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Aspen Group Reports Record Revenue of $5.7 million in Q3 Fiscal 2018

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NEW YORK, March 15, 2018 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (NASDAQ:ASPU), a post-secondary education company, today announced financial results for its 2018 third quarter ended January 31, 2018, highlighted by revenue of $5.7 million, and active student body growth at Aspen University (AU) of 49% year-over-year and 110% active student body growth at United States University (USU) since May, 2017 (9-month period). Both Aspen University and United States University ended the quarter with nursing students representing 73% of their active student body.

Michael Mathews, Chairman & CEO of Aspen Group, commented, "We're pleased to report that already 46% of USU's total active students have selected to pay for their education through a monthly payment method. This immediate uptake, particularly from Nurse Practitioner students at USU, gives us great confidence that USU will follow in AU's footsteps with the overwhelming majority of students paying month-to-month."

Fiscal Q3 2018 Financial Highlights:*

  • Revenue totaled $5,701,958, an increase of 53% as compared to the prior fiscal year;
  • GAAP Gross Profit totaled $2,900,633, a 29% increase as compared to the prior fiscal year;
  • Net Loss applicable to shareholders of ($2,147,945), as compared to Net Income of $7,377 in the prior fiscal year; Diluted Net Loss per share was $(0.15), as compared to $0.00 in the prior fiscal year;
  • EBITDA, a non-GAAP financial measure, totaled $(1,588,565);
  • Adjusted EBITDA, a non-GAAP financial measure, totaled $(597,305);

Fiscal 2018 Third Quarter Financial and Operational Highlights:*

    Aspen University   United States University
    Q3 FY'2018   Q3 FY'2018
New Student Enrollments   1,164   103*
Active Student Body   6,066   446
-College of Nursing Students   4,401   326
Monthly Payment Method Students   4,194   204

For the third quarter, revenues increased 53% to $5,701,958 as compared to $3,735,626 for the same period the prior year. GAAP Gross Profit increased to $2,900,633 or 51% Gross Margin. Net loss applicable to shareholders was ($2,147,945) or Diluted Net Loss per share of $(0.15). EBITDA, a non-GAAP financial measure, was $(1,588,565) or (28%). Adjusted EBITDA, a non-GAAP financial measure, was $(597,305) or (10%).

One-time expenses related to the acquisition of United States University totaled $610,219, which represented an increase in the company's EPS loss by an additional $(0.04).

Aspen University increased its internet advertising spend rate sequentially by approximately $167,000 or 17%, primarily the result of a spending increase at the Doctoral level during the month of January. Additionally, the company launched a 9-person outside sales force in January, initially targeting the San Diego, Los Angeles, Phoenix and NY Metropolitan areas. These two sales & marketing investment initiatives are designed to drive incremental enrollment growth in the upcoming 2019 fiscal year, consequently the company's gross margin and marketing efficiency ratios are expected to moderately decline short-term as a result.

*All comparatives include USU financial results for the two month period from December 1, 2017 – January 31, 2018.

Excluding the $610,219 one-time USU acquisition expenses, G&A increased sequentially by $900,750. The acquisition of United States University accounted for over three-quarters of the G&A increase, as the company's non-faculty full-time staff rose from 110 to 142 employees. The majority of the remaining increase was a one-time expense of legal fees related to the HEMG NJ bankruptcy proceeding in which the company is a creditor. On a year-over-year basis, G&A rose by 119%, from $2,133,074 to $4,677,359.

The following table presents gross profit calculated in accordance with GAAP:

    For the Quarters Ended
    January 31,
    2018*     2017
           
Revenues   $ 5,701,958     $ 3,735,626
               
Costs of revenues (exclusive of amortization shown separately)     2,665,664       1,359,131
               
Amortization expenses excluded from cost of revenues     135,661       119,577
               
GAAP gross profit   $ 2,900,633     $ 2,256,918


The following table presents a reconciliation of EBITDA and Adjusted EBITDA to Net loss, a GAAP financial measure:

    For the Quarters Ended  
    January 31,  
    2018*     2017  
Net income (loss)   $ (2,147,945 )   $ 7,377  
Interest expense, net of interest income     211,486       78,317  
Depreciation & amortization     347,894       132,727  
EBITDA (loss)     (1,588,565 )     218,421  
Bad debt expense     132,644       (25,680 )
USU Acquisition expenses     610,219        
Non-recurring charges     85,853       146,809  
Stock-based compensation     162,544       96,498  
Adjusted EBITDA (Loss)   $ (597,305 )   $ 436,048  


Fiscal Year 2018 Fourth Quarter Business Update:

The company expects to have approximately 70 enrollment advisors employed by early-April, approximately one month ahead of its original fiscal year-end target date. Consequently, the company intends to increase its internet marketing monthly spend rate to over $600,000 beginning with the month of April.

Revenues for fiscal year 2018 fourth quarter are expected to increase by at least $1 million sequentially, or over $6.7 million.

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, operating income, 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 comparison.  Our management recognizes that the non-GAAP financial measures have inherent limitations because of the excluded items described above.

Aspen Group defines Adjusted EBITDA as earnings (or loss) from continuing operations before the items in the table above. Aspen Group excludes these expenses because they are non-cash or non-recurring in nature.

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.

Conference Call:

Aspen Group, Inc. will host a conference call to discuss its fiscal year 2018 third quarter (ending January 31, 2018) financial results and business outlook on Thursday, March 15, 2018, at 4:30 p.m. (ET).  The conference call can be accessed by dialing toll-free (844) 452-6823 (U.S.) or (731) 256-5216 (international), passcode 6565836. 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 6565836.

About Aspen Group, Inc.:

Aspen Group, Inc. is a publicly held, for-profit post-secondary education company headquartered in New York, NY.  It owns two accredited universities, Aspen University and United States University. Aspen Group's vision is to make college affordable again in America.

Aspen University's mission is to offer any motivated college-worthy student the opportunity to receive a high quality, responsibly priced distance-learning education for the purpose of achieving sustainable economic and social benefits for themselves and their families. Aspen University is dedicated to providing the highest quality education experiences taught by top-tier faculty - 54% of Aspen University's faculty hold doctoral degrees. To learn more about Aspen University, visit www.aspen.edu.

United States University began its institutional history in 1997 as InterAmerican College. In 2010, the school was renamed to United States University and recently moved its campus into the heart of San Diego. United States University is regionally accredited by the Accrediting Commission for Senior Colleges and Universities of the Western Association of Schools and Colleges, offering bachelor and master level degree programs in nursing, education, health science, and business & management. To learn more about United States University, visit www.usuniversity.edu.

Forward-Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including USU students electing monthly payment plans as have AU students, the expected short-term impact of internet and outside sales expenses and future marketing spend rate and fourth quarter anticipated revenues. 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 unexpected difficulties integrating United States University, a change in the effectiveness of our marketing and changes in the economy. Further information on our risk factors is contained in our filings with the SEC, including our Form 10-K for the year ended April 30, 2017. 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
 
    January 31,     April 30,  
    2018     2017  
    (Unaudited)        
Assets            
             
Current assets:            
Cash and cash equivalents   $ 3,803,080     $ 2,756,217  
Restricted cash     190,506        
Accounts receivable, net of allowance of $544,492 and $328,864, respectively     8,592,958       4,434,862  
Prepaid expenses     288,640       133,531  
Promissory note receivable           900,000  
Other receivables     233,862       81,464  
Accrued interest receivable           8,000  
Total current assets     13,109,046       8,314,074  
               <
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