ASPU - Aspen Group

[steelheadhunter]

Has anyone taken a look at this company?

 

On track to do 22m in FY18 revenue ends this month. Reached breakeven at 14m and now is marketing spend to capture more students.

 

Company is a leader in online for profit education for employed nurses looking for an advanced degree.

 

CAC is around $825 with LTV of $8500 that should grow as more expensive graduate degrees are offered.

 

Yield on marketing dollars is 13% which is uncanny.

 

CEO ran and sold Interclick for $270m to Yahoo.

 

20m shares outstanding, estimates call for 39m in revenue this FY and 65-70m FY20.

 

They have a pay as you go model so students only pay $250-$350 per month to go to school which is a huge comp advantage versus other schools and ends up being 30-45% cheaper.

 

Might not be the greatest education but its good enough and given the students already have jobs and employers are also helping with costs lowers the risk.

 

Seems like market is big enough to get to 200m plus over next 4 years especially if they get into undergrad market or other verticals like psychology, etc.

 

GrandCanyon (LOPE) for example is growing enrollments 8% versus Aspen at 55% accelerating to 75% and LOPE trades at 4.5x revenue

 

Aspen just issued equity at $7.15 so they have a funded balance sheet and its likely they will pay off debt with some of cash they just raised.

 

Be curious if anyone has any thoughts as this still seems under the radar at $150m market cap and limited liquidity

[Parsad]

Please add the name of the company after the ticket symbol when starting a new thread.  I've done it for you on this thread and another one. 

 

Thanks very much!

 

Sanjeev

[grandmasterG]

Has anyone taken a look at this company?

 

On track to do 22m in FY18 revenue ends this month. Reached breakeven at 14m and now is marketing spend to capture more students.

 

Company is a leader in online for profit education for employed nurses looking for an advanced degree.

 

CAC is around $825 with LTV of $8500 that should grow as more expensive graduate degrees are offered.

 

Yield on marketing dollars is 13% which is uncanny.

 

CEO ran and sold Interclick for $270m to Yahoo.

 

20m shares outstanding, estimates call for 39m in revenue this FY and 65-70m FY20.

 

They have a pay as you go model so students only pay $250-$350 per month to go to school which is a huge comp advantage versus other schools and ends up being 30-45% cheaper.

 

Might not be the greatest education but its good enough and given the students already have jobs and employers are also helping with costs lowers the risk.

 

Seems like market is big enough to get to 200m plus over next 4 years especially if they get into undergrad market or other verticals like psychology, etc.

 

GrandCanyon (LOPE) for example is growing enrollments 8% versus Aspen at 55% accelerating to 75% and LOPE trades at 4.5x revenue

 

Aspen just issued equity at $7.15 so they have a funded balance sheet and its likely they will pay off debt with some of cash they just raised.

 

Be curious if anyone has any thoughts as this still seems under the radar at $150m market cap and limited liquidity

 

An interesting one to watch, ceo Mathews is a man on a mission, wanting to change online higher education with his pay as you go model

with their lower marketing cost and more attractive offer for students, they have the potential to grow rapidly and for years to come, the market potential is huge

one thing to watch is that the ceo may be a bit too ambitious and trying to grow to fast, I wish he would grow a bit less fast and focus more on becoming profitable

[NorteCapital]

The company looks interesting. However:

 

Q3 Transcript - 15 March

"Let me reiterate today that we have no plans to raise additional equity this calendar year and should we decided to increase our cash position later this year, we would first look to increase our existing $10 million credit facility before we would consider equity." CEO Michael Mathews

 

Raise new equity - 18 April

" Aspen Group, Inc. (Nasdaq:ASPU), a post-secondary education company, today announced that it intends to offer shares of its common stock in an underwritten public offering."

 

For me, this is enough to stop analyzing it. After the raise, they cancelled the credit facility that one month before they were looking to increase.

[DeepValuePlay]

The company looks interesting. However:

 

Q3 Transcript - 15 March

"Let me reiterate today that we have no plans to raise additional equity this calendar year and should we decided to increase our cash position later this year, we would first look to increase our existing $10 million credit facility before we would consider equity." CEO Michael Mathews

 

Raise new equity - 18 April

" Aspen Group, Inc. (Nasdaq:ASPU), a post-secondary education company, today announced that it intends to offer shares of its common stock in an underwritten public offering."

 

For me, this is enough to stop analyzing it. After the raise, they cancelled the credit facility that one month before they were looking to increase.

 

I agree this incident was disheartening. That said, I think the company merits another look. There is interesting research that was just posted on SumZero and makes several interesting points.

I think growth may be painful in the interim here but as the company regains profitability over the next few quarters, share price should appreciate.

[grandmasterG]

accelerating the growth even further: $ 10 million loan, the next few quarters are going to be interesting

 

https://www.aspu.com/press-releases/detail/380/aspen-group-inc-announces-the-closing-of-a-10-million

[DeepValuePlay]

I agree.

The CEO said the next quarter will be a huge step up and I'm looking forward to it.

Now that the balance sheet has significant liquidity management are regaining very profitable growth.

We should see (almost) cash flow neutral next quarter.

[Deepdive]

I actually think that Aspen could be a huge multi-year multi-bagger.  The CEO is a bit nuts.  But I think there is a thin line between visionaries and crazies.  I was skeptical when he hosted a conference call to announce the new pre-licensure program.  Everything he said has come true.  People are dying to sign up for the program.  The product sells itself.  I just wish they have a better balance sheet.  I hope we can crowdsource the research here.  If you have friends or family who are nurses or looking at nursing program, it would be great if they can provide some feedback. 

[Spekulatius]

My wife is RN. She got her degree at a community college 6 years ago as a second career. It was a pretty demanding study. At the time she was on school, there were news about nursing students from private schools getting stranded because the private schools went out of business.

 

Admission wasn’t too bad, although there was a short waiting list because after the recession (when she started) a lot people started nursing because there were jobs available. However, the waiting list depends on the school and location. Then she had to take course to meet the requirements (Math, science etc) that many applicants did not have and struggled to obtain.

 

The tuition itself at that community college wasn’t expensive (maybe <$1500/ semester all in including books). There were practical parts like anatomy or work with patient that can’t be done online and I wonder how online universities deal with this.

 

Also, graduation rate is the wrong metric, the important one is accreditation rate, as an graduate needs to pass the NCLEX test in order to practition. Some private colleges were infamous for their student passing graduation , but failing NCLEX.

[BG2008]

My wife is RN. She got her degree at a community college 6 years ago as a second career. It was a pretty demanding study. At the time she was on school, there were news about nursing students from private schools getting stranded because the private schools went out of business.

 

Admission wasn’t too bad, although there was a short waiting list because after the recession (when she started) a lot people started nursing because there were skins available. However, the waiting list depends on the school and location. Then she had to take course to meet the requirements (Math, science etc) that many applicants did not have and struggled to obtain.

 

The tuition itself at that community college wasn’t expensive (maybe <$1500/ semester all in including books). There were practical parts like anatomy or work with patient that can’t be done online and I wonder how online universities deal with this.

 

Also, graduation rate is the wrong metric, the important one is accreditation rate, as an graduate needs to pass the NCLEX test in order to practition. Some private colleges were infamous for their student passing graduation , but failing NCLEX.

 

Great color on this. Aspen has traditionally focused on the RN to BSN conversion.  Part of the reason why they went into the pre-licensure program is that some community colleges have long wait list, 2 years, to get into nursing programs.  Some people will wait tables or work menial jobs and then lose interest.  Community colleges don't want too much enrollment as they make more money giving English lecture rather than teach all the hard sciences.  So there tends to be a back log of students trying to get in.  Great feedback that NCLEX is the real measure of success.  I don't think they would even have those measures so far.  It would be too early to see what the NCLEX passing percentage is.  It seems that they have good graduation/passing percentage for their RN to BSN. I don't actually have the data.  But the reviews online are pretty decent for Aspen.  But Aspen is about 1/2 to 1/3 the cost of other private institutions.  Where Aspen has done a better job I believe is recruiting new students.  I believe this is where Aspen, with its digital marketing past, is much much better than the local community college.  They built a business focused on lower cost of attendance for their students.  Most of it starts with lower student acquisition cost which allows them to charge much lower tuition.  There is some Geico element to this I would think.  I have compared their per credit cost to others.  They are 1/4 to 1/2 of U of Phoenix or other institutions.  Would love to keep this thread going.

 

If you have a girlfriend, boyfriend, spouse, or children, who is exploring a nursing degree, it would be great for you to chime in here.

[BG2008]

This is the probably the fastest about face on an equity offering of a company that I have seen.  The CEO is eccentric and I would say that his biggest weakness is capital markets capability which leaves ASPU constantly looking for funding.  He should market his company as "Education As A Service" not "Education As A Home Payment".  His pivots and strategic thinking is actually quite impressive.  Going after pre-licensure has been an absolute homerun.  These two press releases are about 13 hours apart. 

 

NEW YORK, Dec. 12, 2019 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (ASPU) (“the Company” or “AGI”), an education technology holding company, today announced that Aspen intends to offer and sell shares of its common stock in an underwritten public offering. Aspen also expects to grant to the underwriters a 30-day option to purchase up to an additional 15% of shares of common stock offered in the public offering.  There can be no assurance as to whether or when the proposed offering may be completed, or as to the actual size or terms of the offering.

 

Aspen intends to use the net proceeds from this offering for potential repayment of debt, to repurchase and retire approximately 430,000 shares of its common stock from certain of its directors and officers at a price equal to the net proceeds per share that Aspen will receive from the offering, before expenses, to fund capital expenditures and for general corporate purposes.

 

Canaccord Genuity LLC is acting as the sole bookrunning manager of the offering.

 

NEW YORK, Dec. 13, 2019 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (ASPU) (“the Company” or “AGI”), an education technology holding company, today announced that it has determined not to proceed with the proposed public offering of its common stock previously announced on December 12, 2019. The determination results from an assessment by the Company's management that current equity market conditions are not conducive for an offering on terms that would be in the best interests of the Company's stockholders. The offering was being made pursuant to a shelf registration statement that was declared effective by the Securities and Exchange Commission on April 18, 2018. This press release shall not constitute an offer to sell or the solicitation of an offer to buy common stock or any other securities of Aspen Group in any jurisdiction.

[BG2008]

This offering will help resolve their liquidity issues and provide them with capital to grow for the next year or two.  I just wish Michael Mathews had Elon's capital market's skills.  I think it is still early innings for Aspen as the overall market could be quite large if they can take their offerings and scale it outside of Nursing.  The pivot to Pre-licensure has been a homerun and frankly a much better solution to the high cost of education in the US.  Aspen doesn't offer an Ivy League quality education, but it likely offers something of similar quality for about 1/4 to half the cost of its competitors.  I think it's a win/win for both Aspen and students and that could really have a Lallapolooza effect as the Aspen name grows to mean something.  I think if it grows into "Okay education, but very affordable" It will be very meaningful.  This one falls into the Peter Lynch basket of a multi-bagger potential.  But I can't bring myself to size it big.   

 

One thing that is really interesting is the almost non-existent cost of customer acquisition for their pre-licensure program.  They built the classrooms and it gets filled with 400-500 students right away.  I was lucky enough to pick up a few shares in late 2018 for $5 and I think I'll hang on to this one for a while.  Generally, I think they have a bit of a edge with customer acquisition because they use a lot of banner ads rather than Google AdWords.  Google AdWords is known to result in low return on ad spend.  But their banner ads on various websites seems to generate quite good returns. 

 

 

NEW YORK, Jan. 22, 2020 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (NASDAQGM: ASPU) (“the Company” or “Aspen” or “AGI”), an education technology holding company, today closed its previously announced underwritten public offering of 2,415,000 shares of its common stock at a price to the public of $7.15 per share. The number of shares sold by Aspen includes 315,000 shares of common stock pursuant to an option granted to the underwriters to cover overallotments that was exercised in full.

 

Net proceeds from the offering to Aspen are approximately $16 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by Aspen. Aspen intends to use the net proceeds from this offering to pay for expansion of its BSN pre-licensure program and for general corporate purposes and working capital.

 

Canaccord Genuity LLC acted as the sole bookrunning manager of the offering. Craig-Hallum Capital Group LLC and Roth Capital Partners acted as lead managers of the offering.

[Spekulatius]

A few issues/ questions:

 

1) It seems that Aspen has national accreditation, but not regional. Some of the regional accreditions  (NY, CA, New England ?) are way harder than national standard, so I am not sure the Aspen’s degree is useful in many states.

 

2) How are they dealing with topics than can only be thought well with a physical presence. my wife had to work on anatomy (actually dissect cadavers) and work with ROA patients (sort of an Internet ship), when she got her RN degree in a community collage in CA. This just can’t be thought online.

 

When you skim the message board, it clear that some students report issue with respect to above or some college don’t accept credits from Aspen.

 

3) Why do they need to raise cash every 18 month?

 

BG2008, thanks for bringing this to our attention prior to the secondary. This might be a good tactical opportunity  to get into the stock, if it sells off.

 

[BG2008]

A few issues/ questions:

 

1) It seems that Aspen has national accreditation, but not regional. Some of the regional accreditions  (NY, CA, New England ?) are way harder than national standard, so I am not sure the Aspen’s degree is useful in many states.

 

2) How are they dealing with topics than can only be thought well with a physical presence. my wife had to work on anatomy (actually dissect cadavers) and work with ROA patients (sort of an Internet ship), when she got her RN degree in a community collage in CA. This just can’t be thought online.

 

When you skim the message board, it clear that some students report issue with respect to above or some college don’t accept credits from Aspen.

 

3) Why do they need to raise cash every 18 month?

 

BG2008, thanks for bringing this to our attention prior to the secondary. This might be a good tactical opportunity  to get into the stock, if it sells off.

 

USU has regional accredidation.  For those that aren't familiar, regional is more stringent than national.  They made that acquisition in essence to acquire the regional accredidation. 

 

Traditionally, their business is almost entirely RN to BSN which I don't believe require the anatomy courses etc.  USU has a campus in San Diego where people will fly out, I believe 2-3 times during their program. 

 

The Pre-licensure consist of online work for pre-requisites.  The pre-requisite is I believe $7k.  That way you can figure out whether this program is really for you or not.  After the first 2 years, you apply for student loans for $30k to finish up the last 2 years of hands on work.  CEO, Mike Mathews, told me that he was a 17 year old knuckle head that shouldn't be in college and making those financial commitments. He failed out.  It is a bit of a mission to make sure that people don't go to "economic jail" for financial decisions they make when they are 18 years old.

 

Why does the company need to raise capital every 18 months?  There are a few reasons.

 

1) They are growing 40-50% a year.  There is a 40% rule in Silicon Valley that states if you are growing 40% a year, you can afford to be profitless or if you are growing 0%, you should have a 40% margin.  I maybe botching this.  With 40% growth, they need to scale up their staffing ahead of time.  One of the best example is the enrollment advisors.  They need to hire them 6-12 months ahead of time to meet the demand of the incoming class to get them trained and ready.  This is why you don't see operating leverage.  It seems as they scale, the G&A is not scaling.  It is a function of them always hiring 6-12 months ahead in anticipation of 40% growth.  The advisors have quotas they need to meet.  But their compensation is heavily tied to making sure students stay in school. 

 

2) They offer "car payment" level payments.  There are a few payment plans, which is mostly $250/month.  Students get their degree in 4 years, but actually pay off in 6 years.  In recent years, they have scale back some of this.  They have the opposite mix of the 90/10 student loan versus self pay ratio.  Their students are 80-90% self pay and 10-20% student loans.  Despite having decent margins, the cashflow comes later. 

 

So growth and favorable payment plans for students are the main reasons why they are constantly raising capital.  The CEO is eccentric and I think he may rub people the wrong way.  I have sat in meetings where he outright says that "he's so much better than his competitors and he's running circles around them."  It is largely true.  I think the Bridgepoints and the traditional guys are toast and Aspen is the new disruptor that is scaling like a Saas business.  But it is still weird to hear someone so boastful.  He's a character alright. 

 

Can you share some of the conversations about the accredidation.  The forum reviews that I have read says

 

"Great if you do the work" 

"Professors don't care, lots of work" 

 

Let's be realistic, this is not Robin Williams in Dead Poet Society.  Most hospital require RNs to convert to BSN.  The curriculum is very cookie cutter and lots of work.  Do the work and get the BSN.  It is traditionally a very straightforward process. 

[BG2008]

This one has gone a bit parabolic lately.  I think market is a bit more comfortable after the equity raise and the B/S looks healthy.  I have Nate Tobik to thank for one of his insights.  Nate was talking about how hard it was to sell a product.  Aspen opened up a couple pre-licensure facilities for a little over $1mm each and they were filled up with 4-500 students within a year.  The pre-licensure to BSN program sells itself.  Cost of customer acquisition is something like $500 per student for total revenue of $37k.  Nate's discussion about the importance of good sales people and sales strategy really resonated with me at the right time and I decided to kind of ignore the valuation a bit in this one.  The reasoning being that if you kind of suspected that you were buying the first 10 McDonald's, is paying $100mm too much for it?  I know, it's hard to tell in advance.  But if someone can get people to graduate with a nursing degree for $37k (4 years), I think they are onto something. 

 

Also, the emergence of Google AdWords as an customer acquisition tool and Google's power was another light bulb moment for me.  Google has such pricing power that the return on ad spend is fairly low.  Aspen has traditionally relied heavily on display ads for their customer acquistion.  The CEO has a lot of experience building that out.  So if CAC (customer acquisition cost) is the new rent, then Aspen has a low rent model.  Small position and a surprise double for me since late 2018/early 2019.  I think I'll close my eyes and try to ride this one out for a little bit.  I have mentioned Aspen in my Multi-bagger thread.  I figure I will try to bump it here a bit and try to get more of you guys to look at it.  It has been very hard for me to get people serious in this name.  The for profit space just gives people shudders. 

[DTEJD1997]

A few issues/ questions:

 

1) It seems that Aspen has national accreditation, but not regional. Some of the regional accreditions  (NY, CA, New England ?) are way harder than national standard, so I am not sure the Aspen’s degree is useful in many states.

 

2) How are they dealing with topics than can only be thought well with a physical presence. my wife had to work on anatomy (actually dissect cadavers) and work with ROA patients (sort of an Internet ship), when she got her RN degree in a community collage in CA. This just can’t be thought online.

 

When you skim the message board, it clear that some students report issue with respect to above or some college don’t accept credits from Aspen.

 

3) Why do they need to raise cash every 18 month?

 

BG2008, thanks for bringing this to our attention prior to the secondary. This might be a good tactical opportunity  to get into the stock, if it sells off.

 

How in the world can somebody become a doctor or nurse by exclusively taking courses on the interwebs?

 

How do they get practical experience?  How do they know how to work a blood pressure machine if they have never touched one?  How do they know how to draw blood, make a shot, clean a wound, and on and if they've not had any physical experience?

 

Stuff like this should be shut down pronto.

[Spekulatius]

 

How in the world can somebody become a doctor or nurse by exclusively taking courses on the interwebs?

 

How do they get practical experience?  How do they know how to work a blood pressure machine if they have never touched one?  How do they know how to draw blood, make a shot, clean a wound, and on and if they've not had any physical experience?

 

Stuff like this should be shut down pronto.

 

It does make sense, if they offer RN coursework For a BS Nursing degree. An RN already has the practical knowledge to do these things so a BS degree is mostly around theoretical knowledge.

 

I do agree with you that doing an online degree for an RN would be scary.

[A Dhandho Investor]

Stock sold off today along with the overall market after posting Q3 2019 results that did not seem that bad: https://www.aspu.com/press-releases/detail/409/aspen-group-reports-record-revenue-of-12-5-million-in-the

[TLS]

Stock up big on the press release.  They went on to say CV-19 did not affect them much or at all.  Enrollment and average revenue per enrollment are way up.  I'm not sure how their online vs campus revenue is split but I'd imagine they are posed to take advantage of the (now accelerated) trend of people going online.

 

 

Aspen Group, Inc. Pre-Announces 42% Increase in Q4 2020 Revenue to $14.5 Million and FY 2020 Revenue Increase of 45% to $49.5 Million; Higher LTV Programs now Represent 44% of Revenues [/size]

[BG2008]

Added to Russell 2000 (Is this potentially the new Xpel?)

 

NEW YORK, June 10, 2020 (GLOBE NEWSWIRE) -- Aspen Group, Inc. (“AGI”) (Nasdaq: ASPU), an education technology holding company, today announced the Company is set to join the small cap Russell 2000® Index and the broad-market Russell 3000® Index at the conclusion of the annual reconstitution of the Russell stock indexes, effective after the U.S. stock market opens June 29, 2020.

 

“Inclusion in the Russell Indexes reflects Aspen Group’s substantial valuation increase over the past year, which is the result of the Company delivering strong growth and improving financial performance,” said Chairman & CEO, Michael Mathews. “The move from the Russell Microcap into the Russell 2000 and 3000 will further increase awareness of the Company with institutional investors and all our stakeholders. Aspen Group is committed to delivering long-term financial performance by focusing the majority of our investments on the roll-out of a nationwide BSN pre-licensure campus degree program and continued growth of our USU MSN-FNP degree program.”