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CST: 21/08/2019 11:29:02   

Aspen Group Reports Record Revenues of $34 Million in Fiscal Year 2019, an Increase of 55% Year-Over-Year

42 Days ago

Enrollments Rose 36% Year-Over-Year, Delivering a 90% Increase in Bookings

NEW YORK, July 09, 2019 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (Nasdaq: ASPU) ( “AGI”), an education technology holding company, today announced financial results for its 2019 fiscal fourth quarter ended April 30, 2019, highlighted by revenue of $10.2 million, representing a sequential increase of 20% and an increase of 41% year-over-year. Aspen Group also announced its full year results highlighted by record revenues of $34 million, an increase of 55% year-over-year, which are included in the consolidated financial statements at the end of this press release.

Michael Mathews, Chairman & CEO of Aspen Group, commented, “We delivered year-over-year enrollment growth of 36% in fiscal year 2019, but as a result of our business plan to drive the majority of enrollment growth in our highest LTV units (USU MSN-FNP and pre-licensure BSN program), the Company was able to increase its bookings by 90% from $34.8 million to $66.1 million. This sets the stage for sustained revenue growth and will expedite the achievement of our near-term goal of producing positive Adjusted EBITDA for fiscal year 2020.”

Fiscal Q4 2019 Highlights:

  • Revenue totaled $10,214,143, an increase of 41% as compared to the prior fiscal year fourth quarter;
  • Gross Profit totaled $5,683,536 or a 56% margin, a 62% increase as compared to the prior fiscal year fourth quarter;
  • Net Loss applicable to shareholders of ($1,609,923), as compared to Net Loss of ($3,664,485) in the prior fiscal year fourth quarter; Diluted net loss per share was $(0.09), as compared to a loss of $(0.24) in the prior fiscal year fourth quarter;
  • EBITDA, a non-GAAP financial measure, totaled a loss of $(731,852) for the quarter ended April 30, 2019;
  • Adjusted EBITDA, a non-GAAP financial measure, totaled $72,935 for the quarter ended April 30, 2019;
  • Cash used in operations totaled $2,785,464, as compared to $1,954,988 in the prior fiscal year fourth quarter.

Fiscal 2019 Fourth Quarter Financial and Operational Results:

Aspen Group, Inc. delivered 1,560 new student enrollments for the fiscal fourth quarter, a 23% increase year-over-year. Aspen University accounted for 1,243 new student enrollments (includes 113 Doctoral enrollments and 186 Pre-licensure BSN AZ campus enrollments). USU accounted for 317 new student enrollments (primarily Family Nurse Practitioner (“FNP”) enrollments), a 79% increase year-over-year. Enrollments for Aspen University’s Pre-Licensure BSN program increased 92% sequentially as the university began accepting enrollments for prerequisite students taking online courses in anticipation of entering the HonorHealth final two-year core campus program targeted to launch this upcoming September.

In the charts below, we have provided a full-year comparison of enrollments and bookings* from fiscal year 2018 to fiscal year 2019. Note that the company’s enrollments rose 36% year-over-year, however, the bookings increased 90% year-over-year. 

Growing enrollments by 36% year-over-year, yet achieving a 90% increase in bookings translates to a 39% average revenue per user (ARPU)* increase year-over-year, from $8,182 to $11,391. This result is why the company focused its growth spending on these three new business units during fiscal year 2019.

  Lifetime Value (LTV) FY'2018   FY'2018   FY'2019   FY'2019
  Per Enrollment Enrollments   Bookings   Enrollments   Bookings
AU Online (Nursing + Other) Unit $ 7,350 3,858   $ 28,356,300   3,825   $ 28,113,750
AU (Doctoral) Unit $ 12,600 116   $ 1,461,600   484   $ 6,098,400
AU (Pre-Licensure BSN) Unit $ 30,000 -   $ -   433   $ 12,990,000
USU (FNP + Other) Unit $ 17,820 280   $ 4,989,600   1,060   $ 18,889,200
Total   4,254   $ 34,807,500   5,802   $ 66,091,350
Average Revenue Per User (ARPU)       $ 8,182       $ 11,391

* Note: “Bookings” are defined by multiplying LTV by new student enrollments for each operating unit. “Average Revenue Per  User or (ARPU)” is defined by dividing total bookings by total enrollments.

To view the Total Enrollments and Total Bookings bar graphs accompanying this announcement, please visit: https://www.globenewswire.com/NewsRoom/AttachmentNg/e67da1da-d9d0-438c-9eb3-84eb0497fd5d

AGI’s total active student body (includes both Aspen University and USU) grew 27% year-over-year from 7,057 to 8,932. Of the 8,932 total active students at both universities, 81% or 7,213 are degree-seeking Nursing students.

Aspen University’s total active degree-seeking student body grew 20% year-over-year from 6,500 to 7,784. Aspen’s School of Nursing grew 28% year-over-year, from 4,807 to 6,164 active students, which includes 396 active students in the BSN Pre-Licensure program in Phoenix, AZ. Aspen University students paying tuition and fees through a monthly payment method grew by 19% year-over-year, from 4,532 to 5,404. Those 5,404 students paying through a monthly payment method represent 69% of Aspen University’s total active student body.

USU’s total active degree-seeking student body grew sequentially from 961 to 1,148 students or a sequential increase of 19%. Of the 1,148 total active students at USU, 970 or 84% are enrolled in the MSN-FNP degree program. USU students paying tuition and fees through a monthly payment method grew from 602 to 758 students sequentially. Those 758 students paying through a monthly payment method represent 66% of USU’s total active student body.

Revenues increased to $10,214,143, an increase of 41% as compared to the prior fiscal year fourth quarter. USU accounted for approximately 24% and Aspen University’s Pre-Licensure BSN program accounted for approximately 5% of overall Company revenues.

Gross profit increased to $5,683,536 or 56% gross margin. Aspen University gross profit represented 58% of Aspen University revenues for the fourth quarter, while USU gross profit equaled 55% of USU revenues during the fourth quarter. Aspen University instructional costs and services represented 17% of Aspen University revenues for the 2019 fourth quarter, while USU instructional costs and services equaled 25% of USU revenues during the 2019 fourth quarter. Aspen University marketing and promotional costs represented 21% of Aspen University revenues for the 2019 fourth quarter, while USU marketing and promotional costs equaled 19% of USU revenues during the 2019 fourth quarter.

Net loss applicable to shareholders was ($1,609,923) or diluted net loss per share of ($0.09). Aspen University generated $1.1 million of operating income for the fourth quarter, while USU experienced a net loss of ($0.51) million during the fourth quarter. Aspen Group corporate incurred $2.2 million of expenses for the fourth quarter.

EBITDA, a non-GAAP financial measure, was a loss of ($731,852) or (7%) as a percentage of revenue. Adjusted EBITDA, a non-GAAP financial measure, was $72,935 or 1% as a percentage of revenue. Aspen University generated $1.8 million of Adjusted EBITDA for the fourth quarter, while USU experienced an Adjusted EBITDA loss of ($0.1) million during the fourth quarter. Aspen Group corporate contributed $1.6 million of expenses toward the $72,935 Adjusted EBITDA result for the fourth quarter.

The company used cash of $2.8 million for operations in the fourth quarter, as compared to using $2.0 million in the prior fiscal year fourth quarter.

Conference Call:

Aspen Group, Inc. will host a conference call to discuss its fiscal year 2019 4th quarter financial results and business outlook on Tuesday, July 9th, 2019, at 4:30 p.m. (ET). Aspen will issue a press release reporting results after the market closes on that day. The conference call can be accessed by dialing toll-free (844) 452-6823 (U.S.) or (731) 256-5216 (international), passcode 7459518. Subsequent to the call, a transcript of the audiocast will be available from the Company’s website at ir.aspen.edu. There will also be a 7 day dial-in replay which can be accessed by dialing toll-free (855) 859-2056 or (404) 537-3406 (international), passcode 7459518.

Non-GAAP – Financial Measures:

This press release includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income (loss), operating income (loss), and cash flow from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of Aspen Group nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Our management uses and relies on Adjusted EBITDA and EBITDA, each of which are non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described below.

Aspen Group defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table below including non-recurring charges of $497,300 in 2019 and $764,253 in 2018. Adjusted EBITDA is an important measure of our operating performance because it allows management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing the impact of items of a non-operational nature that affect comparability.

We have included a reconciliation of our non-GAAP financial measures to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between Aspen Group and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules.

The following table presents a reconciliation of Adjusted EBITDA to net loss allocable to common shareholders, a GAAP financial measure:

    For the Years Ended
April 30,
 
    2019     2018  
Net loss   $ (9,278,217 )   $ (7,061,061 )
Interest expense     441,961       1,860,391  
Taxes     9,276        
Depreciation & amortization     2,170,098       1,092,283  
EBITDA (loss)     (6,656,882 )     (4,108,387 )
Bad debt expense     854,008       535,366  
Acquisition expenses           828,566  
Non-recurring charges     497,300       764,253  
Stock-based compensation     1,190,385       642,566  
Adjusted EBITDA (Loss)   $ (4,115,189 )   $ (1,337,636 )


    For the Quarters Ended
April 30,
 
    2019     2018  
Net loss   $ (1,609,923 )   $ (3,664,486 )
Interest expense     285,437       1,504,701  
Depreciation & amortization     592,634       460,314  
EBITDA (Loss)     (731,852 )     (1,699,471 )
Bad debt expense     373,942       317,222  
Non-recurring charges     106,589       186,147  
Stock-based compensation     324,256       176,098  
Adjusted EBITDA (Loss)   $ 72,935     $ (1,020,004 )

About Aspen Group, Inc.:

Aspen Group, Inc. is an education technology holding company that leverages its infrastructure and expertise to allow its two universities, Aspen University and United States University, to deliver on the vision of making college affordable again.

Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including future growth of our new business units, sustained revenue growth, achieving positive Adjusted EBITDA for fiscal year 2020 and the future impact of bookings. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Important factors that could cause actual results to differ from those in the forward-looking statements include the continued demand of nursing students for the new programs, potential student attrition and national and local economic factors. Other risks are included in our filings with the SEC including our Form 10-K for the year ended April 30, 2019. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Company Contact:

Aspen Group, Inc.
Michael Mathews, CEO
914-906-9159


ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

    April 30,     April 30,  
    2019     2018  
Assets                
                 
Current assets:                
Cash   $ 9,519,352     $ 14,612,559  
Restricted cash     448,400       190,506  
Accounts receivable, net of allowance of $1,247,031 and $468,174, respectively     10,656,470       6,802,723  
Prepaid expenses     410,745       199,406  
Other receivables     2,145       184,569  
Total current assets     21,037,112       21,989,763  
                 
Property and equipment:                
Call center equipment     193,774       140,509  
Computer and office equipment     327,621       230,810  
Furniture and fixtures     1,381,271       932,454  
Software     4,314,198       2,878,753  
      6,216,864       4,182,526  
Less accumulated depreciation and amortization     (1,825,524 )     (1,320,360 )
Total property and equipment, net     4,391,340       2,862,166  
Goodwill     5,011,432       5,011,432  
Intangible assets, net of accumulated amortization of $1,558,333 and 458,333, respectively     8,541,667       9,641,667  
Courseware, net     161,930       138,159  
Accounts receivable, secured - net of allowance of $625,963, and $625,963, respectively     45,329       45,329  
Long term contractual accounts receivable     3,085,243       1,315,050  
Debt issue cost, net     300,824        
Deposits and other assets     629,626       584,966  
                 
Total assets   $ 43,204,503     $ 41,588,532  

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)

    April 30,     April 30,  
    2019     2018  
Liabilities and Stockholders’ Equity                
                 
Current liabilities:                
Accounts payable   $ 1,699,221     $ 2,227,214  
Accrued expenses     651,418       658,854  
Deferred revenue     2,456,865       1,814,136  
Refunds due students     1,174,501       815,841  
Deferred rent, current portion     47,436       8,160  
Convertible notes payable, current portion     50,000       1,050,000  
Other current liabilities     270,786       203,371  
Total current liabilities     6,350,227       6,777,576  
                 
Convertible note payable           1,000,000  
Senior secured loan payable, net of discount of $353,328     9,646,672        
Deferred rent     746,176       77,365  
Total liabilities     16,743,075       7,854,941  
                 
Commitments and contingencies - See Note 11                
                 
Stockholders’ equity:                
Preferred stock, $0.001 par value; 1,000,000 shares authorized,                
0 issued and outstanding at April 30, 2019 and April 30, 2018            
Common stock, $0.001 par value; 40,000,000 shares authorized,                
18,665,551 issued and 18,648,884 outstanding at April 30, 2019                
18,333,521 issued and 18,316,854 outstanding at April 30,2018     18,666       18,334  
Additional paid-in capital     68,562,727       66,557,005  
Treasury stock (16,667 shares)     (70,000 )     (70,000 )
Accumulated deficit     (42,049,965 )     (32,771,748 )
Total stockholders’ equity     26,461,428       33,733,591  
                 
Total liabilities and stockholders’ equity   $ 43,204,503     $ 41,588,532  


ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

    For the  
    Years Ended  
    April 30,  
    2019     2018  
                 
Revenues   $ 34,025,418     $ 22,021,512  
                 
Operating expenses                
Cost of revenues (exclusive of depreciation and amortization shown separately below)     15,977,218       9,853,819  
General and administrative     24,987,828       16,328,580  
Depreciation and amortization     2,170,098       1,092,283  
Total operating expenses     43,135,144       27,274,682  
                 
Operating loss     (9,109,726 )     (5,253,170 )
                 
Other income (expense):                
Other income     276,189       149,761  
Gain on extinguishment of warrant liability           52,500  
Interest expense     (444,680 )     (2,010,152 )
Total other income (expense), net     (168,491 )     (1,807,891 )
                 
Loss before income taxes     (9,278,217 )     (7,061,061 )
                 
Income tax expense (benefit)            
                 
Net loss   $ (9,278,217 )   $ (7,061,061 )
                 
Net loss per share allocable to common stockholders - basic and diluted   $ (0.50 )   $ (0.50 )
                 
Weighted average number of common shares outstanding: basic and diluted     18,409,459       14,215,868  


ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED APRIL 30, 2019 AND APRIL 30, 2018

For the year ended April 30, 2019

                Additional                 Total  
    Common Stock     Paid-In     Treasury     Accumulated     Stockholders'  
    Shares     Amount     Capital     Stock     Deficit     Equity  
Balance at April 30, 2018     18,333,521     $ 18,334     $ 66,557,005     $ (70,000 )   $ (32,771,748 )   $ 33,733,591  
                                                 
Stock-based compensation                 1,190,385                   1,190,385  
Common stock issued for cashless stock options exercised     111,666       112       (112 )                  
Common stock issued for stock options exercised for cash     56,910       56       128,145                   128,201  
Common stock issued for cashless warrant exercise     119,594       120       (120 )                  
Common stock issued for warrants exercised for cash     43,860       44       99,956                   100,000  
Warrants issued debt financing                 615,587                   615,587  
Warrants issued for services                 1,713                   1,713  
Purchase of treasury stock, net of broker fees                         (7,370,000 )           (7,370,000 )
Re-sale of treasury stock, net of broker fees                       7,370,000             7,370,000  
Fees associated with equity raise                 (29,832 )                 (29,832 )
Net loss, for the year ended April 30, 2019                             (9,278,217 )     (9,278,217 )
Balance at April 30, 2019     18,665,551     $ 18,666     $ 68,562,727     $ (70,000 )   $ (42,049,965 )   $ 26,461,428  

For the year ended April 30, 2018

                Additional                 Total  
    Common Stock     Paid-In     Treasury     Accumulated     Stockholders'  
    Shares     Amount     Capital     Stock     Deficit     Equity  
Balance at April 30, 2017     13,504,012     $ 13,504     $ 33,607,423     $ (70,000 )   $ (25,710,687 )   $ 7,840,240  
                                                 
Stock-based compensation                 642,566                   642,566  
Common stock issued for stock options exercised for cash     136,563       137       475,688                   475,825  
Common stock issued for cashless warrant exercise     171,962       172       (172 )                  
Common stock issued for warrants exercised for cash     87,775       88       246,292                   246,380  
Warrants issued with senior secured term loan                 478,428                   478,428  
Fees associated with equity raise                 (2,215,730 )                 (2,215,730 )
Restricted stock issued for services     10,000       10       88,689                   88,699  
Common stock issued for acquisition     1,203,209       1,203       10,214,041                   10,215,244  
Common stock issued in equity raise     3,220,000       3,220       23,019,780                   23,023,000  
Net loss, for the year ended April 30, 2018                             (7,061,061 )     (7,061,061 )
Balance at April 30, 2018     18,333,521     $ 18,334     $ 66,557,005     $ (70,000 )   $ (32,771,748 )   $ 33,733,591  


ASPEN GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

    For the     For the  
    Year ended     Year ended  
    April 30,     April 30,  
    2019     2018  
Cash flows from operating activities:                
Net loss   $ (9,278,217 )   $ (7,061,061 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Bad debt expense     854,008       535,366  
Gain on extinguishment of warrant liability           (52,500 )
Depreciation and amortization     2,170,098       1,092,283  
Stock-based compensation     1,190,385       642,566  
Warrants awarded to directors for service     1,713        
Loss on asset disposition           27,590  
Amortization and write-off origination fees           829,794  
Amortization of debt discounts     40,881        
Amortization of debt issue costs     54,247        
Cash paid to settle convertible debt     60,932        
Amortization of prepaid shares for services     8,285       80,415  
Changes in operating assets and liabilities:                
Accounts receivable     (6,477,948 )     (3,360,277 )
Prepaid expenses     (219,624 )     (13,593 )
Accrued interest receivable           (45,400 )
Other receivables     182,424       (103,105 )
Other assets     (44,660 )     (528,549 )
Accounts payable     (527,993 )     1,319,268  
Accrued expenses     (7,436 )     280,697  
Deferred rent     663,376       22,079  
Refunds due students     358,660       505,265  
Deferred revenue     642,729       (1,953 )
Other liabilities     112,126       221,180  
Net cash used in operating activities     (10,216,014 )     (5,609,935 )
                 
Cash flows from investing activities:                
Purchases of courseware and accreditation     (91,522 )     (48,388 )
Purchases of property and equipment     (2,531,521 )     (1,836,618 )
Notes receivable           900,000  
Cash paid in acquisition           (2,589,719 )
Proceeds from promissory note interest receivable           53,400  
Net cash used in investing activities     (2,623,043 )     (3,521,325 )
                 
Cash flows from financing activities:                
Repayment of convertible note payable     (2,000,000 )      
Proceeds of equity offering           23,023,000  
Disbursements for equity offering costs     (29,832 )     (2,215,730 )
Proceeds from senior secured term loan           7,500,000  
Repayment of senior secured loan           (7,500,000 )
Proceeds of stock options and warrants exercised     228,201       722,205  
Purchase of treasury stock     (7,370,000 )      
Re-sale of treasury stock     7,370,000        
Offering costs paid on debt financing     (100,000 )     (351,367 )
Closing costs of senior secured loans     (33,693 )      
Cash paid to settle convertible debt     (60,932 )      
Proceeds of senior secured loan     10,000,000        
Net cash provided by financing activities     8,003,744       21,178,108  

ASPEN GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

    For the     For the  
    Year ended     Year ended  
    April 30,     April 30,  
    2019     2018  
Net increase (decrease) in cash and cash equivalents   $ (4,835,313 )   $ 12,046,848  
Cash, restricted cash, and cash equivalents at beginning of year     14,803,065       2,756,217  
Cash and cash equivalents at end of year   $ 9,967,752     $ 14,803,065  
                 
Supplemental disclosure cash flow information                
Cash paid for interest   $ 118,217     $ 540,341  
Cash paid for income taxes   $     $  
                 
Supplemental disclosure of non-cash investing and financing activities                
Warrants issued as part of revolving credit facility   $ 255,071     $  
Warrants issued as part of senior secured term loans   $ 360,516     $ 478,428  
Assets acquired net of liabilities assumed for non-cash consideration   $     $ 12,215,244  
Common stock issued for services   $ 29,809     $ 88,699  

The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheet that sum to the same such amounts shown in the consolidated statement of cash flows:

    For the     For the  
    Year ended     Year ended  
    April 30,     April 30,  
    2019     2018  
Cash   $ 9,519,352     $ 14,612,559  
Restricted cash     448,400       190,506  
Total cash and restricted cash   $ 9,967,752     $ 14,803,065  

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