Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company generated 79% of its revenue from U.S. domestic sales for each of the three months ended March 31, 2023 and 2022. The remaining 21% of revenue was generated from non-U.S. sales for each of the three months ended March 31, 2023 and 2022.

For the three months ended March 31, 2023, the Company recognized 55% of its revenue over time as control of the services and goods transferred to the customer, and the remaining 45% at a point in time, when the customer obtained control of the promised goods. For the three months ended March 31, 2022, the Company recognized 61% of its revenue over time, and the remaining 39% at a point in time.

Contract Assets. As of March 31, 2023, the Company recognized a contract asset of $34.1 million related to a contract at a Kaplan International business, which is included in Deferred Charges and Other Assets. The Company expects to recognize an additional $323.1 million related to this contract over the next six years. As of December 31, 2022, the contract asset was $26.3 million.

Deferred Revenue. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance, including amounts which are refundable. The following table presents the change in the Company’s deferred revenue balance:

	As of
	March 31, 2023		December 31, 2022		%
(in thousands)					Change
Deferred revenue	$	377,050	$	385,507	(2)

In April 2020, GHG received $31.5 million under the expanded Medicare Accelerated and Advanced Payment Program modified by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as a result of COVID-19. The Department of Health and Human Services started to recoup this advance 365 days after the payment was

issued. The advance has been recouped in full as of September 30, 2022. For the three months ended March 31, 2022, GHG recognized $6.4 million of the balance in revenue for claims submitted for eligible services.

The majority of the change in the deferred revenue balance is related to the cyclical nature of services in the Kaplan international division. During the three months ended March 31, 2023, the Company recognized $183.7 million related to the Company’s deferred revenue balance as of December 31, 2022.

Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be recognized as revenue in future periods. As of March 31, 2023, the deferred revenue balance related to certain medical and nursing qualifications with an original contract length greater than twelve months at Kaplan Supplemental Education was $6.8 million. Kaplan Supplemental Education expects to recognize 67% of this revenue over the next twelve months and the remainder thereafter.

Costs to Obtain a Contract. The following table presents changes in the Company’s costs to obtain a contract asset:

(in thousands)	Balance at Beginning of Period		Costs associated with new contracts		Less: Costs amortized during the period		Other		Balance at End of Period
2023	$	31,647	$	16,068	$	(19,637)	$	541	$	28,619

The majority of other activity was related to currency translation adjustments for the three months ended March 31, 2023.