CHANDLER, Ariz., Aug. 1, 2022
/PRNewswire/ -- Zovio Inc (NASDAQ: ZVO), an education
technology services company, today announced its results for the
three and six months ended June 30, 2022.
Transaction Completed with The University of Arizona Global Campus
On July 31, 2022, the Company
entered into and simultaneously closed a new asset purchase
agreement with The University of
Arizona Global Campus ("UAGC"), pursuant to which Zovio sold
all of the remaining assets related to the UAGC Services
Agreements. In connection with the new asset purchase agreement,
the parties terminated the previous agreements, and UAGC assumed
all obligations under Zovio's business contracts associated with
the UAGC Services Businesses, as well as the lease for the
facilities located in Chandler,
Arizona, and has released Zovio from all remaining
obligations under the previous agreements, including from all
indemnification obligations under the Original Asset Purchase
Agreement and all minimum payment guarantees under the UAGC
Services Agreements. For further information, please refer to the
transaction announcement filed earlier today.
Following the transaction, Zovio will continue to support the
continued growth and expansion of its Fullstack Academy subsidiary
and simultaneously explore strategic alternatives for that
business.
Balance Sheet and Cash Flow
As of June 30, 2022, the Company had combined cash and cash
equivalents of $20.8 million,
compared with combined cash and cash equivalents of $28.3 million as of December 31, 2021.
The Company used $57.2 million of
cash in operating activities during the six months ended
June 30, 2022 and used $16.3
million of cash used in operating activities during the six
months ended June 30, 2021. The Company also has projected
future negative cash flows from operations.
Financial Results for the Three Months Ended June 30,
2022
Revenue and other revenue for the three months ended
June 30, 2022 was $51.4 million,
compared with revenue and other revenue of $69.2 million for the three months ended
June 30, 2021.
Operating loss for the three months ended June 30, 2022 was
$0.8 million, compared with operating
loss of $4.5 million for the three
months ended June 30, 2021.
Net loss for the three months ended June 30, 2022 was
$4.7 million, compared with net loss
of $4.0 million for the three months
ended June 30, 2021.
Diluted loss per share for the three months ended June 30,
2022 was $0.14, compared with diluted
loss per share of $0.12 for the three
months ended June 30, 2021.
The Company recognized income tax expense of approximately
$8 thousand for the three months
ended June 30, 2022, compared with income tax benefit of
$0.2 million for the three months
ended June 30, 2021.
Non-GAAP Financial Results for the Three Months Ended
June 30, 2022
Non-GAAP operating loss for the three months ended June 30,
2022 was $8.5 million, compared with
non-GAAP operating loss of $1.0
million for the three months ended June 30, 2021.
Non-GAAP operating loss for the three months ended June 30,
2022 excludes the net gain on sale transactions of $45.7 million, legal expense of $0.9 million, restructuring and impairment
expense of $35.9 million, acquisition
costs of $0.5 million, and other
non-GAAP costs of $0.8 million.
Non-GAAP operating loss for the three months ended June 30,
2021 excludes restructuring and impairment expense of $2.3 million, separation transaction costs of
$0.3 million, acquisition costs of
$0.5 million and non-GAAP stock
compensation of $0.4 million.
Non-GAAP net loss for the three months ended June 30, 2022
was $12.3 million, compared with
non-GAAP net loss of $0.8 million for
the three months ended June 30, 2021. Non-GAAP net loss for
the three months ended June 30, 2022 excludes the net gain on
sale transactions of $45.7 million,
legal expense of $0.9 million,
restructuring and impairment expense of $35.9 million, acquisition costs of $0.5 million, and other non-GAAP costs of
$0.8 million. Non-GAAP net loss for
the three months ended June 30, 2021 excludes restructuring
and impairment expense of $2.3
million, separation transaction costs of $0.3 million, acquisition costs of $0.5 million, non-GAAP stock compensation of
$0.4 million, and income tax benefit
of $0.3 million.
Non-GAAP diluted loss per share for the three months ended
June 30, 2022 was $0.36,
compared with non-GAAP diluted loss per share of $0.02 for the three months ended June 30,
2021.
Financial Results for the Six Months Ended June 30,
2022
Revenue and other revenue for the six months ended June 30,
2022 was $113.0 million, compared
with revenue and other revenue of $146.0
million for the six months ended June 30, 2021.
Operating loss for the six months ended June 30, 2022 was
$8.1 million, compared with operating
loss of $13.8 million for the six
months ended June 30, 2021.
Net loss for the six months ended June 30, 2022 was
$12.1 million, compared with net loss
of $13.5 million for the six months
ended June 30, 2021.
Diluted loss per share for the six months ended June 30,
2022 was $0.36, compared with diluted
loss per share of $0.41 for the six
months ended June 30, 2021.
The Company recognized income tax expense of $86 thousand for the six months ended
June 30, 2022, compared with an income tax benefit of
$0.1 million for the six months ended
June 30, 2021.
Non-GAAP Financial Results for the Six Months Ended
June 30, 2022
Non-GAAP operating loss for the six months ended June 30,
2022 was $12.8 million, compared with
non-GAAP operating loss of $4.1
million for the six months ended June 30, 2021.
Non-GAAP operating loss for the six months ended June 30, 2022
excludes the net gain on sale transactions of $45.7 million, legal expense of $0.9 million, restructuring and impairment
expense of $35.9 million, acquisition
costs of $1.0 million, non-GAAP stock
compensation of $0.2 million and
other non-GAAP costs, including severance costs of $3.0 million. Non-GAAP operating loss for the six
months ended June 30, 2021 excludes restructuring and
impairment expense of $2.3 million,
separation transaction costs of $1.1
million, acquisition costs of $1.3
million, non-GAAP stock compensation of $0.4 million and other non-GAAP costs, including
severance costs of $4.6 million.
Non-GAAP net loss for the six months ended June 30, 2022
was $16.8 million, compared with
non-GAAP net loss of $4.1 million for
the six months ended June 30, 2021. Non-GAAP net loss for the
six months ended June 30, 2022 excludes the net gain on sale
transactions of $45.7 million, legal
expense of $0.9 million,
restructuring and impairment expense of $35.9 million, acquisition costs of $1.0 million, non-GAAP stock compensation of
$0.2 million, and other non-GAAP
costs, including severance costs of $3.0
million. Non-GAAP net loss for the six months ended
June 30, 2021 excludes restructuring and impairment expense of
$2.3 million, separation transaction
costs of $1.1 million, acquisition
costs of $1.3 million, non-GAAP stock
compensation of $0.4 million, other
non-GAAP costs, including severance costs of $4.6 million and income tax benefit of
$0.3 million.
Non-GAAP diluted loss per share for the six months ended
June 30, 2022 was $0.50,
compared with non-GAAP diluted loss per share of $0.12 for the six months ended June 30,
2021.
About Non-GAAP Financial Measures
This press release contains non-GAAP financial measures for
non-GAAP operating loss, non-GAAP net loss, non-GAAP diluted loss
per share, EBITDA and Adjusted EBITDA. These non-GAAP measures
exclude the net gain on sale transactions, legal expense,
restructuring and impairment expense, acquisition costs, separation
transaction costs, certain non-GAAP stock compensation, other
non-GAAP costs including severance, as well as certain income tax
adjustments, as applicable. These non-GAAP financial measures are
not prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") and are not based on a comprehensive set of
accounting rules. Management believes non-GAAP financial measures
are useful in providing investors with an understanding of how
specific line items in the consolidated statements of income (loss)
are affected by items that may not be indicative of the operating
results of the Company's core business. To the extent that other
companies use similar methods in calculating and reporting non-GAAP
operating results, the Company believes provision of supplemental
non-GAAP financial information allows for a meaningful comparison
of the Company's performance against the performance of other
companies. The Company further believes that these non-GAAP
financial measures provide useful information regarding its ongoing
operating activities and business trends related to its results of
operations, as well as a meaningful comparison with historical
financial results. The Company's management and board of directors
utilize these non-GAAP financial measures, together with the
Company's financial statements prepared in accordance with GAAP, in
developing operating budgets and evaluating the Company's
performance. These non-GAAP financial measures are intended to
supplement GAAP financial information, and should not be considered
as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. In addition, these
non-GAAP financial measures may be different from non-GAAP
financial measures used by other companies. Refer to the
accompanying tables for a detailed reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures.
Earnings Conference Call and Webcast
Zovio Inc will host a conference call at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) today to discuss its
latest financial results and recent highlights. The dial-in number
for callers in the United States
is (888) 330-3204, and the dial-in number for other callers is
(646) 960-0844. The access code for all callers is 8039474. A live
broadcast of the call will also be available on the Company's
website at http://ir.zovio.com.
About Zovio Inc
Zovio Inc (NASDAQ: ZVO) is an education technology services
company that partners with higher education institutions and
employers to deliver innovative, personalized solutions to help
learners and leaders achieve their aspirations. The Zovio network,
including Fullstack Academy, leverages its core strengths to solve
priority market needs through education technology services. Using
proprietary advanced data analytics, Zovio identifies the most
meaningful ways to enhance the learner experience and deliver
strong outcomes for higher education institutions, employers, and
learners. Zovio's purpose is to help everyone be in a class of
their own. For more information, visit www.zovio.com.
Forward-Looking Statements
This news release may contain forward-looking statements which
are not statements of historical fact and are subject to the Safe
Harbor provisions created by the Private Securities Litigation
Reform Act of 1995, including, without limitation, statements
regarding management's intentions, hopes, beliefs or expectations,
and statements regarding the Company's outlook for the remainder of
2022 and beyond. These forward-looking statements are based on
current information and expectations and are subject to various
risks and uncertainties. The Company's actual performance or
results may differ materially from those expressed in or suggested
by such statements due to various factors, including, without
limitation: our ability to successfully transition to being an
education technology services company and the reliability of
certain financial and accounting measures we utilize.
Additional information on factors that could cause actual plans
implemented and actual results achieved to differ materially from
those set forth in the forward-looking statements is included from
time to time in the Company's filings with the Securities and
Exchange Commission ("SEC"), including, but not limited to, the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 filed with the SEC
on April 15, 2022, the Company's
quarterly reports on Form 10-Q and the Company's current reports on
Form 8-K which are available at www.zovio.com. You should not place
undue reliance on any forward-looking statements. Forward-looking
statements are made on the basis of management's good faith
beliefs, expectations and assumptions regarding future events based
on information available at the time such statements are made.
Forward-looking statements speak only as of the date they are made.
The Company assumes no obligation to update or revise any
forward-looking statements to reflect actual results or any changes
in assumptions, expectations or other factors affecting such
forward-looking statements, except to the extent required by
applicable securities laws.
|
ZOVIO INC
|
|
Condensed
Consolidated Statements of Income (Loss)
|
|
(Unaudited)
|
|
(In thousands,
except per share amounts)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
University Partners
segment revenue
|
$
42,784
|
|
$
62,254
|
|
$
95,117
|
|
$
131,933
|
|
Zovio Growth segment
revenue
|
8,596
|
|
6,932
|
|
17,896
|
|
14,112
|
|
Revenue and other
revenue
|
$
51,380
|
|
$
69,186
|
|
$
113,013
|
|
$
146,045
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Technology and
academic services
|
$
17,290
|
|
$
18,056
|
|
$
35,788
|
|
$
37,200
|
|
Counseling services
and support
|
17,705
|
|
23,173
|
|
39,036
|
|
48,498
|
|
Marketing and
communication
|
18,272
|
|
21,729
|
|
40,186
|
|
47,560
|
|
General and
administrative
|
7,836
|
|
8,376
|
|
14,958
|
|
24,272
|
|
Legal
expense
|
920
|
|
—
|
|
920
|
|
—
|
|
Restructuring and
impairment expense
|
35,887
|
|
2,341
|
|
35,887
|
|
2,341
|
|
Gain on transactions,
net
|
(45,689)
|
|
—
|
|
(45,689)
|
|
—
|
|
Total costs and
expenses
|
52,221
|
|
73,675
|
|
121,086
|
|
159,871
|
|
Operating
loss
|
(841)
|
|
(4,489)
|
|
(8,073)
|
|
(13,826)
|
|
Other income (expense),
net
|
(3,824)
|
|
232
|
|
(3,951)
|
|
159
|
|
Loss before income
taxes
|
(4,665)
|
|
(4,257)
|
|
(12,024)
|
|
(13,667)
|
|
Income tax expense
(benefit)
|
8
|
|
(224)
|
|
86
|
|
(141)
|
|
Net loss
|
$
(4,673)
|
|
$
(4,033)
|
|
$
(12,110)
|
|
$
(13,526)
|
|
|
|
|
|
|
|
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
(0.14)
|
|
$
(0.12)
|
|
$
(0.36)
|
|
$
(0.41)
|
|
Diluted
|
$
(0.14)
|
|
$
(0.12)
|
|
$
(0.36)
|
|
$
(0.41)
|
|
Weighted average number
of common shares outstanding used in computing loss per
share:
|
|
|
|
|
|
|
|
|
Basic
|
34,122
|
|
33,343
|
|
33,844
|
|
33,058
|
|
Diluted
|
34,122
|
|
33,343
|
|
33,844
|
|
33,058
|
|
ZOVIO INC
|
|
Condensed
Consolidated Balance Sheets
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
June 30,
2022
|
|
December
31,
2021
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
20,812
|
|
$
28,265
|
|
Restricted
cash
|
6,079
|
|
9,288
|
|
Investments
|
227
|
|
974
|
|
Accounts receivable,
net
|
4,951
|
|
9,631
|
|
Prepaid expenses and
other current assets
|
8,633
|
|
13,423
|
|
Total current
assets
|
40,702
|
|
61,581
|
|
Property and equipment,
net
|
1,100
|
|
26,382
|
|
Operating lease
assets
|
17,358
|
|
28,881
|
|
Goodwill and
intangibles, net
|
23,915
|
|
29,499
|
|
Other long-term
assets
|
2,358
|
|
2,691
|
|
Total assets
|
$
85,433
|
|
$
149,034
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
35,523
|
|
$
74,769
|
|
Deferred revenue and
student deposits
|
7,405
|
|
14,939
|
|
Total current
liabilities
|
42,928
|
|
89,708
|
|
Rent
liability
|
32,864
|
|
34,205
|
|
Other long-term
liabilities
|
3,036
|
|
5,115
|
|
Total
liabilities
|
78,828
|
|
129,028
|
|
Total stockholders'
equity
|
6,605
|
|
20,006
|
|
Total liabilities and
stockholders' equity
|
$
85,433
|
|
$
149,034
|
|
ZOVIO INC
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
Six Months Ended
June 30,
|
|
2022
|
|
2021
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net loss
|
$
(12,110)
|
|
$
(13,526)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Provision for bad
debts
|
257
|
|
911
|
|
Depreciation and
amortization
|
3,911
|
|
4,262
|
|
Stock-based
compensation
|
(1,182)
|
|
2,629
|
|
Noncash lease
expense
|
2,849
|
|
4,367
|
|
Net loss (gain) on
marketable securities
|
140
|
|
(144)
|
|
Loss on disposal or
impairment of fixed assets
|
35,887
|
|
61
|
|
Gain on transactions,
net
|
(45,689)
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
3,108
|
|
(1,628)
|
|
Prepaid expenses and
other current assets
|
(1,643)
|
|
(614)
|
|
Other long-term
assets
|
(1,611)
|
|
(1,568)
|
|
Accounts payable and
accrued liabilities
|
(38,771)
|
|
(9,198)
|
|
Deferred revenue and
student deposits
|
198
|
|
2,491
|
|
Operating lease
liabilities
|
(3,456)
|
|
(5,243)
|
|
Other
liabilities
|
925
|
|
940
|
|
Net cash
used in operating activities
|
(57,187)
|
|
(16,260)
|
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(24)
|
|
(733)
|
|
Purchases of
investments
|
(46)
|
|
(64)
|
|
Capitalized costs for
intangible assets
|
(495)
|
|
(333)
|
|
Net proceeds from sale
of assets
|
48,921
|
|
—
|
|
Sale of
investments
|
652
|
|
247
|
|
Net cash
provided by (used in) investing activities
|
49,008
|
|
(883)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from the
issuance of stock under employee stock purchase plan
|
35
|
|
76
|
|
Proceeds from long-term
borrowings
|
29,627
|
|
—
|
|
Tax withholdings on
issuance of stock awards
|
(144)
|
|
(1,166)
|
|
Repayments on long-term
borrowing
|
(32,001)
|
|
—
|
|
Net cash
used in financing activities
|
(2,483)
|
|
(1,090)
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
(10,662)
|
|
(18,233)
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
37,553
|
|
55,497
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$
26,891
|
|
$
37,264
|
|
ZOVIO INC
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
|
(Unaudited)
|
|
(In thousands,
except per share amounts)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Operating Loss
Reconciliation:
|
|
|
|
|
|
|
|
|
GAAP operating
loss
|
$
(841)
|
|
$
(4,489)
|
|
$
(8,073)
|
|
$
(13,826)
|
|
Gain on sale
transactions, net
|
(45,689)
|
|
—
|
|
(45,689)
|
|
—
|
|
Legal
expense
|
920
|
|
—
|
|
920
|
|
—
|
|
Restructuring and
impairment expense
|
35,887
|
|
2,341
|
|
35,887
|
|
2,341
|
|
Separation transaction
costs
|
—
|
|
285
|
|
—
|
|
1,062
|
|
Acquisition costs,
net
|
493
|
|
513
|
|
1,006
|
|
1,345
|
|
Non-GAAP stock
compensation
|
—
|
|
367
|
|
222
|
|
367
|
|
Other non-GAAP
costs
|
765
|
|
—
|
|
2,963
|
|
4,601
|
|
Non-GAAP operating
loss
|
$
(8,465)
|
|
$
(983)
|
|
$
(12,764)
|
|
$
(4,110)
|
|
|
|
|
|
|
|
|
|
Net Loss
Reconciliation:
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
(4,673)
|
|
$
(4,033)
|
|
$
(12,110)
|
|
$
(13,526)
|
|
Gain on sale
transactions, net
|
(45,689)
|
|
—
|
|
(45,689)
|
|
—
|
|
Legal
expense
|
920
|
|
—
|
|
920
|
|
—
|
|
Restructuring and
impairment expense
|
35,887
|
|
2,341
|
|
35,887
|
|
2,341
|
|
Separation transaction
costs
|
—
|
|
285
|
|
—
|
|
1,062
|
|
Acquisition costs,
net
|
493
|
|
513
|
|
1,006
|
|
1,345
|
|
Non-GAAP stock
compensation
|
—
|
|
367
|
|
222
|
|
367
|
|
Other non-GAAP
costs
|
765
|
|
—
|
|
2,963
|
|
4,601
|
|
Income tax impact,
non-GAAP
|
—
|
|
(265)
|
|
—
|
|
(275)
|
|
Non-GAAP net
loss
|
$
(12,297)
|
|
$
(792)
|
|
$
(16,801)
|
|
$
(4,085)
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per
Share Reconciliation:
|
|
|
|
|
|
|
|
|
GAAP diluted loss per
share
|
$
(0.14)
|
|
$
(0.12)
|
|
$
(0.36)
|
|
$
(0.41)
|
|
Gain on sale
transactions, net
|
(1.34)
|
|
—
|
|
(1.35)
|
|
—
|
|
Legal
expense
|
0.03
|
|
—
|
|
0.03
|
|
—
|
|
Restructuring and
impairment expense
|
1.05
|
|
0.07
|
|
1.06
|
|
0.07
|
|
Separation transaction
costs
|
—
|
|
0.01
|
|
—
|
|
0.03
|
|
Acquisition costs,
net
|
0.01
|
|
0.02
|
|
0.03
|
|
0.05
|
|
Non-GAAP stock
compensation
|
—
|
|
0.01
|
|
0.01
|
|
0.01
|
|
Other non-GAAP
costs
|
0.03
|
|
—
|
|
0.08
|
|
0.14
|
|
Income tax impact,
non-GAAP
|
—
|
|
(0.01)
|
|
—
|
|
(0.01)
|
|
Non-GAAP diluted loss
per share
|
$
(0.36)
|
|
$
(0.02)
|
|
$
(0.50)
|
|
$
(0.12)
|
|
ZOVIO INC
|
|
Reconciliation of
GAAP to Non-GAAP Financial Measures (continued)
|
|
(Unaudited)
|
|
(In
thousands)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Adjusted EBITDA
Reconciliation:
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
(4,673)
|
|
$
(4,033)
|
|
$
(12,110)
|
|
$
(13,526)
|
|
Interest expense
(income), net
|
3,824
|
|
(232)
|
|
3,951
|
|
(159)
|
|
Income tax
expense
|
8
|
|
(224)
|
|
86
|
|
(141)
|
|
Depreciation and
amortization
|
1,878
|
|
1,977
|
|
3,911
|
|
4,262
|
|
EBITDA
|
1,037
|
|
(2,512)
|
|
(4,162)
|
|
(9,564)
|
|
Gain on sale
transactions, net
|
(45,689)
|
|
—
|
|
(45,689)
|
|
—
|
|
Legal settlement
expense
|
920
|
|
—
|
|
920
|
|
—
|
|
Restructuring and
impairment expense
|
35,887
|
|
2,341
|
|
35,887
|
|
2,341
|
|
Separation transaction
costs
|
—
|
|
285
|
|
—
|
|
1,062
|
|
Non-GAAP stock
compensation
|
—
|
|
367
|
|
222
|
|
367
|
|
Other non-GAAP
costs
|
765
|
|
—
|
|
2,963
|
|
4,601
|
|
Adjusted
EBITDA
|
$
(7,080)
|
|
$
481
|
|
$
(9,859)
|
|
$
(1,193)
|
Contact: Vickie Schray
vickie.schray@zovio.com
866 475 0317 x10003
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SOURCE Zovio
