10-K: Perdoceo Education Reports Strong 2025 Growth Amid Regulatory Shifts

Perdoceo Education Corporation reported significant increases in revenue and operating income for fiscal year 2025, driven by student enrollment growth and the USAHS acquisition.

Summary

• Total student enrollments increased by 7.3% to 44,400 students as of December 31, 2025, compared to 41,380 in 2024.
• Revenue for 2025 increased by 24.2% ($164.8 million) to $846.1 million, primarily due to the USAHS acquisition.
• Operating income increased by 12.5% to $196.0 million in 2025, up from $174.3 million in 2024.
• Adjusted operating income was $237.6 million in 2025, compared to $188.9 million in 2024.
• Diluted EPS was $2.42 in 2025, up from $2.19 in 2024. Adjusted diluted EPS was $2.61 in 2025, up from $2.26 in 2024.
• CTU's student enrollments grew by 6.6%, AIUS by 11.2%, and USAHS by 2.6%.
• Bad debt expense decreased by 12.5% ($4.2 million) in 2025, driven by stronger student engagement and retention at CTU and AIUS.
• The company repurchased 4.1 million shares for approximately $120.8 million at an average price of $29.17 per share in 2025.
• A new $100.0 million share repurchase program was authorized on January 2, 2026, expiring June 30, 2027.
• USAHS was removed from Heightened Cash Monitoring 1 (HCM1) and its $20.5 million letter of credit requirement was lifted by the Department of Education on January 16, 2026.
• The 90-10 Rule rates for AIUS, CTU, and USAHS are in compliance for 2025, showing improvement from the prior year.
• The company's consolidated financial responsibility Composite Score was 3.0 for both 2024 and preliminary 2025, which is the highest possible score.
• The Reconciliation Act, signed July 4, 2025, introduces significant changes to federal student loan programs effective July 1, 2026, including the elimination of Grad PLUS loans for new borrowers and new borrowing limits.
• The Department of Education's 2022 borrower defense to repayment and closed school loan discharge regulations are delayed until July 1, 2035, by the Reconciliation Act.
• The AHEAD committee reached consensus on a revised Gainful Employment (GE) rule framework, eliminating the debt-to-earnings metric and aligning with the Reconciliation Act's earnings-premium standard.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to strong financial performance, significant enrollment growth, and favorable regulatory compliance outcomes, despite ongoing industry-wide regulatory uncertainties and potential future impacts from federal student aid changes.

Positives

• Total student enrollments increased by 7.3% to 44,400 students in 2025.
• Revenue increased by 24.2% ($164.8 million) to $846.1 million in 2025, significantly boosted by the USAHS acquisition.
• Operating income increased by 12.5% to $196.0 million, and adjusted operating income rose to $237.6 million.
• Diluted EPS increased to $2.42, with adjusted diluted EPS reaching $2.61.
• All three academic institutions (CTU, AIUS, USAHS) experienced student enrollment growth.
• Student retention and engagement trends remained strong, contributing to enrollment growth.
• Bad debt expense decreased by 12.5% ($4.2 million) due to improved student engagement and retention.
• USAHS was removed from Heightened Cash Monitoring 1 (HCM1) status and its $20.5 million letter of credit requirement was lifted by the Department of Education.
• All academic institutions are in compliance with the 90-10 Rule for 2025, with preliminary calculations showing improvement from the prior year.
• The company achieved the highest possible consolidated financial responsibility Composite Score of 3.0 for both 2024 and preliminary 2025.
• A new $100.0 million share repurchase program was authorized, indicating confidence in future cash flow and commitment to shareholder value.
• Strategic investments in technology, including artificial intelligence (AI) for student enrollment and academic life cycle, are enhancing student experiences and operational efficiency.

Negatives

• AIUS revenue decreased slightly by 0.4% ($0.9 million) in 2025, partly due to the impact on Trident University from a recent government shutdown.
• USAHS operating income margin is low at 2.0% for 2025, despite its significant revenue contribution.
• USAHS graduate students previously relied on Grad PLUS loans, which are being eliminated for new borrowers starting July 1, 2026, potentially impacting future enrollment for these programs.
• Depreciation and amortization expense increased significantly by 184.2% ($27.0 million) in 2025, primarily due to the USAHS acquisition.
• Educational services and facilities expense increased by 63.4% ($76.7 million) in 2025, largely due to a full year of USAHS expenses.
• General and administrative expense increased by 12.0% ($43.9 million) in 2025, also primarily due to USAHS acquisition and non-recurring personnel investments.
• The Department of Education's 2022 borrower defense to repayment (BDR) rules, though delayed, could increase the likelihood of loan forgiveness and financial incentives for students to apply, potentially increasing institutional burden.
• Cohort Default Rates (CDR) are anticipated to be higher starting with the 2024 cohort due to the expiration of the repayment on-ramp period and ongoing federal loan servicer disruptions.

Risks

• Compliance with extensive and evolving regulatory requirements can be costly and time-consuming, potentially leading to substantial financial penalties, severe operational restrictions, or loss of federal and state financial aid funding.
• Accountability regulations, including the existing Gainful Employment (GE) rule and the statutory earnings premium measure, could result in required student warnings, limitations, or loss of federal aid eligibility, or mandated program closures, materially reducing enrollments and revenue.
• The risk of losing eligibility to participate in federal student financial aid programs exists if the percentage of revenues derived from certain federal programs (90-10 Rule) is too high, potentially requiring business modifications or financial protection.
• Borrower defense to repayment regulations, including closed school loan discharges, may subject the company to significant repayment liability to the Department for discharged federal student loans and require posting substantial letters of credit, which could limit investment capacity.
• Loss of institutional accreditation would result in the inability to participate in Title IV Programs, and failure to obtain or maintain programmatic accreditation could lead to declining student enrollments.
• Recent changes to federal student loan programs under the Reconciliation Act, reducing annual, aggregate, and lifetime borrowing limits, may limit students' ability to finance their education and materially reduce enrollments.
• Elevated cohort default rates could result in operational restrictions or loss of Title IV eligibility.
• Failure to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid could lead to loss or conditioning of Title IV Program participation.
• The agreement with the FTC may lead to unexpected impacts on student enrollments or higher than anticipated expenses, with non-compliance potentially resulting in additional enforcement actions and continued scrutiny.
• Unsuccessful resolution of pending or future litigation and regulatory and governmental inquiries, or increased regulatory actions, could adversely affect financial condition and results of operations.
• Denial or significant conditioning of recertification for any institution to participate in Title IV Programs would prevent that institution from operating its business as currently conducted.
• Delays in obtaining timely approval from applicable regulatory agencies to offer new programs or make substantive changes to existing programs could impair business growth.
• Loss of eligibility or limitations in employer-sponsored, military, or veterans education benefit programs could negatively impact student enrollments and revenue.
• Financial performance is dependent on student enrollment levels, which are impacted by economic conditions, affordability concerns, demographic trends, and job growth in unrelated fields.
• Increased competition from a variety of educational institutions, especially in the online education market, could adversely impact student enrollments and revenue.
• The U.S. political and economic environment, including potential legal, regulatory, and policy changes by the new U.S. presidential administration, could materially impact business operations and financial performance.
• Failure to develop awareness among, and enroll and retain, students in a cost-effective manner, including reliance on third-party lead aggregators, could adversely affect financial performance.
• Inability to retain key personnel or hire, train, and retain the necessary personnel due to industry scrutiny or compensation restrictions.
• Failure to keep pace with changing market needs and technology, including employer demands for specific skills and adaptation to new devices and platforms, could impair student attraction and retention.
• The use of artificial intelligence (AI) may subject the company to increased compliance obligations and legal risk, including issues related to robocall mitigation, data privacy, intellectual property, and potential for biased or inaccurate outputs.
• Risk of goodwill impairment if unexpected economic conditions or operational results negatively impact fair value assumptions.
• Proprietary rights and intellectual property may not be adequately protected under current laws, and disputes relating to the use of third-party intellectual property may arise.
• Challenges associated with the acquisition, integration, and growth of acquired businesses, such as USAHS, could harm the business.
• Natural disasters or other extraordinary events may cause school closures or casualty losses.
• Cyberattacks, data breaches, or other security incidents, or disruptions to information technology systems, could expose the company to liability and adversely affect financial condition and operating results.
• The primarily remote work environment may exacerbate risks related to business technology infrastructure, including cybersecurity threats and operational disruptions.
• The trading price of common stock may continue to fluctuate substantially due to various factors, including regulatory changes, media coverage, economic conditions, and litigation outcomes.
• Shareholders may not receive the level of dividends previously provided, or any dividends at all, and the share repurchase program may not enhance long-term stockholder value.

Future Outlook

The company expects continued strong student retention and engagement, along with prospective student interest, to continue into 2026. This is anticipated to result in higher full-year adjusted operating income for 2026 compared to 2025, primarily driven by expected total student enrollment and revenue growth. Capital expenditures for 2026 are expected to be approximately 1.5% of revenue. The company also anticipates a number of regulatory changes reflecting the priorities of the current Administration.

Management Comments

• Our academic institutions remained focused on enhancing student experiences and academic outcomes while aligning their academic programs with the current demands of the workforce.
• We expect the strong levels of student retention and student engagement we experienced over the past year, as well as the prospective student interest experienced, to continue into 2026.
• As a result, full year adjusted operating income is expected to be higher for 2026 as compared to 2025, primarily driven by expected total student enrollment and revenue growth.
• Our goal is to deploy resources in the most effective and efficient manner that we believe will lead to increased stockholder value while supporting and enhancing the academic quality of our institutions.
• The Board of Directors approved the aforementioned stock repurchase programs believing it advantageous to the Company and its stockholders to repurchase shares of the Companys common stock from time to time at prices below what the Board of Directors believed to be the intrinsic value of the Companys common stock.

Industry Context

StockSavvy.ai notes that the postsecondary education industry remains highly fragmented and competitive, with increasing competition from online programs offered by traditional public and private non-profit institutions. The sector is heavily scrutinized by various regulatory bodies and political administrations, leading to frequent and often conflicting regulatory changes. The current Trump Administration's focus on deregulation and the Reconciliation Act's changes to federal student aid programs (e.g., Grad PLUS elimination, new borrowing limits, earnings-premium accountability) will significantly reshape the operating environment, particularly for for-profit institutions. The company's strategic investments in technology and corporate partnerships are a response to these evolving market and regulatory dynamics.

Comparison to Industry Standards

• The domestic postsecondary degree-granting education industry was an approximately $796 billion industry for fiscal year 2023, according to the National Center for Education Statistics (NCES).
• Approximately 5,600 postsecondary education institutions were eligible for federal student aid in the U.S. for academic year 2024-25, including 2,100 for-profit, 1,800 public, and 1,700 private non-profit schools.
• The company's 0% three-year cohort default rate for the 2022 cohort is significantly better than historical levels, though this is influenced by COVID-19 era payment pauses and servicer disruptions.
• The company's consolidated financial responsibility Composite Score of 3.0 is the highest possible, indicating strong financial health compared to industry standards.
• The Reconciliation Act's earnings-premium accountability test will revoke loan eligibility for programs whose graduates' median earnings fall below specified comparison groups for two out of any three consecutive years, applying universally to all higher education institutions.
• The AHEAD committee's consensus framework for GE and FVT aims for a more streamlined and uniform transparency and accountability framework applicable across all institutional sectors and program types, moving away from proprietary-institution-specific metrics.

Management Changes

Corporate Governance

Legal Proceedings

• United States of America, ex rel. Fiorisce LLC v. Perdoceo Education Corporation and Colorado Technical University, Inc.: A qui tam action alleging False Claims Act violations related to federal financial aid credit hour requirements and the company's learning management system. The DOJ declined to intervene, and the Relator is pursuing the litigation.
• United States of America, ex rel. Aidan K. Peters v. Perdoceo Education Corporation, Colorado Technical University, Inc. and CEC Employee Group, LLC.: A False Claims Act (FCA) lawsuit alleging violations of incentive compensation and misrepresentation requirements for Title IV Programs, and a personal anti-retaliation claim. The DOJ declined to intervene, and the Relator is pursuing the litigation.
• Career Colleges & Schools of Texas (CCST) v. Department of Education: A lawsuit challenging the Department's 2022 borrower defense to repayment and closed school loan discharge regulations. A preliminary injunction against the 2022 BDR Rule was granted by the Fifth Circuit, and the Supreme Court stayed its review. The U.S. District Court for the Northern District of Texas entered the preliminary injunction on January 28, 2026.
• American Association of Cosmetology Schools (AACS) v. Department of Education: A lawsuit challenging the Gainful Employment (GE) rule, consolidated with another similar lawsuit. The district court ruled in favor of the Department, upholding the GE rule, and the plaintiffs have appealed to the Fifth Circuit.
• The company receives frequent requests from state attorneys general, federal and state government agencies, and accreditors regarding student complaints or loan forgiveness claims, which could lead to formal actions or claims of non-compliance.
• The company is subject to a variety of other claims, lawsuits, arbitrations, and investigations that arise from time to time, including alleged violations of the Telephone Consumer Protection Act and employment matters.

Related Party Transactions

• Periodic operating maintenance payments to a former equity affiliate (an international private company) totaled $1.663 million in 2025 (up to the date of sale), $1.727 million in 2024, and $1.672 million in 2023. The investment was sold during the fourth quarter of 2025.

Stakeholder Impact

• Shareholders: Potential for increased stockholder value through share repurchases and quarterly dividends, though future dividends are discretionary. The trading price of common stock may continue to fluctuate substantially.
• Students: Enhanced academic outcomes and learning experiences through technology investments, including AI. Potential negative impact on USAHS students due to the elimination of Grad PLUS loans for new borrowers and lower borrowing limits. Risk of reduced federal aid availability and increased cohort default rates.
• Employees: Focus on human capital objectives, compliant and ethical conduct, and multi-week training for student-serving functions. Employee turnover impacts personnel costs and operating efficiencies. Executive officers have adopted Rule 10b5-1 trading plans.
• Corporate Partners: Continued engagement and collaboration with companies for tuition assistance programs, supporting employee development and retention.
• Regulatory Authorities: Ongoing scrutiny and evolving regulatory requirements (e.g., 90-10 Rule, GE, BDR, financial responsibility, administrative capability) necessitate robust compliance efforts and significant management attention.

Next Steps

• CTU and AIUS will be required to submit applications for recertification to continue participation in Title IV Programs by March 31, 2027.
• USAHS will participate under provisional certification for up to three years following change of ownership approval.
• The Department of Education intends to publish proposed AHEAD committee regulations in spring 2026 and final regulations for both RISE and AHEAD committees later in 2026.
• The company will continue to monitor the Department's interpretations, public statements, and other communications regarding regulatory changes.
• The company is informing prospective USAHS students about private financing alternatives and updating internal processes for comprehensive counseling on responsible borrowing due to the elimination of Grad PLUS loans for new borrowers.
• The company will continue to evaluate its valuation allowance in future years for any change in circumstances that causes a change in judgment about the realizability of deferred tax assets.
• The company expects capital expenditures to be approximately 1.5% of revenue for the year ending December 31, 2026.
• The company expects to continue to generate cash in 2026 and anticipates satisfying cash requirements with cash generated by operations and existing cash balances.
• The company will continue to evaluate the potential impact of the new earnings-premium requirement and the changes to the GE rule agreed to by the AHEAD committee.
• The Career Colleges & Schools of Texas (CCST) is required to file a proposed amended complaint on or before February 20, 2026, in its lawsuit challenging the 2022 BDR Rule.

Key Dates

Recommendation

The company demonstrates strong financial performance and operational improvements, including significant enrollment growth and reduced bad debt. However, substantial regulatory uncertainties, particularly regarding federal student aid changes (Reconciliation Act, GE rule, BDR), and ongoing litigation create material future risks. The elimination of Grad PLUS loans for new borrowers could specifically impact USAHS enrollments. While current performance is robust, the evolving and unpredictable regulatory landscape warrants a cautious 'hold' stance until the full impact of these changes becomes clearer.

Keywords

Education, Postsecondary Education, Online Learning, Higher Education, Financial Aid, Title IV Programs, SEC Filing, 10-K, Perdoceo, CTU, AIUS, USAHS, Student Enrollment, Financial Performance, Regulatory Compliance, Risk Management, Corporate Governance, Share Repurchase, Dividends, Artificial Intelligence, Cybersecurity, Workforce Development, Accreditation