XML 38 R15.htm IDEA: XBRL DOCUMENT v3.20.2
Business and Geographic Segment Information
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Business and Geographic Segment Information Business and Geographic Segment Information
Laureate’s educational services are offered through six operating segments: Brazil, Mexico, Andean, Central America, Rest of World and Online & Partnerships. Following the March 2020 sale of NSAD, Laureate’s last remaining U.S. campus-based institution, the Central America & U.S. Campuses segment is now called the Central America segment. Laureate determines its operating segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.

Our campus-based segments generate revenues by providing an education that emphasizes profession-oriented fields of study with undergraduate and graduate degrees in a wide range of disciplines. Our educational offerings are increasingly utilizing online and hybrid (a combination of online and in-classroom) courses and programs to deliver their curriculum. In response to the COVID-19 pandemic, we have temporarily transitioned the educational delivery method at all of our campus-based institutions to be online and are leveraging our existing technologies and learning platforms to serve students outside of the traditional classroom setting. Many of our largest campus-based operations are in developing markets which are experiencing a growing demand for higher education based on favorable demographics and increasing secondary completion rates, driving increases in participation rates and resulting in continued growth in the number of higher education students. Traditional higher education students (defined as 18-24 year olds) have historically been served by public universities, which have limited capacity and are often underfunded, resulting in an inability to meet the growing student demand and employer requirements. This supply and demand imbalance has created a market opportunity for private sector participants. Most students finance their own education. However, there are some government-sponsored student financing programs which are discussed below. These campus-based segments include Brazil, Mexico, Andean, Central America, and Rest of World. Specifics related to each of these campus-based segments and our Online & Partnerships segment are discussed below.

In Brazil, approximately 73% of post-secondary students are enrolled in private higher education institutions. While the federal government defines the national curricular guidelines, institutions are licensed to operate by city. Laureate owns 12 institutions in seven states throughout Brazil, with a particularly strong presence in the competitive São Paulo market. Most students finance their own education while others rely on the government-sponsored programs such as Prouni and Fundo de Financiamento Estudantil (FIES).

Public universities in Mexico enroll approximately two-thirds of students attending post-secondary education. However, many public institutions are faced with capacity constraints or the quality of the education is considered low. Laureate owns two institutions and is present throughout the country with a footprint of over 40 campuses. Each institution in Mexico has a national license. Students in our Mexican institutions typically finance their own education.
The Andean segment includes institutions in Chile and Peru. In Chile, private universities enroll approximately 72% of post-secondary students and there are government-sponsored student financing programs. In Peru, the public sector plays a significant role, but private universities are increasingly providing the capacity to meet growing demand.

The Central America segment includes an institution in Honduras, which is included in Discontinued Operations. Students in Central America typically finance their own education.

The Rest of World segment includes campus-based institutions in Asia Pacific with operations in Australia, Malaysia and New Zealand. Additionally, the Rest of World segment manages one institution in China through a joint venture arrangement. The institution in Malaysia is included in Discontinued Operations.

The Online & Partnerships segment includes fully online institutions that offer profession-oriented degree programs in the United States through Walden University (Walden), a U.S.-based accredited institution, and through the University of Liverpool and the University of Roehampton in the United Kingdom. These online institutions primarily serve working adults with undergraduate and graduate degree program offerings. Students in the United States finance their education in a variety of ways, including Title IV programs. We no longer accept new enrollments at the University of Liverpool and the University of Roehampton, which are in a teach-out process.

As discussed in Note 1, Description of Business, and Note 4, Discontinued Operations and Assets Held for Sale, a number of our subsidiaries have met the requirements to be classified as discontinued operations, including the entire Central America segment. As a result, the operations of the Central America segment has been excluded from the segment information for all periods presented. In addition, the portion of the Rest of World reportable segment that is included in Discontinued Operations has also been excluded from the segment information for all periods presented.

Intersegment transactions are accounted for in a similar manner as third-party transactions and are eliminated in consolidation. The Corporate amounts presented in the following tables include corporate charges that were not allocated to our reportable segments and adjustments to eliminate intersegment items.

We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income (loss) from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: Gain (loss) on sale or disposal of subsidiaries, Foreign currency exchange gain, net, Other (expense) income, net, (Loss) gain on derivatives, Loss on debt extinguishment, Interest expense, Interest income, Depreciation and amortization expense, Loss on impairment of assets, Share-based compensation expense and expenses related to our Excellence-in-Process (EiP) initiative. EiP is an enterprise-wide initiative to optimize and standardize Laureate’s processes, creating vertical integration of procurement, information technology, finance, accounting and human resources. It included the establishment of regional shared services organizations (SSOs) around the world, as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also includes other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure and certain non-recurring costs incurred in connection with the planned dispositions described in Note 4, Discontinued Operations and Assets Held for Sale, and the completed dispositions described in Note 5, Dispositions. Beginning in the third quarter of 2019, EiP also includes expenses associated with an enterprise-wide program aimed at revenue growth.

When we review Adjusted EBITDA on a segment basis, we exclude intercompany revenues and expenses related to network fees and royalties between our segments, which eliminate in consolidation. We use total assets as the measure of assets for reportable segments.
The following tables provide financial information for our reportable segments, including a reconciliation of Adjusted EBITDA to Income from continuing operations before income taxes and equity in net (loss) income of affiliates, as reported in the Consolidated Statements of Operations:
For the three months endedFor the six months ended
June 30,June 30,
2020201920202019
Revenues
Brazil$118,519  $197,106  $202,200  $307,074  
Mexico114,864  162,455  269,071  318,919  
Andean345,867  422,994  435,375  561,937  
Rest of World62,559  51,186  106,135  84,618  
Online & Partnerships148,885  159,715  305,390  321,489  
Corporate984  (1,053) 2,064  (562) 
Revenues$791,678  $992,403  $1,320,235  $1,593,475  
Adjusted EBITDA of reportable segments
Brazil$41,590  $58,856  $22,390  $28,200  
Mexico19,704  31,585  43,014  57,413  
Andean160,692  186,530  98,542  153,287  
Rest of World19,688  12,109  24,525  8,750  
Online & Partnerships43,400  49,859  86,681  98,435  
Total Adjusted EBITDA of reportable segments285,074  338,939  275,152  346,085  
Reconciling items:
Corporate(26,029) (40,145) (52,982) (76,865) 
Depreciation and amortization expense(40,117) (49,342) (84,276) (96,550) 
Loss on impairment of assets(445,085) (470) (448,853) (470) 
Share-based compensation expense(4,615) (4,748) (6,596) (7,735) 
EiP expenses(24,008) (27,069) (54,360) (39,329) 
Operating (loss) income(254,780) 217,165  (371,915) 125,136  
Interest income1,016  2,844  3,683  6,397  
Interest expense(33,812) (41,466) (69,922) (96,119) 
Loss on debt extinguishment—  (15,595) —  (26,217) 
(Loss) gain on derivatives(1,428) 2,632  (626) 7,815  
Other (expense) income, net(406) 7,704  (508) 8,101  
Foreign currency (loss) gain, net(4,903) 8,881  31,041  4,135  
Gain on sales of subsidiaries, net93  —  2,822  —  
Income from continuing operations before income taxes and equity in net (loss) income of affiliates$(294,220) $182,165  $(405,425) $29,248  
June 30, 2020December 31, 2019
Assets
Brazil$834,277  $1,068,362  
Mexico1,099,565  1,315,377  
Andean1,345,984  1,715,145  
Rest of World239,237  194,409  
Online & Partnerships1,251,246  1,303,811  
Corporate and Discontinued Operations1,183,368  918,524  
Total assets$5,953,677  $6,515,628