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Perdoceo (PRDO) Expands into Health Sciences With USAHS Buyout
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Perdoceo Education Corporation (PRDO - Free Report) inked a definitive agreement to acquire full ownership of the University of St. Augustine for Health Sciences, LLC (USAHS). The acquisition, likely to be valued at $142-$144 million, is set to be completed by December 2024.
Founded in 1979, USAHS is one of the nation’s leading universities known for its graduate health sciences degrees in physical therapy, occupational therapy, speech-language therapy, nursing and continuing education programs. The university operates campuses in San Marcos, CA; St. Augustine and Miami, FL; and Austin and Dallas, TX, in addition to offering online programs. USAHS holds accreditation from the Western Association of Schools and Colleges (WASC).
This strategic acquisition is expected to support PRDO's further growth and diversification of academic programs, particularly in health sciences. It aligns with current technological advancements like AI. It responds to the increasing demand for health science careers, projected to increase 13% by 2031, according to the U.S. Bureau of Labor Statistics, surpassing average job growth rates across sectors.
PRDO affirms its full-year adjusted operating income outlook for fiscal 2024, which is expected to range between $175 million and $190 million. The company anticipates the acquisition will enhance its adjusted operating income starting in 2025, with continued growth expected in 2026. This move supports PRDO's strategy of acquiring quality academic institutions to enhance shareholder value through dividends and share buybacks, reflecting its balanced capital allocation approach.
Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 32.4% in the past six months compared with the Zacks Schools industry’s 6.7% growth. The company is benefiting from strong student retention and engagement trends at both academic institutions, Colorado Technical University (CTU) and the American InterContinental University System (AIUS or AIU System). Also, the focus on investments in student resources and technology bodes well.
Image Source: Zacks Investment Research
As of Mar 31, 2024, total student enrollments were 41,300, up 9.0% year over year. Despite a 22.9% year-over-year decline in AIUS enrollments, student enrollments at CTU rose approximately 28.5% compared with the prior-year quarter’s tally. The upside was primarily driven by a positive timing impact from the academic calendar. The company expects continued enrollment growth throughout 2024, following the normalization of marketing and student enrollment activities since the fourth quarter of 2023.
The company sees technology as a key driver and competitive advantage. PRDO remains focused on using technology to evaluate student academic experiences and enhance the efficiency of academic and student support functions. It continues to invest selectively to enhance the learning experience for students. It focuses on improving processes supporting corporate engagement programs and prioritizing investments in staff and technology for program expansion.
The consensus estimate for AGS’s 2024 sales and earnings per share (EPS) suggests growth of 7.7% and 5,200%, respectively, from the year-ago levels.
American Public Education, Inc. (APEI - Free Report) currently flaunts a Zacks Rank #1. APEI has a trailing four-quarter earnings surprise of 138.2%, on average. The stock has surged 317.2% in the past year.
The Zacks Consensus Estimate for APEI’s 2024 sales and EPS indicates an increase of 3.9% and 124.6%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently carries a Zacks Rank #2 (Buy). RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 73.2% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.9% and 64%, respectively, from the year-ago levels.
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Perdoceo (PRDO) Expands into Health Sciences With USAHS Buyout
Perdoceo Education Corporation (PRDO - Free Report) inked a definitive agreement to acquire full ownership of the University of St. Augustine for Health Sciences, LLC (USAHS). The acquisition, likely to be valued at $142-$144 million, is set to be completed by December 2024.
Founded in 1979, USAHS is one of the nation’s leading universities known for its graduate health sciences degrees in physical therapy, occupational therapy, speech-language therapy, nursing and continuing education programs. The university operates campuses in San Marcos, CA; St. Augustine and Miami, FL; and Austin and Dallas, TX, in addition to offering online programs. USAHS holds accreditation from the Western Association of Schools and Colleges (WASC).
This strategic acquisition is expected to support PRDO's further growth and diversification of academic programs, particularly in health sciences. It aligns with current technological advancements like AI. It responds to the increasing demand for health science careers, projected to increase 13% by 2031, according to the U.S. Bureau of Labor Statistics, surpassing average job growth rates across sectors.
PRDO affirms its full-year adjusted operating income outlook for fiscal 2024, which is expected to range between $175 million and $190 million. The company anticipates the acquisition will enhance its adjusted operating income starting in 2025, with continued growth expected in 2026. This move supports PRDO's strategy of acquiring quality academic institutions to enhance shareholder value through dividends and share buybacks, reflecting its balanced capital allocation approach.
Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 32.4% in the past six months compared with the Zacks Schools industry’s 6.7% growth. The company is benefiting from strong student retention and engagement trends at both academic institutions, Colorado Technical University (CTU) and the American InterContinental University System (AIUS or AIU System). Also, the focus on investments in student resources and technology bodes well.
Image Source: Zacks Investment Research
As of Mar 31, 2024, total student enrollments were 41,300, up 9.0% year over year. Despite a 22.9% year-over-year decline in AIUS enrollments, student enrollments at CTU rose approximately 28.5% compared with the prior-year quarter’s tally. The upside was primarily driven by a positive timing impact from the academic calendar. The company expects continued enrollment growth throughout 2024, following the normalization of marketing and student enrollment activities since the fourth quarter of 2023.
The company sees technology as a key driver and competitive advantage. PRDO remains focused on using technology to evaluate student academic experiences and enhance the efficiency of academic and student support functions. It continues to invest selectively to enhance the learning experience for students. It focuses on improving processes supporting corporate engagement programs and prioritizing investments in staff and technology for program expansion.
Key Picks
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
PlayAGS, Inc. (AGS - Free Report) sports a Zacks Rank #1 (Strong Buy). AGS has a trailing four-quarter earnings surprise of 33.3%, on average. The stock has appreciated 73.6% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The consensus estimate for AGS’s 2024 sales and earnings per share (EPS) suggests growth of 7.7% and 5,200%, respectively, from the year-ago levels.
American Public Education, Inc. (APEI - Free Report) currently flaunts a Zacks Rank #1. APEI has a trailing four-quarter earnings surprise of 138.2%, on average. The stock has surged 317.2% in the past year.
The Zacks Consensus Estimate for APEI’s 2024 sales and EPS indicates an increase of 3.9% and 124.6%, respectively, from year-ago levels.
Royal Caribbean Cruises Ltd. (RCL - Free Report) currently carries a Zacks Rank #2 (Buy). RCL has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has rallied 73.2% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS calls for growth of 16.9% and 64%, respectively, from the year-ago levels.