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Bridgepoint Education Reports Fourth Quarter and Full Year 2016 Results

SAN DIEGO, March 7, 2017 /PRNewswire/ -- Bridgepoint Education, Inc. (NYSE:BPI), a provider of postsecondary education services, today announced the results for its fourth quarter and full year ended December 31, 2016.

Financial Results for the Three Months Ended December 31, 2016

Revenue for the three months ended December 31, 2016 was $119.5 million, compared with revenue of $131.4 million for the three months ended December 31, 2015.

Operating loss for the three months ended December 31, 2016 was $18.5 million, compared with operating loss of $6.1 million for the three months ended December 31, 2015.

The Company recognized an income tax benefit of $4.3 million for the three months ended December 31, 2016, compared with income tax expense of $1.2 million for the three months ended December 31, 2015.

Net loss for the three months ended December 31, 2016 was $13.8 million, compared with net loss of $6.7 million for the three months ended December 31, 2015.

Diluted loss per share for the three months ended December 31, 2016 was $0.30, compared with diluted loss per share of $0.15 for the three months ended December 31, 2015.

Non-GAAP Financial Results for the Three Months Ended December 31, 2016

Non-GAAP operating loss for the three months ended December 31, 2016 was $1.8 million, compared with non-GAAP operating income of $2.9 million for the three months ended December 31, 2015. Non-GAAP operating loss for the three months ended December 31, 2016 excludes a legal settlement expense of $0.2 million and restructuring and impairment charges of $16.5 million. Non-GAAP operating income for the three months ended December 31, 2015 excludes restructuring and impairment charges of $9.0 million.

Non-GAAP net loss for the three months ended December 31, 2016 was $0.7 million, compared with non-GAAP net income of $2.0 million for the three months ended December 31, 2015. Non-GAAP net loss for the three months ended December 31, 2016 excludes a legal settlement expense of $0.2 million, as well as restructuring and impairment charges of $16.5 million and the related tax effect. Non-GAAP net income for the three months ended December 31, 2015 excludes restructuring and impairment charges of $9.0 million and the related tax effect, as well as tax expense of $3.0 million relating to the valuation allowance against deferred tax assets.

Non-GAAP diluted loss per share for the three months ended December 31, 2016 was $0.01, compared with non-GAAP diluted earnings per share of $0.04 for the three months ended December 31, 2015.

Financial Results for the Year Ended December 31, 2016

Revenue for the year ended December 31, 2016 was $527.1 million, compared with revenue of $561.7 million for the year ended December 31, 2015.

Operating loss for the year ended December 31, 2016 was $40.2 million, compared with operating loss of $42.3 million for the year ended December 31, 2015.

The Company recognized an income tax benefit of $7.9 million for the year ended December 31, 2016, compared with income tax expense of $30.3 million for the year ended December 31, 2015.

Net loss for the year ended December 31, 2016 was $30.0 million, compared with net loss of $70.5 million for the year ended December 31, 2015.

Diluted loss per share for the year ended December 31, 2016 was $0.65, compared with diluted loss per share of $1.54 for the year ended December 31, 2015.

Non-GAAP Financial Results for the Year Ended December 31, 2016

Non-GAAP operating income for the year ended December 31, 2016 was $12.1 million, compared with non-GAAP operating income of $26.1 million for the year ended December 31, 2015. Non-GAAP operating income for the year ended December 31, 2016 excludes a legal settlement expense of $33.1 million and restructuring and impairment charges of $19.3 million. Non-GAAP operating income for the year ended December 31, 2015 excludes restructuring and impairment charges of $68.4 million.

Non-GAAP net income for the year ended December 31, 2016 was $8.4 million, compared with non-GAAP net income of $15.9 million for the year ended December 31, 2015. Non-GAAP net income for the year ended December 31, 2016 excludes a legal settlement expense of $33.1 million, as well as restructuring and impairment charges of $19.3 million and the related tax effect. Non-GAAP net income for the year ended December 31, 2015 excludes restructuring and impairment charges of $68.4 million and the related tax effect, as well as tax expense of $43.7 million relating to the valuation allowance against deferred tax assets.

Non-GAAP diluted earnings per share for the year ended December 31, 2016 was $0.18, compared with non-GAAP diluted earnings per share of $0.35 for the year ended December 31, 2015.

Balance Sheet and Cash Flow  

As of December 31, 2016, the Company had cash, cash equivalents, restricted cash and investments of $381.8 million, compared with cash, cash equivalents, restricted cash and investments of $374.0 million as of December 31, 2015. 

The Company generated $11.1 million of cash from operating activities during the year ended December 31, 2016, compared with $18.8 million of cash from operating activities during the year ended December 31, 2015.

Student Enrollment

Total student enrollment at the Company's academic institutions, Ashford University and University of the Rockies, was 45,087 at December 31, 2016, compared with total student enrollment of 49,159 at December 31, 2015.

As of December 31, 2016, the 12-month retention for all Ashford students who were active on the last day of the fourth quarter of 2015 was 59.8%.  As of December 31, 2015, the 12-month retention for all Ashford students who were active on the last day of the fourth quarter of 2014 was 61.3%.

About Non-GAAP Financial Measures

This press release contains non-GAAP financial measures for non-GAAP operating income, non-GAAP net income and non-GAAP diluted earnings per share, which exclude a legal settlement expense, restructuring and impairment charges, and 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 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

Bridgepoint Education will host a conference call and webcast at 5:00 p.m. ET (2:00 p.m. PT) today to discuss its latest financial results and recent highlights. The dial-in number for callers in the United States / Canada is (866) 859-7412, and the dial-in number for other callers is (832) 900-4623. The access code for all callers is 74641308. A live broadcast of the call will also be available on the Company's website at http://ir.bridgepointeducation.com.

A replay of the call will be available via telephone through April 7, 2017. To access the replay, callers in the United States and Canada should dial (855) 859-2056 and other callers should dial (404) 537-3406. The access code for all callers is 74641308.

About Bridgepoint Education

Bridgepoint Education, Inc. (NYSE:BPI) harnesses the latest technology to reimagine the modern student experience. Bridgepoint owns two academic institutions - Ashford University and University of the Rockies. Together, these programs, technologies, and resources represent a unique model for advancing education in the 21st century. Bridgepoint stands for greater access, social learning, and exposure to leading minds. For more information, visit www.bridgepointeducation.com or www.facebook.com/BridgepointEducation.

Forward-Looking Statements

This news release may contain forward-looking statements, including, without limitation, statements regarding management's intentions, hopes, beliefs or expectations, and statements regarding the Company's outlook for 2017 and beyond. These forward-looking statements are subject to risks and uncertainties that could cause the Company's actual performance or results to differ materially from those expressed in or suggested by such statements. Such risks and uncertainties include, without limitation, the failure to comply with the extensive regulatory framework applicable to the Company and its institutions, adverse administrative, economic, legislative or regulatory changes affecting the Company and its institutions, the imposition of fines or other corrective measures against the Company's institutions, competition in the postsecondary education market and its potential impact on the Company's market share, recruiting costs and tuition rates, reputational and other risks related to potential compliance audits, regulatory or legal actions, negative publicity or service disruptions, and the inability to recruit and retain students or develop new or expanded programs in a timely and cost-effective manner.

Additional information on factors that could affect the Company's performance or results 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 year ended December 31, 2016 to be filed with the SEC, the Company's quarterly reports on Form 10-Q and the Company's current reports on Form 8-K. 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, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws.

Contact: Kevin Royal, Chief Financial Officer
(866) 475-0317 x11120
investorrelations@bridgepointeducation.com



BRIDGEPOINT EDUCATION, INC.

Consolidated Statements of Income (Loss)

(In thousands, except per share amounts)



Three Months Ended
December 31,


Year Ended
December 31,


2016


2015


2016


2015

Revenue

$

119,535



$

131,392



$

527,090



$

561,729


Costs and expenses:








Instructional costs and services

63,769



65,840



263,898



281,496


Admissions advisory and marketing

45,408



48,948



202,206



197,584


General and administrative

12,134



13,674



48,843



56,588


Legal settlement expense

170





33,088




Restructuring and impairment charges

16,510



9,034



19,276



68,356


Total costs and expenses

137,991



137,496



567,311



604,024


Operating loss

(18,456)



(6,104)



(40,221)



(42,295)


Other income, net

414



607



2,306



2,106


Loss before income taxes

(18,042)



(5,497)



(37,915)



(40,189)


Income tax (benefit) expense

(4,253)



1,190



(7,875)



30,265


Net loss

$

(13,789)



$

(6,687)



$

(30,040)



$

(70,454)


Loss per share:








Basic

$

(0.30)



$

(0.15)



$

(0.65)



$

(1.54)


Diluted

$

(0.30)



$

(0.15)



$

(0.65)



$

(1.54)


Weighted average number of common shares outstanding used in computing loss per share:








Basic

46,373



45,799



46,228



45,665


Diluted

46,373



45,799



46,228



45,665





BRIDGEPOINT EDUCATION, INC.

Consolidated Balance Sheets

(In thousands, except par value)



As of December 31,


2016


2015

ASSETS




Current assets:




Cash and cash equivalents

$

307,802



$

282,145


Restricted cash

24,533



24,685


Investments

49,434



19,387


Accounts receivable, net

26,457



24,091


Student loans receivable, net



775


Prepaid expenses and other current assets

23,467



52,192


Total current assets

431,693



403,275


Property and equipment, net

12,218



21,742


Investments



47,770


Student loans receivable, net



7,394


Goodwill and intangibles, net

17,419



21,265


Other long-term assets

2,046



5,320


Total assets

$

463,376



$

506,766


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued liabilities

$

77,866



$

79,196


Deferred revenue and student deposits

74,666



88,756


Total current liabilities

152,532



167,952


Rent liability

16,508



20,118


Other long-term liabilities

13,630



15,046


Total liabilities

182,670



203,116


Total stockholders' equity

280,706



303,650


Total liabilities and stockholders' equity

$

463,376



$

506,766





BRIDGEPOINT EDUCATION, INC.

Consolidated Statements of Cash Flows

(In thousands)



Year Ended December 31,


2016


2015

Cash flows from operating activities




Net loss

$

(30,040)



$

(70,454)


Adjustments to reconcile net loss to net cash provided by operating activities:




Provision for bad debts

32,583



29,863


Depreciation and amortization

13,082



19,578


Amortization of premium/discount

68



475


Deferred income taxes

28



40,944


Stock-based compensation

7,317



9,710


Excess tax benefit of option exercises



(460)


Loss on impairment of student loans receivable

7,542



1,328


Net loss (gain) on marketable securities

(164)



91


Loss on termination of leased space

13,244



17,047


Loss on disposal or impairment of fixed assets

3,024



44,949


Changes in operating assets and liabilities:




  Accounts receivable

(34,790)



(32,383)


  Prepaid expenses and other current assets

13,225



(14,446)


  Student loans receivable

876



1,139


  Other long-term assets

3,274



(2,845)


  Accounts payable and accrued liabilities

4,778



1,104


  Deferred revenue and student deposits

(14,078)



(19,170)


  Other liabilities

(8,886)



(7,669)


Net cash provided by operating activities

11,083



18,801


Cash flows from investing activities




Capital expenditures

(1,925)



(2,477)


Purchases of investments

(20,260)



(20,280)


Capitalized costs for intangible assets

(830)



(2,153)


Sales of investments



10,101


Maturities of investments

37,756



66,096


Net cash provided by investing activities

14,741



51,287


Cash flows from financing activities




Proceeds from exercise of stock options

1,331



284


Excess tax benefit of option exercises



460


Proceeds from the issuance of stock under employee stock purchase plan

246



261


Tax withholding on issuance of stock awards

(1,896)



(1,341)


Proceeds from failed sale-leaseback transaction



4,141


Net cash provided by (used in) financing activities

(319)



3,805


Net increase in cash, cash equivalents and restricted cash

25,505



73,893


Cash, cash equivalents and restricted cash at beginning of period

306,830



232,937


Cash, cash equivalents and restricted cash at end of period

$

332,335



$

306,830





BRIDGEPOINT EDUCATION, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,


2016


2015


2016


2015

Operating Income (Loss) Reconciliation:








GAAP operating loss

$

(18,456)



$

(6,104)



$

(40,221)



$

(42,295)


Legal settlement expense

170





33,088




Restructuring and impairment charges

16,510



9,034



19,276



68,356


Non-GAAP operating income (loss)

$

(1,776)



$

2,930



$

12,143



$

26,061


















Net Income (Loss) Reconciliation:








GAAP net loss

$

(13,789)



$

(6,687)



$

(30,040)



$

(70,454)


Legal settlement expense

170





33,088




Restructuring and impairment charges

16,510



9,034



19,276



68,356


Income tax impact

(3,566)



(3,388)



(13,973)



(25,634)


Incremental income tax expense related to establishment of valuation allowance



2,999





43,655


Non-GAAP net income (loss)

$

(675)



$

1,958



$

8,351



$

15,923


















Diluted Earnings (Loss) Per Share Reconciliation:








GAAP diluted loss per share

$

(0.30)



$

(0.15)



$

(0.65)



$

(1.54)


Legal settlement expense

0.01





0.71




Restructuring and impairment charges

0.35



0.20



0.42



1.49


Income tax impact

(0.07)



(0.07)



(0.30)



(0.56)


Incremental income tax expense related to establishment of valuation allowance



0.06





0.96


Non-GAAP diluted earnings (loss) per share

$

(0.01)



$

0.04



$

0.18



$

0.35


SOURCE Bridgepoint Education

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