HERNDON, Va.--(BUSINESS WIRE)-- Strategic Education, Inc. (SEI) (NASDAQ: STRA) today announced financial results for the period ended September 30, 2019.

Karl McDonnell, Chief Executive Officer of SEI said, “Continued strong performance at both Strayer University and Capella University during the third quarter positions us well as we approach the end of 2019. Merger synergies are on track, and our significant liquidity position provides us with a solid foundation to drive growth as we remain focused on delivering academic success and long-term economic mobility for our students and alumni.”

STRATEGIC EDUCATION, INC. CONSOLIDATED RESULTS

[Note: Strategic Education, Inc.’s financial results for any periods ended prior to August 1, 2018 do not include the financial results of Capella Education Company and are therefore not directly comparable.]

Three Months Ended September 30

• Revenue increased 50.2% to $241.7 million compared to $160.9 million for the same period in 2018. Revenue in 2018 included a purchase accounting adjustment of $26.2 million to reflect Capella University contract liabilities at fair value. Adjusted revenue, which is a non-GAAP financial measure and excludes the aforementioned contract liabilities adjustment, increased 29.2% to $241.7 million compared to $187.2 million for the same period in 2018. For more details on non-GAAP financial measures, refer to the information in the Non-GAAP Financial Measures section of this press release.

• Income from operations was $20.0 million or 8.3% of revenue, compared to a loss from operations of $57.1 million for the same period in 2018. Income from operations in 2019 includes $15.4 million of amortization expense related to assets acquired in the merger with Capella Education Company and $1.5 million in costs associated with the merger with Capella Education Company. Loss from operations in 2018 included the aforementioned adjustment to contract liabilities, $10.3 million of amortization expense related to assets acquired in the merger with Capella Education Company, $29.6 million in costs associated with the merger with Capella Education Company, and a $13.1 million noncash charge resulting from the impairment of intangible assets associated with The New York Code + Design Academy. Adjusted income from operations was $36.9 million in 2019 compared to $22.1 million for the same period in 2018. The adjusted operating income margin was 15.3% compared to 11.8% for the same period in 2018.

• Net income, which includes the items described above, and also includes income from partnership interests and other investments, and certain discrete tax adjustments, was $16.7 million in 2019 compared to a net loss of $52.8 million for the same period in 2018. Adjusted net income was $28.4 million compared to $16.9 million for the same period in 2018.

• Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $46.4 million in 2019 compared to a loss of $38.7 million in 2018. Adjusted EBITDA was $50.9 million compared to $34.0 million for the same period in 2018.

• Diluted earnings per share was $0.75 compared to a loss per share of $2.97 for the same period in 2018. Adjusted diluted earnings per share increased to $1.28 from $0.92 for the same period in 2018. Diluted weighted average shares outstanding increased to 22,129,000 from 18,480,000 for the same period in 2018, due primarily to new shares issued to facilitate the merger with Capella Education Company.

Strayer University Segment Highlights

• For the third quarter, student enrollment at Strayer University increased 11% to 50,582 compared to 45,431 for the same period in 2018. New student enrollment for the period increased 4% and continuing student enrollment for the period increased 13%.

• Revenue increased 11.7% to $127.8 million in the third quarter of 2019 compared to $114.5 million for the same period in 2018, driven primarily by higher third quarter enrollment.

• Income from operations increased to $18.7 million in the third quarter of 2019 from $11.9 million for the same period in 2018. The operating income margin was 14.6%, compared to 10.4% for the same period in 2018.

• During the third quarter of 2019, Strayer University opened a new campus in Chattanooga, Tennessee, and is planning to open one additional campus, pending regulatory approval, in the fourth quarter of 2019.

Capella University Segment Highlights

• For the third quarter, student enrollment at Capella University increased 2% to 38,451 compared to 37,822 for the same period in 2018. New student enrollment for the period increased 7% and continuing student enrollment for the period increased approximately 1%.

• FlexPath continued to be a significant driver of new and total enrollment growth in the third quarter of 2019, and is 33% of Capella University’s bachelor’s and master’s degrees total enrollment.

• Revenue was $110.5 million in the third quarter of 2019 compared to revenue of $43.8 million, or adjusted revenue of $70.0 million, for the same period in 2018. The increase was driven by higher enrollment and higher revenue-per-learner.

• Income from operations was $18.6 million in the third quarter of 2019 compared to a loss from operations of $14.3 million, or adjusted income from operations of $11.9 million, for the same period in 2018. The adjusted operating income margin was 16.9% compared to 17.0% in 2018.

• The Company is planning to open the second Capella University Campus Center, pending regulatory approval, in Orlando, Florida in the fourth quarter of 2019.

Non-Degree Programs Segment Highlights

• For the third quarter, revenue increased to $3.4 million from $2.7 million for the same period in 2018.

• Loss from operations was $0.4 million in the third quarter of 2019 compared to a loss from operations of $1.7 million in the same period in 2018.

BALANCE SHEET AND CASH FLOW

At September 30, 2019, Strategic Education, Inc. had cash, cash equivalents, and marketable securities of $457.1 million, and no debt. For the first nine months of 2019, cash provided by operations was $141.4 million compared to cash used in operations of $14.6 million for the same period in 2018. Capital expenditures for the first nine months of 2019 were $27.8 million compared to $16.0 million for the same period in 2018. Capital expenditures for 2019 are expected to be between $40 million and $45 million.

For the third quarter of 2019, consolidated bad debt expense as a percentage of revenue was 5.0%, compared to 6.1%, or 5.3% of adjusted revenue, for the same period in 2018.

COMMON STOCK CASH DIVIDEND

SEI announced today that its Board of Directors has increased its regular annual dividend by 20% to $2.40 per share, and also declared a regular, quarterly cash dividend of $0.60 per share of common stock. This dividend will be paid on December 9, 2019 to shareholders of record as of November 25, 2019.

STRATEGIC EDUCATION, INC. INVESTOR AND ANALYST DAY

SEI is holding its first Investor and Analyst Day today, Thursday, November 7, 2019, in Washington, D.C. beginning at 8:00 a.m. ET. The Investor and Analyst Day presentation will be available via webcast. To access the live webcast of the Investor and Analyst Day presentation, please go to www.strategiceducation.com in the Investor Relations section 15 minutes prior to the start time to register. An earnings release presentation will also be posted to www.strategiceducation.com in the Investor Relations section prior to the start time of the webcast. Following the webcast, the webcast and presentation will be archived and available at www.strategiceducation.com in the Investor Relations section.

About SEI

Strategic Education, Inc. (NASDAQ: STRA) (www.strategiceducation.com) is dedicated to enabling economic mobility with education. We serve working adult students through a range of educational opportunities that include: Strayer University and Capella University (separate institutions that are each regionally accredited), which collectively offer flexible and affordable associate, bachelor’s, master’s, and doctoral programs; a Top-25 Princeton Review-ranked online MBA program through the Jack Welch Management Institute at Strayer University; self-paced courses for college credit through Sophia; customized degrees for corporations through Degrees@Work; and non-degree web and mobile application development courses through DevMountain, Generation Code, Hackbright Academy, and The New York Code + Design Academy. These programs help our students prepare for success in today’s jobs and find a path to bettering their lives.

Forward-Looking Statements

This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “expect,” “estimate,” “assume,” “believe,” “anticipate,” “may,” “will,” “forecast,” “outlook,” “plan,” “project,” “potential” and other similar words, and include all statements that are not historical facts, including with respect to, among other things, the future financial performance of SEI; SEI’s plans, strategies and prospects; and future events and expectations. The statements are based on SEI’s current expectations and are subject to a number of assumptions, uncertainties and risks, including but not limited to:

• SEI’s continued compliance with Title IV of the Higher Education Act, and the regulations thereunder, as well as regional accreditation standards and state regulatory requirements;
• rulemaking by the Department of Education and increased focus by the U.S. Congress on for-profit education institutions;
• the pace of growth of student enrollment;
• competitive factors;
• risks associated with the opening of new campuses;
• risks associated with the offering of new educational programs and adapting to other changes;
• risks associated with the acquisition of existing educational institutions;
• risks relating to the timing of regulatory approvals;
• SEI’s ability to implement its growth strategy;
• the risk that the benefits of the merger with Capella Education Company, including expected synergies, may not be fully realized or may take longer to realize than expected;
• the risk that the combined company may experience difficulty integrating employees or operations;
• risks associated with the ability of SEI’s students to finance their education in a timely manner;
• general economic and market conditions; and
• additional factors described in SEI’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Many of these risks, uncertainties and assumptions are beyond SEI’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, these forward-looking statements speak only as of the information currently available to SEI on the date they are made, and SEI undertakes no obligation to update or revise forward-looking statements, except as required by law. Actual results may differ materially from those projected in the forward-looking statements.

STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
		For the three months ended September 30,								For the nine months ended September 30,
		2018				2019				2018				2019
Revenues		$	160,945			$	241,747			$	392,082			$	733,365
Costs and expenses:
Instructional and support costs		103,079				132,527				240,830				397,281
General and administration		61,976				72,303				125,494				204,816
Amortization of intangible assets		10,278				15,417				10,278				46,251
Merger and integration costs		29,620				1,500				37,791				11,698
Impairment of intangible assets		13,119				—				19,304				—
Total costs and expenses		218,072				221,747				433,697				660,046
Income (loss) from operations		(57,127		)		20,000				(41,615		)		73,319
Other income		1,110				3,243				1,846				10,695
Income (loss) before income taxes		(56,017		)		23,243				(39,769		)		84,014
Provision (benefit) for income taxes		(3,236		)		6,551				(1,643		)		31,413
Net income (loss)		$	(52,781	)		$	16,692			$	(38,126	)		$	52,601
Earnings (loss) per share:
Basic		$	(2.97	)		$	0.77			$	(2.90	)		$	2.42
Diluted		$	(2.97	)		$	0.75			$	(2.90	)		$	2.38
Weighted average shares outstanding:
Basic		17,799				21,806				13,141				21,694
Diluted		17,799				22,129				13,141				22,096
Cash dividend declared per share		$	0.50			$	0.50			$	1.00			$	1.50

STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
		December 31, 2018				September 30, 2019
ASSETS
Current assets:
Cash and cash equivalents		$	311,732			$	397,094
Marketable securities		37,121				33,455
Tuition receivable, net		55,694				50,964
Income taxes receivable		—				6,970
Other current assets		15,814				17,130
Total current assets		420,361				505,613
Property and equipment, net		122,677				116,489
Right-of-use lease assets		—				93,208
Marketable securities, non-current		37,678				26,532
Intangible assets, net		328,344				286,844
Goodwill		732,540				732,075
Other assets		19,429				20,435
Total assets		$	1,661,029			$	1,781,196
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	85,979			$	86,092
Income taxes payable		419				—
Contract liabilities		38,733				45,571
Lease liabilities		—				26,167
Total current liabilities		125,131				157,830
Deferred income tax liabilities		59,358				57,016
Lease liabilities, non-current		—				83,067
Other long-term liabilities		51,316				38,624
Total liabilities		235,805				336,537
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 32,000,000 shares authorized; 21,743,498 and 21,964,505 shares issued and outstanding at December 31, 2018 and September 30, 2019, respectively		217				220
Additional paid-in capital		1,306,653				1,306,353
Accumulated other comprehensive income		32				447
Retained earnings		118,322				137,639
Total stockholders’ equity		1,425,224				1,444,659
Total liabilities and stockholders’ equity		$	1,661,029			$	1,781,196

STRATEGIC EDUCATION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		For the nine months ended September 30,
		2018				2019
Cash flows from operating activities:
Net income (loss)		$	(38,126	)		$	52,601
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of deferred financing costs		209				250
Amortization of investment discount/premium		132				286
Depreciation and amortization		29,107				78,862
Deferred income taxes		(4,443		)		971
Stock-based compensation		11,781				9,075
Impairment of intangible assets		19,304				—
Changes in assets and liabilities:
Tuition receivable, net		8,227				2,258
Other current assets		2,223				(921		)
Other assets		(581		)		(727		)
Accounts payable and accrued expenses		(8,949		)		(2,022		)
Income taxes payable and income taxes receivable		(7,868		)		(7,125		)
Contract liabilities		(21,946		)		10,311
Other long-term liabilities		(3,717		)		(2,412		)
Net cash provided by (used in) operating activities		(14,647		)		141,407
Cash flows from investing activities:
Net cash acquired in acquisition		168,387				—
Purchases of property and equipment		(16,028		)		(27,769		)
Purchases of marketable securities		(11,346		)		(17,769		)
Maturities of marketable securities		5,842				32,860
Other investments		(167		)		(878		)
Net cash provided by (used in) investing activities		146,688				(13,556		)
Cash flows from financing activities:
Common dividends paid		(16,802		)		(33,297		)
Net payments for stock awards		6,372				(9,195		)
Payment of deferred financing costs		(1,162		)		—
Net cash used in financing activities		(11,592		)		(42,492		)
Net increase in cash, cash equivalents, and restricted cash		120,449				85,359
Cash, cash equivalents, and restricted cash — beginning of period		156,448				312,237
Cash, cash equivalents, and restricted cash — end of period		$	276,897			$	397,596
Noncash transactions:
Purchases of property and equipment included in accounts payable		$	2,975			$	1,821

STRATEGIC EDUCATION, INC.
UNAUDITED SEGMENT REPORTING
(in thousands)
		For the three months ended September 30,								For the nine months ended September 30,
		2018				2019				2018				2019
Revenues:
Strayer University		$	114,471			$	127,837			$	343,644			$	384,806
Capella University		43,792				110,549				43,792				337,418
Non-Degree Programs		2,682				3,361				4,646				11,141
Consolidated revenues		$	160,945			$	241,747			$	392,082			$	733,365
Income (loss) from operations:
Strayer University		$	11,904			$	18,689			$	44,215			$	68,268
Capella University		(14,326		)		18,643				(14,326		)		63,918
Non-Degree Programs		(1,688		)		(415		)		(4,131		)		(918		)
Amortization of intangible assets		(10,278		)		(15,417		)		(10,278		)		(46,251		)
Merger and integration costs		(29,620		)		(1,500		)		(37,791		)		(11,698		)
Impairment of intangible assets		(13,119		)		—				(19,304		)		—
Consolidated income (loss) from operations		$	(57,127	)		$	20,000			$	(41,615	)		$	73,319

Non-GAAP Financial Measures

In our press release and schedules, we report certain financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below, and the press release schedules that follow reconcile the most directly comparable GAAP measure to each non-GAAP measure that we reference. Although management evaluates and presents these non-GAAP measures for the reasons described below, please be aware that these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for revenue, income from operations, operating margin, net income, earnings per share or any other comparable financial measure prescribed by GAAP. In addition, we may calculate and/or present these non-GAAP financial measures differently than measures with the same or similar names that other companies report, and as a result, the non-GAAP measures we report may not be comparable to those reported by others.

Management uses certain non-GAAP measures to evaluate financial performance because those non-GAAP measures allow for period-over-period comparisons of the Company’s ongoing operations before the impact of certain items described below. These measures are Adjusted Revenue, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Net Income, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), Adjusted EBITDA and Adjusted Diluted Earnings Per Share (EPS). We define Adjusted Revenue, Adjusted Income from Operations, Adjusted Operating Margin, Adjusted Net Income, and Adjusted Diluted EPS to exclude (1) a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company’s merger with Capella Education Company, (2) amortization and depreciation expense related to intangible assets and software assets associated with the Company’s merger with Capella Education Company, (3) transaction and integration costs associated with the Company’s merger with Capella Education Company, (4) goodwill and intangible asset impairment charges related to the Company’s acquisition of the New York Code and Design Academy, (5) income recognized from the Company’s investments in partnership interests and other investments, and (6) discrete tax adjustments utilizing an adjusted effective income tax rate of 27.1% and 28.0% for 2018 and 2019, respectively. We define EBITDA as net income before the provision for income taxes, other income, depreciation and amortization, and from this amount in arriving at Adjusted EBITDA we also exclude the amounts in (1), (3) and (4) above, stock-based compensation expense, and adjustments to the value of purchase consideration related to the Company’s acquisition of the New York Code and Design Academy. These non-GAAP measures are reconciled to the most directly comparable GAAP measures in the sections that follow. Non-GAAP measures should not be viewed as substitutes for GAAP measures.

STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED INCOME FROM OPERATIONS, ADJUSTED NET INCOME, AND ADJUSTED EPS
(in thousands, except per share data)
					For the three months ended September 30, 2018
					Non-GAAP Adjustments
		As Reported (GAAP)			Contract liability adjustment (1)			Amortization of intangible assets(2)			Merger and integration costs(3)			Impairment of intangible assets(4)			Income from other investments (5)			Tax adjustments (6)			As Adjusted (Non- GAAP)
Revenues		$	160,945		$	26,214		$	—		$	—		$	—		$	—		$	—		$	187,159
Costs and expenses:
Instructional and support costs			103,079		—			—			—			—				—		—				103,079
General and administration			61,976		—			—			—			—				—		—				61,976
Amortization of intangible assets			10,278		—				(10,278)		—			—				—		—			—
Merger and integration costs			29,620		—			—				(29,620)		—				—		—			—
Impairment of intangible assets			13,119		—			—			—				(13,119)			—		—			—
Total costs and expenses			218,072		—				(10,278)			(29,620)			(13,119)			—		—				165,055
Income (loss) from operations			(57,127)			26,214			10,278			29,620			13,119			—		—				22,104
Operating margin			(35.5%)																					11.8%
Other income, net			1,110		—						—			—				—		—				1,110
Income (loss) before income taxes			(56,017)			26,214			10,278			29,620			13,119			—		—				23,214
Provision (benefit) for income taxes			(3,236)		—			—			—			—				—			9,527			6,291
Net income (loss)		$	(52,781)		$	26,214		$	10,278		$	29,620		$	13,119		$	—		$	(9,527)		$	16,923
Earnings (loss) per share:
Basic		$	(2.97)																				$	0.95
Diluted		$	(2.97)																				$	0.92
Weighted average shares outstanding:
Basic			17,799																					17,799
Diluted			17,799																					18,480

					For the three months ended September 30, 2019
					Non-GAAP Adjustments
		As Reported (GAAP)			Contract liability adjustment (1)			Amortization of intangible assets(2)			Merger and integration costs(3)			Impairment of intangible assets(4)			Income from other investments (5)			Tax adjustments (6)			As Adjusted (Non- GAAP)
Revenues		$	241,747		$	—		$	—		$	—		$	—		$	—		$	—		$	241,747
Costs and expenses:
Instructional and support costs			132,527			—		—			—				—		—			—				132,527
General and administration			72,303			—		—			—				—		—			—				72,303
Amortization of intangible assets			15,417			—			(15,417)		—				—		—			—			—
Merger and integration costs			1,500			—		—				(1,500)			—		—			—			—
Impairment of intangible assets		—				—		—			—				—		—			—			—
Total costs and expenses			221,747			—			(15,417)			(1,500)			—		—			—				204,830
Income from operations			20,000			—			15,417			1,500			—		—			—				36,917
Operating margin			8.3%																					15.3%
Other income, net			3,243			—		—			—				—			(706)		—				2,537
Income before income taxes			23,243			—			15,417			1,500			—			(706)		—				39,454
Provision for income taxes			6,551			—		—			—				—		—				4,496			11,047
Net income		$	16,692		$	—		$	15,417		$	1,500		$	—		$	(706)		$	(4,496)		$	28,407
Earnings per share:
Basic		$	0.77																				$	1.30
Diluted		$	0.75																				$	1.28
Weighted average shares outstanding:
Basic			21,806																					21,806
Diluted			22,129																					22,129

(1)		Reflects a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company's merger with Capella Education Company.
(2)		Reflects amortization and depreciation expense of intangible assets and software assets acquired through the Company’s merger with Capella Education Company.
(3)		Reflects transaction and integration charges associated with the Company's merger with Capella Education Company.
(4)		Reflects impairment of goodwill and intangible assets related to the Company’s acquisition of the New York Code and Design Academy.
(5)		Reflects income recognized from the Company's investments in partnership interests and other investments.
(6)		Reflects tax impacts of the adjustments described above and discrete tax adjustments related to stock-based compensation and other adjustments, utilizing adjusted effective tax rates of 27.1% and 28.0% for the three months ended September 30, 2018 and 2019, respectively.

STRATEGIC EDUCATION, INC.
UNAUDITED NON-GAAP SEGMENT REPORTING
(in thousands)
		For the Three Months Ended						For the Nine Months Ended
		September 30,						September 30,
		2018			2019			2018			2019
Revenues:
Strayer University		$	114,471		$	127,837		$	343,644		$	384,806
Capella University			43,792			110,549			43,792			337,418
Non-Degree Programs			2,682			3,361			4,646			11,141
Consolidated revenues			160,945			241,747			392,082			733,365
Adjustments to consolidated revenues:
Strayer University			—			—			—			—
Capella University			26,214			—			26,214			—
Non-Degree Programs			—			—			—			—
Total adjustments to consolidated revenues			26,214			—			26,214			—
Adjusted revenues by segment:
Strayer University			114,471			127,837			343,644			384,806
Capella University			70,006			110,549			70,006			337,418
Non-Degree Programs			2,682			3,361			4,646			11,141
Adjusted consolidated revenues		$	187,159		$	241,747		$	418,296		$	733,365
Income (loss) from operations:
Strayer University		$	11,904		$	18,689		$	44,215		$	68,268
Capella University			(14,326)			18,643			(14,326)			63,918
Non-Degree Programs			(1,688)			(415)			(4,131)			(918)
Amortization of intangible assets			(10,278)			(15,417)			(10,278)			(46,251)
Merger and integration costs			(29,620)			(1,500)			(37,791)			(11,698)
Impairment of intangible assets			(13,119)			—			(19,304)			—
Consolidated income (loss) from operations			(57,127)			20,000			(41,615)			73,319
Adjustments to consolidated income (loss) from operations:
Contract liabilities adjustment			26,214			—			26,214			—
Amortization of intangible assets			10,278			15,417			10,278			46,251
Merger and integration costs			29,620			1,500			37,791			11,698
Impairment of intangible assets			13,119			—			19,304			—
Total adjustments to consolidated income (loss) from operations			79,231			16,917			93,587			57,949
Adjusted income (loss) from operations by segment:
Strayer University			11,904			18,689			44,215			68,268
Capella University			11,888			18,643			11,888			63,918
Non-Degree Programs			(1,688)			(415)			(4,131)			(918)
Total adjusted income (loss) from operations		$	22,104		$	36,917		$	51,972		$	131,268

STRATEGIC EDUCATION, INC.
UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA
(in thousands)
		For the three months ended September 30,
		2018				2019
Net income		$	(52,781)			$	16,692
Provision (benefit) for income taxes		(3,236)				6,551
Other income		(1,110)				(3,243)
Depreciation and amortization		18,457				26,365
EBITDA (1)		(38,670)				46,365
Stock-based compensation		3,572				3,020
Merger and integration costs (2)		29,620				1,500
Impairment of intangible assets and fair value adjustments (3)		13,246				—
Contract liability adjustment (4)		26,214				—
Adjusted EBITDA (1)		$	33,982			$	50,885

(1)		Denotes non-GAAP financial measures. Please see the information in the Non-GAAP Financial Measures section of this press release for more detail regarding these adjustments and management’s reasons for providing this information.
(2)		Reflects transaction and integration charges associated with the Company's merger with Capella Education Company. Includes $0.5 million of stock-based compensation benefit related to forfeitures of stock-based awards for the three months ended September 30, 2019.
(3)		Reflects adjustments to the value of purchase consideration and goodwill and intangible asset impairment charges related to the Company’s acquisition of The New York Code and Design Academy, Inc. for the three months ended September 30, 2018.
(4)		Reflects a purchase accounting adjustment to record Capella University contract liabilities at fair value as a result of the Company's merger with Capella Education Company.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191107005039/en/

Terese Wilke

Manager, Investor Relations

Strategic Education, Inc.

(612) 977-6331

[email protected]

Source: Strategic Education, Inc.

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