Risk Factors Update Summary

• Revenues increased by $168.7 million, a 27% increase from 2022. Organic enrollment increased by 10%, adding $52.2 million in revenue.
• Addition of new risk factors related to cybersecurity threats and information security programs.
• Increase in operating income from $270.0 million in 2022 to $338.8 million in 2023.
• Introduction of the 2024 Annual Incentive Plan detailing bonus targets and components. This change outlines a structured incentive plan.
• Goodwill increased by $78 million from $583 million to $661 million.
• The transfer agent for common stock remains American Stock Transfer & Trust Company, LLC.
• Adjusted EBITDA increased by $53.6 million, a 43% increase from 2022, driven by higher revenues.
• Stated maturity date of Senior Secured Credit Facility extended to September 18, 2028.
• Increase in tax positions related to current year by $498 million. This may impact financials.
• Depreciation and amortization increased by $10.5 million from $59.1 million in 2022 to $69.6 million in 2023.
• Total long-term debt and finance leases decreased from $234 million to $167 million.
• Detailed breakdown of bonus calculations based on Adjusted EBITDA, Revenue, New Enrollment, and Unlevered Free Cash Flow. This provides transparency on bonus determinants.
• Tradenames and other intangible assets increased by $18 million from $151 million to $169 million.
• Corporate Results: Adjusted EBITDA increased by $6.0 million, a 12% increase from 2022, due to lower labor expenses and professional fees.
• Decrease in unrecognized tax benefits by $1 billion due to statute of limitations lapsing.
• The Incentive Compensation Clawback Policy was adopted on September 14, 2023, under Nasdaq Rule 5608.
• Total deferred tax assets decreased from $285,918 to $253,898.
• Loss on impairment of assets decreased by $141 million from $144 million to $3 million.
• Inclusion of the Adjusted EBITDA Factor Table specifying bonus factors based on performance levels. This adds clarity to bonus calculations.
• Cash Flows: Operating cash flow increased by $72.6 million to $250.8 million for 2023, driven by higher operating income.
• Adjusted EBITDA increased from $338.9 million in 2022 to $418.6 million in 2023.
• The Policy applies both during and after termination of employment, ensuring accountability.
• Recognition of net interest and penalties related to income taxes increased to $10.2 million.
• Implementation of Unlevered Free Cash Flow Factor Table for bonus calculations. This enhances the understanding of bonus determinants.
• Loss on impairment of assets increased significantly from $0.1 million in 2022 to $72.5 million in 2023.
• Reduction in unrecognized tax benefits by $120 million due to lapse of statutes.
• Deferred tax liabilities decreased from $204,546 to $249,784.
• Stock Repurchase Program: Approved a new program to repurchase up to $100 million of common stock.
• EiP implementation expenses increased from $0.8 million in 2022 to $75.4 million in 2023.
• Statutes of major jurisdictions open back to 2018, with IRS challenging 2005-2019.
• Total income tax benefit increased from $185,391 to $145,573.
• Introduction of the Individual Objectives component in bonus calculations. This emphasizes individual performance in bonus payouts.
• Comprehensive Income: Net comprehensive income increased by $130.9 million to $277.9 million, reflecting improved financial performance.
• Operating cash flows used for operating leases increased from $56,540 to $63,959.
• Share-based compensation expense increased from $8.8 million in 2022 to $10.2 million in 2023.
• Stock repurchase program approved to acquire up to $100,000 of common stock.
• Property and Equipment: Land value increased by $2 million, buildings by $29 million, and software by $62 million.
• Operating lease right-of-use assets decreased from $389,565 to $371,611.
• Write-offs of fully reserved accounts increased to $25.9 million in 2023.