Aspen Group, Inc. · OTC:ASPU
Aspen — Investor Presentation (December 2018)
45 slides from Aspen's investor presentation, Dec 10, 2018
Slide 1: Investor Presentation December 2018
Investor Presentation December, 2018Nasdaq: ASPU 1
Slide 2: Aspen Group is an education technology holding company
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. 2
Slide 3: Safe Harbor Statement
Safe Harbor Statement Certain statements in this presentation and responses to various questions include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding continued growth in nursing opportunities, projected monthly
Slide 4: Our path from EdTech company to largest nursing school in the U.S.
ASPU: Our path from EdTech company to largest nursing school in the U.S. 4 Strong demand for nurses is being fueled by the aging baby boomer population New degree programs have dramatically increased Aspen’s TAM; now estimated at >$4bn EdTech competitive advantage allows Aspen to offer lower tuition
Slide 5: Our path from EdTech company to largest nursing school in the U.S. (cont.)
ASPU: Our path from EdTech company to largest nursing school in the U.S. 5 Revolutionary Monthly Payment Plan reduces the reliance on Title IV funding Proven Management Team Potential to exploit Aspen’s EdTech advantage beyond nursing Innovative hybrid Pre-Licensure program offers BSN at 40% tuition
Slide 6: Targeting the High Growth Nursing Profession
Targeting the High GrowthNursing Profession 6
Slide 7: The aging population is fueling strong demand for nurses
The aging population is fueling strong demand for nurses 7 The Bureau of Labor Statistics (BLS) estimated in 2016 that the demand for RNs will grow by 15% over the next decade to ~3.4mm; this situation is exacerbated by the high percentage of RNs who are approaching retirement age (>30% over 50) A r
Slide 8: The aging population is fueling strong demand for nurses (Yahoo Finance)
The aging population is fueling strong demand for nurses 8 ” “ –Yahoo Finance (August 2018) It may very well be the best time to be a nurse in the U.S. The job’s strong demand, relatively high pay, rewarding nature and low-risk of automation are all compelling incentives to pursue the career.
Slide 9: The aging population is fueling strong demand for nurses (Indeed)
The aging population is fueling strong demand for nurses 9 ” “ –Martha Gimbel, Research Director at Indeed’s Hiring Lab If you look at the employment projections, health care occupations in general are going to be in high demand over the next decade. Nurses do appear to be really satisfied with thei
Slide 10: The aging population is fueling strong demand for nurses (WSJ)
The aging population is fueling strong demand for nurses 10 ” “ –WSJ (March 2016) Montana State University nursing economist Peter Buerhaus estimates a shortage of about 130,000 nurses nationwide by 2025, not as acute as once feared but still a significant staffing challenge.
Slide 11: Highly educated nurses are in demand with salaries to match
Highly educated nurses are in demand – with salaries to match 11 Further education in the nursing industry is highly regarded by employers and is seen as a reliable way for RNs to improve their career prospects The marketplace recognizes the value of additional education. ” “ –Peter Buerhaus, Jean V
Slide 12: Highly educated nurses are in demand with salaries to match
Highly educated nurses are in demand – with salaries to match 12 Degree Avg. Salary*** Purpose # Students* Associate $67,463 Minimum qualification required to become an RN n/a Pre-Licensure BSN $77,249 Undergraduate degree for those with no experience 201,517 RN to BSN $77,249 Designed for RNs to up
Slide 13: Higher salaries and demonstrated ROI incentivize higher graduation rates
Higher salaries and demonstrated ROI incentivize higher graduation rates 13 By approaching the development of their degree programs from the perspective of the student, Aspen has ensured that there is an expedient ROI following graduation At Aspen, our philosophy is simple. We believe if we put stud
Slide 14: Higher salaries and demonstrated ROI incentivize higher graduation rates
Higher salaries and demonstrated ROI incentivize higher graduation rates 14 Degree Program Tuition ($) Salary Uplift ($)* Payback (yrs) RN to BSN 9,750 9,786 1.00 MSN 11,700 16,260 0.72 DNP 18,900 21,577 0.88 MSN-FNP (USU) 27,000 27,361 0.98 These short payback periods demonstrate how by completing
Slide 15: Two new nursing programs expanded TAM to more than $4bn
With the addition of two new nursing programs, ASPU dramatically expanded TAM to more than $4bn 15 As the company has evolved, Aspen has looked to expand within the nursing vertical via the creation of new degree programs that offer attractive ROI characteristics to students Increasing the total add
Slide 16: Two new nursing programs expanded TAM to more than $4bn
With the addition of two new nursing programs, ASPU dramatically expanded TAM to more than $4bn 16 Launched CCNE Accredited Degree Program Market Size ($) 2011 Q4 2013 2012 Q4 2014 Master of Science in Nursing (MSN)Bachelor of Science in Nursing (RN to BSN) 478mm 2017 In Progress Doctor of Nursing P
Slide 17: Increased offerings and market share driving revenue growth
Increased offerings and gains in market share driving revenue growth 17
Slide 18: Disruptive Business Model
18 Disruptive Business ModelMaking College Affordable with Outstanding Student Outcomes
Slide 19: Monthly payment plans are a revolutionary concept in for-profit education
ASPU’s monthly payment plans are a revolutionary concept in for-profit education 19 The monthly payment plan “MPP” allows students to essentially pay as they go, reducing the reliance on Title IV government funding These plans have also proved popular with healthcare providers looking to upskill the
Slide 20: Monthly payment plans are a revolutionary concept in for-profit education
ASPU’s monthly payment plans are a revolutionary concept in for-profit education 20 Degree Program Monthly Payment ($) # of Months (tuition)* Tuition ($) RN to BSN (AU, USU) 250 39 (AU) or 47 (USU) 9,750 (AU) or 11,700 (USU) MSN (AU, USU) 325 36 (AU) or 38/40 (USU) 11,700 (AU) or 12,350/13,000 (USU)
Slide 21: 70% of active students pay monthly, contractual value >$45mm
70% of active students pay monthly, for a total Contractual Value >$45mm 21 Recurring revenue model delivering ~$1.3 million of monthly cash receipts (Aspen U + USU) An additional 441 Aspen U graduates remain on monthly payment plans (monthly cash receipts of ~$130,000)* *As of 11/15/18
Slide 22: 70% of active students pay monthly, contractual value >$45mm
70% of active students pay monthly, for a total Contractual Value >$45mm 22
Slide 23: Low tuition model predicated on cost/enrollment and graduation rate
Aspen’s low tuition model is predicated on two factors: cost/enrollment and graduation rate 23 Lower cost/ enrollment reduces the number of courses required to cover the marketing cost Higher graduation rates increase the average number of courses taken increasing the revenue/ enrollment These two f
Slide 24: Low cost of enrollment driven by in-house advertising and CRM
Aspen’s low cost of enrollment is driven by its in-house internet advertising and CRM system 24 The durability of this competitive advantage can be seen in the industry-leading conversion rate The traditional marketing approach of an online educator has been to purchase leads from third party provid
Slide 25: Student outcomes are key to our success
Student outcomes are key to our success 25 Upon completing their studies, % of alumni that responded they achieved the goals they had when they started the course or program 92.4% Student Satisfaction Compared to the national average of 60% of students who began a bachelor’s degree at a 4-year insti
Slide 26: EdTech Infrastructure Driving Operational Efficiency
EdTech Infrastucture Driving Industry Leading Operational Efficiency 26
Slide 27: Best-in-class EdTech stack designed to drive better student outcomes
Best-in-class EdTech stack designed to drive better student outcomes 27 Vertically-Integrated Student Acquisition System Data Warehouse CRM System Student Information System Classroom (D2L) Student Portal
Slide 28: EdTech advantage allows among the lowest tuition rates in the industry
EdTech advantage allows Aspen to offer among the lowest tuition rates in the industry 28 ” “ –AACN (December 2017) Looking closer at the AACN data, the survey found little variation in the average rate of job offers at the time of graduation by institutional type.
Slide 29: EdTech advantage allows among the lowest tuition rates in the industry
EdTech advantage allows Aspen to offer among the lowest tuition rates in the industry 29 Degree Program Aspen / USU Chamberlain WGU Walden Capella RN to BSN (AU) 9,750 28,870 14,180 17,785 18,000 MSN (AU) 11,700 27,480 15,780 25,320 21,000 DNP (AU) 18,900 39,660 N/A 40,790 41,080 MSN – FNP (USU) 23,
Slide 30: Aspen U quickly gained market share since BSN accreditation
Aspen U quickly gained market share since BSN program achieved CCNE accreditation in FY’15 30 ASPU is well positioned to continue to increase share. The annual number of new students is estimated to be around 100,000 meaning in the TTMs Aspen’s run rate share of new students was ~4%. Aspen Group’s M
Slide 31: Ample opportunity to invest in business at attractive ROIs
Aspen has ample opportunity to invest in its business at very attractive ROIs 31 RN to BSN / MSN DNP MSN-FNP (USU) Revenue / Enrollment* 7,350 12,600 17,800 Marketing Cost / Enrollment* (1,317) (2,143) (1,517) Enrollment Advisor* (811) (811) (870) Instructional Costs** (1,260) (1,575) (4,140) Contri
Slide 32: Student costs front-loaded, gross profit/student profitable after 3 courses
Total student costs are front-loaded with gross profit/student turning profitable after 3 courses 32
Slide 33: Hybrid BSN pre-licensure degree in a >$3bn market
By offering a hybrid BSN P-L degree, Aspen has created an affordable offering in a >$3bn market 33 The AACN has estimated that there are 190,000 qualified entry level nursing students in the United States annually; however, there is only capacity amongst US nursing schools to accept 70% of worthy ap
Slide 34: Hybrid BSN pre-licensure degree and HonorHealth partnership
By offering a hybrid BSN P-L degree, Aspen has created an affordable offering in a >$3bn market 34 Given the dual use of the Phoenix campus the facility could feasibly educate >700 students, representing a >$14mm revenue opportunity per campus HonorHealth will provide the “clinical home” and capex b
Slide 35: Proven Business Model – Aspen University AEBITDA Profitable
Proven Business Model – Aspen University* AEBITDA Profitable for Past 10 Quarters 35 Aspen Group AEBITDA profitable from July 2016 (Q1 FY’17) to October 2017 (Q2 FY’18). Following acquisition of USU in December 2017, Aspen University remains AEBITDA profitable
Slide 36: Proven Management Team
Proven Management Team 36 Former CEO of Interclick (Nasdaq: ICLK, 2007-2011), sold to Yahoo! in 2011 for $270mmFormer Operating Exec of CKS Partners (Nasdaq: CKSG, 1994-1998), sold to USWeb in 1998 for $344mm Michael Mathews Dr. Cheri St. Arnauld Chairman & Chief Executive Officer Former CAO of Gran
Slide 37: ASPU trades at a discount vs. comps
ASPU trades at a sizeable discount vs. comps1 despite EdTech advantage and higher growth 37 For-Profit Universities Education Technology Metric ASPU ATGE STRA LOPE PS TWOU CHGG LTM Revenue Growth2 58.9% 4.3% 12.2% -0.8% 38.0% 48.9% 22.2% NTM Revenue Growth2 44.3% 3.8% 78.6%3 -29.6% 21.5% 24.1% 14.4%
Slide 38: Equity Snapshot
Equity Snapshot 38 As of 12/7/18 Ticker on Nasdaq: ASPU Share Price: $5.82 52 Week Range: $5.01 - $9.61 Market Cap: $107 Million Shares Outstanding: 18.4 Million Mgmt & BOD Ownership: 19% Closed $5mm credit facility with Leon Cooperman on 11/5/18
Slide 39: Appendix
GROUP INC. Appendix 39
Slide 40: Q2 FY'19 KPI Results—Enrollments
Q2 FY’19 KPI Results—Enrollments 40 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 EAs Enrolls/Month/EA Aspen (Nursing + Other) 1,044* 972* 980 882 1,104 50 7.4 Aspen (Doctoral) 116 118 133 6 7.4 USU (FNP + Other) 177 221 271 13 6.9 Aspen (Pre-Licensure BSN, AZ Campus) 93 57** 3 6.3 Total 1,044 972 1,273 1,314 1,565
Slide 41: KPI Results—Student Body
KPI Results—Student Body 41 *Active Degree-Seeking Students” are defined as degree-seeking students who were enrolled in a course during the quarter reported, or are registered for an upcoming course.
Slide 42: Q2 Fiscal Year 2019 Results
Q2 Fiscal Year 2019 Results 42 For the Quarter Ended October 31, 2018 Revenues $ 8,095,344 Operating expenses Cost of revenues 3,835,515 General and administrative 6,210,411 Depreciation and amortization 524,067 10,569,993 Operating loss from operations (2,474,649) Other income (expense): Other inco
Slide 43: Net (Loss)/Income, Adjusted EBITDA and EPS
Net (Loss)/Income, Adjusted EBITDA and EPS 43 Consolidated AGI AU USU Net (Loss)/Income $ (2,475,079) $ (1.79M) $ 0.43M $(1.12M) Adjusted EBITDA $ (1,304,543) $ (1.44M) $ 0.90M $(0.76M) Net Loss Per Share ($0.13)
Slide 44: Subsidiary KPIs—Q2 FY'19
Subsidiary KPIs—Q2 FY’19 Ratios 44 Consolidated AU USU Revenues $8,095,344 67% YOY Ratios as a Percentage of Total AGI Revenue Ratios as a Percentage of AU Revenue Ratios as a Percentage of USU Revenue Instructional costs $1,586,904 20% 17% 29% Marketing costs $2,248,611 28% 25% 27% Operational Amor
Slide 45: Net Loss to Adjusted EBITDA Reconciliation (Q2 FY'19)
Net Loss to Adjusted EBITDA Reconciliation(Q2 FY’19) 45 Net Loss ($2,475,079) Interest Expense 41,922 Taxes 9,276 Depreciation & Amortization 524,067 EBITDA (1,899,814) Bad Debt Expense 171,084 Stock-Based Compensation 305,315 Non-recurring Charges 118,872 Adjusted EBITDA (Loss) ($1,304,543)