0001140361-23-051555 | 10-Q | XBRL Viewer | Lincoln Educational Services Corp

NET INCOME PER COMMON SHARE

9 Months Ended

Sep. 30, 2023

NET INCOME PER COMMON SHARE [Abstract]

2.	NET INCOME PER COMMON SHARE

Basic and diluted earnings per share (“EPS”) are determined in accordance with ASC Topic 260,” Earnings per Share”, which specifies the computation, presentation and disclosure requirements for EPS. Basic EPS excludes all dilutive Common Stock equivalents. It is based upon the weighted average number of common shares outstanding during the period. Diluted EPS, as calculated using the treasury stock method, reflects the potential dilution that would occur if our dilutive outstanding stock options and stock awards were issued.

During the three and nine months ended September 30, 2022, the Company presented its basic and diluted income per common share using the two-class method, which requires all outstanding Series A Preferred Stock (“Series A Preferred Stock”) and unvested shares of Restricted Stock that contain rights to non-forfeitable dividends and therefore participate in undistributed income with common shareholders to be included in computing income per common share. Under the two-class method, net income is reduced by the amount of dividends declared in the period for each class of Common Stock and participating security. The remaining undistributed income is then allocated to Common Stock and participating securities based on their respective rights to receive dividends. Series A Preferred Stock and shares of unvested Restricted Stock contain non-forfeitable rights to dividends on an if-converted basis and on the same basis as shares of the Company’s Common Stock, respectively, and are considered participating securities. The Series A Preferred Stock and unvested Restricted Stock are not included in the computation of basic income per common share in periods in which we have a net loss, as the Series A Preferred Stock and unvested Restricted Stock are not contractually obligated to share in our net losses. However, the cumulative dividends on Series A Preferred Stock for the period decreases the income or increases the net loss allocated to common shareholders unless the dividend is paid in the period. Basic income per common share has been computed by dividing net income allocated to common shareholders by the weighted-average number of common shares outstanding.

On November 30, 2022, the Company exercised in full its right of mandatory conversion of the Company’s Series A Preferred Stock. In connection with the conversion, each share of Series A Preferred Stock was cancelled and converted into 423,729 shares of the Company’s Common Stock, no par value per share (the “Common Stock”). No shares of Series A Preferred Stock remain outstanding and all rights of the holders to receive future dividends have been terminated. As a result of the conversion, the aggregate 12,700 shares of Series A Preferred Stock outstanding were converted into 5,381,358 shares of Common Stock. As of September 30, 2023, the Company still maintains Restricted Stock, but these shares do not participate in the disbursement of dividends.

The following is a reconciliation of the numerator and denominator of the net income per share computations for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands, except share data)	2023		2022			2023		2022
Numerator:
Net income	$	2,064	$	3,544		$	19,205	$	4,076
Less: preferred stock dividend		-		(304	)		-		(912	)
Less: allocation to preferred stockholders		-		(540	)		-		(522	)
Less: allocation to restricted stockholders		-		(155	)		-		(153	)
Net income allocated to common stockholders	$	2,064	$	2,545		$	19,205	$	2,489

Basic income per share:
Denominator:
Weighted average common shares outstanding		30,163,745		25,381,447			30,114,926		25,692,094
Basic income per share	$	0.07	$	0.10		$	0.64	$	0.10

Diluted income per share:
Denominator:
Weighted average number of:
Common shares outstanding		30,698,475		25,381,447			30,455,155		25,692,094
Dilutive shares outstanding		30,698,475		25,381,447			30,455,155		25,692,094
Diluted income per share	$	0.07	$	0.10		$	0.63	$	0.10

The following table summarizes the potential weighted average shares of Common Stock that were excluded from the determination of our diluted shares outstanding as they were anti-dilutive:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except share data)	2023		2022		2023		2022
Series A Preferred Stock		-		5,381,356		-		5,381,356
Unvested restricted stock		-		1,548,265		-		1,582,493
		-		6,929,621		-		6,963,849

COVID-19 PANDEMIC AND CARES ACT (Details) $ in Millions	9 Months Ended
COVID-19 PANDEMIC AND CARES ACT (Details) $ in Millions	Sep. 30, 2023 USD ($) Intallment	Sep. 30, 2021 USD ($)
COVID-19 [Abstract]
Total amount expected to be received under CARES Act	$ 27.4
Number of installments used to allocated funds to schools \| Intallment	2
Emergency grants available in first installment under CARES Act		$ 13.7
Utilized amount of permitted expenses		$ 13.7
DOE allocated amount to schools	$ 24.4
Emergency grants distributed to students under CRRSAA and ARPA Act	$ 14.8

REVENUE RECOGNITION (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
REVENUE RECOGNITION [Abstract]
Unearned tuition	$ 21,844		$ 21,844		$ 24,154
Revenue recognized included in contract liability			23,300
Disaggregation of Revenue [Abstract]
Total revenues	99,618	$ 91,813	275,548	$ 256,510
Services Transferred at a Point in Time [Member]
Disaggregation of Revenue [Abstract]
Total revenues	7,494	7,710	18,101	17,474
Services Transferred over Time [Member]
Disaggregation of Revenue [Abstract]
Total revenues	92,124	84,103	257,447	239,036
Campus Operations [Member]
Disaggregation of Revenue [Abstract]
Total revenues	99,527	90,085	274,093	251,216
Campus Operations [Member] \| Services Transferred at a Point in Time [Member]
Disaggregation of Revenue [Abstract]
Total revenues	7,489	7,627	18,084	17,225
Campus Operations [Member] \| Services Transferred over Time [Member]
Disaggregation of Revenue [Abstract]
Total revenues	92,038	82,458	256,009	233,991
Transitional [Member]
Disaggregation of Revenue [Abstract]
Total revenues	91	1,728	1,455	5,294
Transitional [Member] \| Services Transferred at a Point in Time [Member]
Disaggregation of Revenue [Abstract]
Total revenues	5	83	17	249
Transitional [Member] \| Services Transferred over Time [Member]
Disaggregation of Revenue [Abstract]
Total revenues	$ 86	$ 1,645	$ 1,438	$ 5,045

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

LEASES

9 Months Ended

Sep. 30, 2023

LEASES [Abstract]

LEASES

The Company determines if an arrangement is a lease at its inception. The Company considers any contract where there is an identified asset as to which the Company has the right to control its use in determining whether the contract contains a lease. An operating lease ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are to be recognized at the commencement date based on the present value of lease payments over the lease term. As all of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. We estimate the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of our credit facility and adjusting it for factors that appropriately reflect the profile of secured borrowing over the expected term of the lease. The operating lease ROU assets include any lease payments made prior to the rent commencement date and exclude lease incentives. Our leases have remaining terms ranging from less than one year to approximately 18 years. Lease terms may include options to extend the term used in determining the lease obligation when it is reasonably certain that the Company will exercise that option. Expenses for lease payments are recognized on a straight-line basis over the lease term for operating leases.

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. The lease term is set to commence on January 2, 2024, with an initial lease term of 21-years and 6 months. The lease contains three five-year renewal options.

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. The lease term is set to commence on November 1, 2023, with an initial lease term of 15-years. The lease contains two five-year renewal options.

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 Atlanta, Georgia. The lease term commenced in August 2022, with total payments due on an undiscounted basis of $12.2 million over the 12-year initial term. The lease contains two five-year renewal options that may be exercised by the Company at the end of the initial lease term. 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. During the nine months ended September 30, 2023, the Company incurred approximately $0.6 million in rent expenses.

Operating lease costs for each of the three months ended September 30, 2023 and 2022 were $4.8 million and $4.8 million, respectively, and $14.6 million and $14.1 million for the nine months ended September 30, 2023 and 2022, respectively. Variable lease costs were $0.2 million and less than $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $0.3 million and less than $0.1 million for the nine months ended September 30, 2023 and 2022, respectively. The net change in ROU asset and operating lease liability is included in other assets in the Condensed Consolidated Cash Flows for the nine months ended September 30, 2023 and 2022.

Supplemental cash flow information and non-cash activity related to our operating leases are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,977	$	4,382	$	12,155	$	13,702
Non-cash activity:
Lease liabilities arising from obtaining right-of-use assets	$	8,349	$	5,844	$	10,491	$	12,561

The Company has entered into three new leases and four lease modifications since the beginning of the fiscal year, resulting in a noncash re-measurement of the related ROU asset and operating lease liability of $10.5 million.

Weighted-average remaining lease term and discount rate for our operating leases are as follows:

	As of
	September 30,
	2023			2022
Weighted-average remaining lease term	11.22 years			11.36 years
Weighted-average discount rate		6.94	%		7.21	%

Maturities of lease liabilities by fiscal year for our operating leases as of September 30, 2023 are as follows:

Year ending December 31,
2023 (excluding the nine months ended September 30, 2023)	$	3,949
2024		18,054
2025		16,681
2026		14,386
2027		11,499
2028		11,331
Thereafter		67,312
Total lease payments		143,212
Less: imputed interest		(40,404	)
Present value of lease liabilities	$	102,808

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2023

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION [Abstract]

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Business Activities - 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 22 campuses in 14 states, offers programs in skilled trades (which include HVAC, welding, 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. The schools operate under Lincoln Technical Institute, Lincoln College of Technology, Lincoln Culinary Institute, Euphoria Institute of Beauty Arts and Sciences, and associated brand names. Most of the campuses serve major metropolitan markets and each typically offers courses in multiple areas of study. 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 by the U.S. Department of Education (“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.

Basis of Presentation – The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. Certain information and footnote disclosures normally included in annual financial statements have been omitted or condensed pursuant to such regulations. These financial statements, which should be read in conjunction with the December 31, 2022 audited consolidated financial statements and notes thereto and related disclosures of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“Form 10-K”), reflect all adjustments, consisting of normal recurring adjustments necessary to present fairly the consolidated financial position, results of operations and cash flows for such periods. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full fiscal year ending December 31, 2023.

As of January 1, 2023, the Company’s business is now organized into two reportable business segments: (a) Campus Operations, and (b) Transitional. 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. The Campus Operations segment includes campuses that are continuing 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. As of September 30, 2023, the only campus classified in the Transitional segment is the Somerville, Massachusetts campus. This campus has been fully taught-out, and will continue to incur some additional closing costs until year-end 2023. Total estimated costs to close the campus will approximate $2.0 million.

We evaluate performance based on operating results. Adjustments to reconcile segment results to consolidated results are included in the caption “Corporate,” which primarily includes unallocated corporate activity.

The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates in the Preparation of Financial Statements – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. On an ongoing basis, the Company evaluates the estimates and assumptions, including those used to determine the incremental borrowing rate to calculate lease liabilities and right-of-use (“ROU”) assets, lease term to calculate lease cost, revenue recognition, bad debts, impairments, useful lives of fixed assets, income taxes, benefit plans and certain accruals. Actual results could differ from those estimates.

New Accounting Pronouncements – In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequently issued additional guidance that modified ASU 2016-13. The ASU and the subsequent modifications were identified as ASC Topic 326. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” methodology to a “current expected credit loss” methodology (the “CECL methodology”). The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses on financial assets measured at amortized cost at the time the financial asset is originated or acquired. The allowance is adjusted each period for changes in expected lifetime credit losses. The CECL methodology represents a significant change from prior U.S. GAAP, which generally required that a loss be incurred before it was recognized. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-11 and ASU No. 2022-02 to provide additional guidance on the credit losses standard. In November 2019, FASB issued ASU No. 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”. This ASU deferred the effective date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Additionally, in February and March 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)”. ASU 2020-02 added an SEC paragraph pursuant to the issuance of SEC Staff Accounting Bulletin No. 119 on loan losses to FASB Codification Topic 326 and also updated the SEC section of the codification for the change in the effective date of Topic 842. As of the January 1, 2023 date of adoption, based on forecasts of macroeconomic conditions and exposures at that time, the aggregate impact to the Company resulted in an opening balance sheet adjustment increasing the allowance for credit losses related to the Company’s accounts receivables of approximately $10.8 million, a decrease in retained earnings of $7.9 million, after-tax and a deferred tax asset increase of $2.9 million.

Income Taxes – The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes” (“ASC 740”). This statement requires an asset and a liability approach for measuring deferred taxes based on temporary differences between the financial statement and tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for years in which taxes are expected to be paid or recovered.

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. A valuation allowance is required to be established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized. In accordance with ASC 740, our assessment considers whether there has been sufficient income in recent years and whether sufficient income is expected in future years in order to utilize the deferred tax asset. 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. 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. 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.

On August 16, 2022, the Inflation Reduction Act was enacted and signed into law. The Inflation Reduction Act is a budget reconciliation package that includes significant changes relating to tax, climate change, energy and health care. The income tax provision of the act includes, among other items, a corporate alternative minimum tax of 15.0%, an excise tax of 1.0% on corporate stock buybacks, energy-related tax credits and additional IRS funding. The Company does not expect the tax provisions of the Inflation Reduction Act to have a material impact to our Condensed Consolidated Financial Statements.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the nine months ended September 30, 2023 and 2022, we did not record any interest and penalties expense associated with uncertain tax positions, as we did not have any uncertain tax positions.

GOODWILL AND LONG-LIVED ASSETS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
GOODWILL AND LONG-LIVED ASSETS [Abstract]
Goodwill Impairment loss	$ 0	$ 0	$ 3,800	$ 0
Impairment of long-lived assets	0	0	400	0
Changes in carrying amount of goodwill [Abstract]
Gross Goodwill Balance	117,176	117,176	117,176	117,176	$ 117,176	$ 117,176
Accumulated Impairment Losses	(106,434)	(102,640)	(106,434)	(102,640)	(102,640)	(102,640)
Net Goodwill Balance	$ 10,742	$ 14,536	10,742	14,536	$ 14,536	$ 14,536
Adjustments			$ (3,794)	$ 0

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Other comprehensive loss
Employee pension plan adjustments, taxes	$ 0	$ 0	$ 0	$ 0

REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2023

REVENUE RECOGNITION [Abstract]

REVENUE RECOGNITION

3.	REVENUE RECOGNITION

Substantially all of our revenues are considered to be revenues from our contracts with students. The related accounts receivable balances are recorded in our Condensed Consolidated Balance Sheets as student accounts receivable. We do not have significant revenue recognized from performance obligations that were satisfied in prior periods, and we do not have any transaction price allocated to unsatisfied performance obligations other than in our unearned tuition. We record revenue for students who withdraw from our schools only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Unearned tuition represents contract liabilities primarily related to our tuition revenue. 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 ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” We have assessed the costs incurred to obtain a contract with a student and determined them to be immaterial.

Unearned tuition in the amount of $21.8 million and $24.2 million is recorded as current liabilities in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively. The change in this contract liability balance during the nine-month period ended September 30, 2023 is the result of payments received in advance of satisfying performance obligations, offset by revenue recognized during that period. Revenue recognized for the nine-month period ended September 30, 2023 that was included in the contract liability balance at the beginning of the year was $23.3 million.

The following table depicts the timing of revenue recognition:

	Three months ended September 30, 2023						Nine months ended September 30, 2023
	Campus Operations		Transitional		Consolidated		Campus Operations		Transitional		Consolidated
Timing of Revenue Recognition
Services transferred at a point in time	$	7,489	$	5	$	7,494	$	18,084	$	17	$	18,101
Services transferred over time		92,038		86		92,124		256,009		1,438		257,447
Total revenues	$	99,527	$	91	$	99,618	$	274,093	$	1,455	$	275,548

	Three months ended September 30, 2022						Nine months ended September 30, 2022
	Campus Operations		Transitional		Consolidated		Campus Operations		Transitional		Consolidated
Timing of Revenue Recognition
Services transferred at a point in time	$	7,627	$	83	$	7,710	$	17,225	$	249	$	17,474
Services transferred over time		82,458		1,645		84,103		233,991		5,045		239,036
Total revenues	$	90,085	$	1,728	$	91,813	$	251,216	$	5,294	$	256,510

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-9

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-10

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 15
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-15

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-12

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-13

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
-Publisher FASB
-URI https://asc.fasb.org//606/tableOfContent

+ Details

GOODWILL AND LONG-LIVED ASSETS

9 Months Ended

Sep. 30, 2023

GOODWILL AND LONG-LIVED ASSETS [Abstract]

GOODWILL AND LONG-LIVED ASSETS

5.	GOODWILL AND LONG-LIVED ASSETS

The Company reviews the carrying value of its long-lived assets and identifiable intangibles annually, or more frequently if necessary for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. If the Company determines that an asset’s carrying value is impaired, it will record a write-down of the carrying value of the asset and charge the impairment as an operating expense in the period in which the determination is made. For other long-lived assets, including ROU lease assets, the Company evaluates assets for recoverability when there is an indication of potential impairment. If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fair value of the asset group is determined and the carrying value of the asset group is written down to fair value.

When we perform the quantitative impairment test for long-lived assets, we examine estimated future cash flows using Level 3 inputs. These cash flows are evaluated by using weighted probability techniques as well as comparisons of past performance against projections. Assets may also be evaluated by identifying independent market values.

For the three months ended September 30, 2023 and 2022, there were no impairments of goodwill or long-lived assets. During the nine months ended September 30, 2023, the Company impaired $3.8 million of goodwill and an additional $0.4 million of long-lived assets relating to the sale of the Company’s Nashville, Tennessee property, which occurred on June 8, 2023 (see Part I, Item 1. “Notes to Condensed Consolidated Financial Statements”, Note 13 - Property Purchase and Sale Agreements). The result of the sale created a change in the trajectory of the fair value of the Nashville, Tennessee operations and consequently triggered the impairments. For the nine months ended September 30, 2022, there were no impairments of goodwill or long-lived assets.

The carrying amount of goodwill at September 30, 2023 and 2022 is as follows:

	Gross Goodwill Balance		Accumulated Impairment Losses			Net Goodwill Balance
Balance as of January 1, 2023	$	117,176	$	(102,640	)	$	14,536
Adjustments		-		(3,794	)		(3,794	)
Balance as of September 30, 2023	$	117,176	$	(106,434	)	$	10,742

	Gross Goodwill Balance		Accumulated Impairment Losses			Net Goodwill Balance
Balance as of January 1, 2022	$	117,176	$	(102,640	)	$	14,536
Adjustments		-		-			-
Balance as of September 30, 2022	$	117,176	$	(102,640	)	$	14,536

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
CURRENT ASSETS:
Accounts receivable, allowance for credit losses	$ 34,677	$ 28,560
PROPERTY, EQUIPMENT AND FACILITIES - accumulated depreciation and amortization	139,697	146,367
OTHER ASSETS:
Noncurrent receivables, allowance for credit losses	$ 17,274	$ 6,810
STOCKHOLDERS' EQUITY:
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	31,359,110	31,147,925
Common stock, shares outstanding (in shares)	31,359,110	31,147,925

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2023

FAIR VALUE [Abstract]

Fair Value of Financial Instruments Measured on Recurring Basis

The Company measures the fair value of money market funds using Level 1 inputs. As of September 30, 2023, the Company has two treasury bills, one with a maturity date of three months or less, which is classified as a cash equivalent, and the other with a maturity date of greater than three months, which is classified as a short-term investment. The treasury bills are valued using Level 1 inputs. Pricing sources may include industry standard data providers, security master files from large financial institutions and other third-party sources used to determine a daily market value. The following charts reflect the fair market value of cash equivalents and short-term investments as of September 30, 2023 and December 31, 2022, respectively.

	September 30, 2023
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)		Total
Cash equivalents:
Money market fund	$	1,883	$	1,883	$	-	$	-	$	1,883
Treasury bill		5,092		5,092		-		-		5,092

Short-term investments:
Treasury bill		24,344		24,679		-		-		24,679
Total cash equivalents and short-term investments	$	31,319	$	31,654	$	-	$	-	$	31,654

	December 31, 2022
	Carrying		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)		Total
Cash equivalents:
Money market fund	$	18,160	$	18,160	$	-	$	-	$	18,160
Treasury bill		10,383		10,383		-		-		10,383

Short-term investments:
Treasury bill		14,758		14,758		-		-		14,758
Total cash equivalents and short-term investments	$	43,301	$	43,301	$	-	$	-	$	43,301

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION, Basis of Presentation (Details) $ in Millions	12 Months Ended
	Dec. 31, 2022 Segment	Sep. 30, 2023 USD ($)
Basis of Presentation [Abstract]
Number of reportable segments \| Segment	2
Estimated cost to close campus \| $		$ 2.0

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands

Common Stock [Member]