Connecticut campus during the second quarter of 2022. Net proceeds from the sale were approximately $2.4 million. Impairment of goodwill and long-lived assets .
Additionally, we obtain independent market metrics for the industry and our peers to assist in the development of these key assumptions. This process is consistent with our internal forecasts and operating plans. On December 31, 2022, we conducted our annual test for goodwill impairment and determined we did not have an impairment. Impairment of Long-Lived Assets .
Additionally, we obtain independent market metrics for the industry and our peers to assist in the development of these key assumptions. This process is consistent with our internal forecasts and operating plans. On June 8, 2023, the Company consummated the sale of its Nashville, Tennessee property (see Part II. Item 8.
Our educational services and facilities expense increased $9.8 million, or 7.1% to $148.7 million for the fiscal year ended December 31, 2022 from $138.9 million in the prior year.
The Company’s hybrid teaching model increases program efficiency and delivers accelerated revenue recognition in certain evening programs. Educational services and facilities expense. Our educational services and facilities expense increased $13.5 million, or 9.1% to $162.3 million for the fiscal year ended December 31, 2023 from $148.7 million in the prior year comparable period.
Net interest income / expense. Net interest income was $0.2 million for the year ended December 31, 2022 compared to net interest expense of $2.0 million in the prior year.
Approximately $0.6 million of the Company’s ROU asset was impaired in addition to $0.4 million of long-lived assets. Net interest income. Net interest income was $2.3 million for the fiscal year ended December 31, 2023 compared to $0.2 million in the prior year comparable period.
“Financial Statements and Supplemental Data - Notes to Consolidated Financial Statements - Note 7 Property Sale Agreements.” Income taxes. Our income tax provision for the year ended December 31, 2022 was $3.8 million, or 23.1% of pre-tax income compared to $12.5 million, or 26.5% of pre-tax income in the prior year.
Our income tax provision for the year ended December 31, 2023 was $9.6 million, or 27.1% of pre-tax income compared to $3.8 million, or 23.1% of pre-tax income in the prior year.
On November 4, 2022, the Company agreed with its Lender to terminate the Credit Agreement and the remaining Revolving Loan.
The Sterling Credit Agreement was amended on various occasions. On November 4, 2022, the Company agreed with its Lender to terminate the Sterling Credit Agreement and the remaining Revolving Loan. The Lender agreed to allow the Company’s existing letters of credit to remain outstanding, provided that they are cash collateralized.
During the year ended, the decrease in effective tax rate was mainly due to a higher tax benefit derived from restricted stock vesting. Segment Results of Operations We operate our business in three reportable operating segments: (a) the Transportation and Skilled Trades segment, (b) the Healthcare and Other Professions (“HOPS”) segment and (c) the Transitional segment.
During the year ended December 31, 2023, the increase in effective tax rate was mainly due to a lesser tax benefit derived from restricted stock vesting and higher pre-tax income. Segment Results of Operations As of January 1, 2023, the Company’s business is now organized into two reportable business segments: (a) Campus Operations; and (b) Transitional.
As of December 31, 2022, the only campus classified in Transitional is the Somerville, Massachusetts campus, which has been marked for closure and is expected to be fully taught-out as of December 31, 2023. Our reportable operating segments have been determined based on a method by which we now evaluate performance and allocate resources.
As of December 31, 2023, the only campus classified in the Transitional segment is the Somerville, Massachusetts campus. The campus has been fully taught-out and total costs to close the campus were approximately $2.0 million. We evaluate performance based on operating results.
The Lender agreed to allow the Company’s existing letters of credit to remain outstanding provided that they are cash collateralized and, as of December 31, 2022, the letters of credit in the aggregate outstanding principal amount of $4.0 million remained outstanding, were cash collateralized and classified as restricted cash on the consolidated balance sheet.
As of December 31, 2023, the letters of credit, in the aggregate outstanding principal amount of $4.1 million, remained outstanding, were cash collateralized, and were classified as restricted cash on the Consolidated Balance Sheets. As of December 31, 2023, the Company did not have a credit facility and did not have any debt outstanding.
Corporate and Other This category includes unallocated expenses incurred on behalf of the entire Company. Corporate and other expenses were $32.8 million and $14.6 million for each of the fiscal years ended December 31, 2022 and 2021, respectively.
Corporate and Other This category includes unallocated expenses incurred on behalf of the entire Company.
The decrease in expense year-over-year was primarily driven by a reduction in incentive compensation, partially offset by additional medical costs due to increased claims, severance and stock compensation related to severance and an increase in salaries and benefits. 47 Index LIQUIDITY AND CAPITAL RESOURCES Our primary capital requirements are for maintenance and expansion of our facilities and the development of new programs.
Increased costs were driven by several factors including additional performance-based incentives, stock-based compensation, and an increase in legal costs. LIQUIDITY AND CAPITAL RESOURCES Our primary capital requirements are for maintenance and expansion of our facilities and the development of new programs.
Our business is organized into three reportable business segments: (a) Transportation and Skilled Trades, (b) Healthcare and Other Professions; and (c) Transitional, which refers to campuses that have been marked for closure and are currently being taught out. On November 3, 2022, the Board of Directors approved a plan to close the Somerville, Massachusetts campus by the end of 2023.
The Campus Operations segment includes campuses that are in operation and contribute to the Company’s core operations and performance. The Transitional segment refers to campuses that are marked for closure and are currently being taught-out. In November, 2022, the Board of Directors approved a plan to close the Somerville, Massachusetts campus which has now been fully taught-out.
The impairment was the result of an assessment of the current market value, as compared to the current carrying value of the assets. 42 Index Further, on December 31, 2021, as a result of impairment testing it was determined that there was an impairment of our property in Suffield, Connecticut of $0.7 million.
For the fiscal year ended December 31, 2022, as a result of the Company’s annual test of goodwill and long-lived assets, it was determined that there was sufficient evidence to conclude that a $1.0 million impairment existed. The impairment was the result of an assessment of the current market value, as compared to the current carrying value of the assets.
For the year ended December 31, 2022, the Company incurred approximately $0.4 million in capital expenditures, mostly relating to architectural fees and approximately $0.3 million in rent. As of December 31, 2022, we had 12,388 students enrolled at 22 campuses. Our revenues consist primarily of student tuition and fees derived from the programs we offer.
For the year ended December 31, 2023, the Company incurred approximately $0.8 million in rent expenses. See Part II. Item 8. “Financial Statements and Supplemental Data - Notes to Consolidated Financial Statements – Note 6 Leases and Note 8 Real Estate Transactions.” Our revenues consist primarily of student tuition and fees derived from the programs we offer.
Facility expense increases were primarily due to increased spending for common area maintenance and additional rent expense. • Selling, general and administrative expense increased $3.9 million, or 11.1% to $39.0 million for the fiscal year ended December 31, 2022 from $35.1 million in the prior year.
Our selling, general and administrative expense increased $26.7 million, or 14.7% to $209.1 million for the fiscal year ended December 31, 2023, from $182.4 million in the prior year comparable period.
Included in the current year is a gain of $0.2 million resulting from the sale of our Suffield, Connecticut property during the second quarter of 2022.
Corporate and other expenses were $43.2 million and $33.0 million after excluding a $30.9 million gain in the current year, resulting from the sale of our Nashville, Tennessee property and a $0.2 million gain in the prior year driven by the sale of our former campus property in Suffield, Connecticut.
As of December 31, 2022, there were four new leases and one lease modification that resulted in noncash re-measurements of the related right-of-use asset and operating lease liability of $13.8 million. This re-measurement includes the new Atlanta, Georgia area campus, the lease of which commenced in August 2022.
As of December 31, 2023, there were three new leases and five lease modifications that resulted in noncash re-measurements of the related right-of-use asset and operating lease liability of $10.5 million. In addition, during the fourth quarter of 2023, the Company entered into a finance lease and recorded a $16.0 million Right of Use (“ROU”) Asset and liability.
Financing Activities Net cash used in financing activities was $12.5 million for the fiscal year ended December 31, 2022 compared to $20.0 million in the prior year. The decrease of $7.5 million was primarily due to $9.4 million in shares repurchased in the current year in combination with payments on borrowings in the prior year of $17.8 million.
Net cash provided by operating activities was $25.5 million for the fiscal year ended December 31, 2023 compared to $0.8 million in the prior year comparable period.
As further discussed below, the Credit Facility was secured by a first priority lien in favor of the Lender on substantially all of the personal property owned by the Company, as well as a pledge of the stock and other equity in the Company’s subsidiaries and mortgages on parcels of real property owned by the Company in Colorado, Tennessee and Texas, at which three of the Company’s schools are located, as well as a former school property owned by the Company located in Connecticut. 49 Index On September 23, 2021, in connection with entering into the agreements relating to the sale leaseback transaction for the Company’s Denver, Grand Prairie and Nashville campuses (collectively, the “Property Transactions”), the Company and certain of its subsidiaries entered into a Consent and Waiver Letter Agreement (the “Consent Agreement”) to the Company’s Credit Agreement with its Lender.
The Credit Facility was secured by a first priority lien in favor of the Lender on substantially all of the personal property owned by the Company as well as a pledge of the stock and other rights in the Company’s subsidiaries and mortgages on parcels of real property owned by the Company.
The higher revenue per student was driven by tuition increases and greater efficiencies realized through the Company’s new hybrid delivery model as detailed in the consolidated results of operations. • Educational services and facilities expense increased $3.1 million, or 7.6% to $44.3 million for the fiscal year ended December 31, 2022 from $41.2 million in the prior year.
The Company’s hybrid teaching model increases program efficiency and delivers accelerated revenue recognition in certain evening programs. • Educational services and facilities expense increased $14.8 million, or 10.2% to $160.4 million for the fiscal year ended December 31, 2023 from $145.6 million in the prior year comparable period.
Also contributing to the increase is $0.4 million of additional cleaning services. Partially offsetting the additional facility costs are reductions in depreciation expense. • Selling, general and administrative expense increased $12.5 million, or 13.3% to $106.2 million for the fiscal year ended December 31, 2022, from $93.7 million in the prior year.
Also contributing to the increased costs were higher utility expense driven by inflation and an increase in repairs and maintenance at several campuses. o Books and tools expense increased $3.0 million, driven by a 11.4% increase in student starts year-over-year. • Selling, general and administrative expense increased $19.1 million, or 13.1% to $164.4 million for the fiscal year ended December 31, 2023, from $145.3 million in the prior year comparable period.
The impairment was the result of an assessment of the current market value, obtained via third-party, as compared to the current carrying value of the assets. The carrying value for the Suffield, Connecticut property was approximately $2.9 million. The fair value estimate provided indicated that the current value of the property was approximately $2.2 million.
The impairment was the result of an assessment of the current market value, as compared to the carrying value of the assets. Income taxes. The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”).
Removed
As of December 31, 2022, the Somerville campus is the only campus classified in the Transitional Segment. On June 30, 2022, the Company executed a lease for a 55,000 square foot facility to house a second Atlanta, Georgia area campus. The build-out is progressing according to plan.
Added
As of December 31, 2023, these campuses were not operational however, the East Point, Georgia campus is expected to hold its first class in March of 2024 and the Houston, Texas campus is expected to become operational in the first quarter of 2026.
Removed
The Company intends to relocate its Nashville campus to a more efficient and technologically advanced facility in the Nashville metropolitan area but has not yet identified a location. The Company and SLC have agreed to an extension of the due diligence period under the Nashville Contract.
Added
The Company was incorporated in New Jersey in 2003 as the successor-in-interest to various acquired schools including Lincoln Technical Institute, Inc. which opened its first campus in Newark, New Jersey in 1946. As of January 1, 2023, the Company’s business has been organized into two reportable business segments: (a) Campus Operations; and (b) Transitional.
Removed
Consequently, subject to satisfactory completion of the due diligence, this transaction is expected to close during the second quarter of 2023. During the extension of the diligence period, non-refundable payments have been and continue to be made to the Company by SLC which are expected to total approximately $1.1 million in the aggregate through March 1, 2023.
Added
Based on trends in student demand and program expansion, there have been more cross-offerings of programs among the various campuses. Given this change, the Company has revised the way it manages the business, evaluates performance and allocates resources, resulting in an updated segment structure.
Removed
The payments will be applied towards the purchase price, assuming that a closing occurs. As of December 31, 2022, the Company had received approximately $0.5 million in non-refundable payments from SLC.
Added
As of December 31, 2023, the only campus classified in the Transitional segment is the Somerville, Massachusetts campus. As of December 31, 2023, we had 13,270 students enrolled at 21 campuses.
Removed
The Nashville, Tennessee property is currently classified as assets held for sale in the consolidated balance sheet for the fiscal years ended December 31, 2022 and 2021, respectively 40 Index Sale-Leaseback Transaction - Denver, Colorado and Grand Prairie, Texas Campuses On September 24, 2021, Lincoln Technical Institute, Inc. and LTI Holdings, LLC, each a wholly-owned subsidiary of the Company (collectively, “Lincoln”), entered into an Agreement for Purchase and Sale of Property for the sale of the properties located at 11194 E. 45th Avenue, Denver, Colorado 80239 and 2915 Alouette Drive, Grand Prairie, Texas 75052, at which the Company operates its Denver and Grand Prairie campuses, respectively, to LNT Denver (Multi) LLC, a subsidiary of LCN Capital Partners (“LNT”), for an aggregate sale price of $46.5 million, subject to customary adjustments at closing.
Added
Our average enrollment for the fiscal year ended December 31, 2023 was 12,941 students and our revenues were $378.1 million, which represented an increase of 8.6% over the prior fiscal year. For more information relating to our revenues, profits and financial condition, please refer to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

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Other LINC 10-K year-over-year comparisons