K12 Inc. growing up, at least in terms of the kind of students they want to reach out to. And with that comes a name change, as its offering now extends beyond running online schools to K-12 districts that have long been its flagship business.
Earlier this week, the Herndon, U.S.-based company agreed to acquire Tech Elevator, which offers bootcamp coding online and in eight cities, in a $ 23.5 million cash deal. If approved, this would mark the second such acquisition this year for the listed company, which bought Galvanize for $ 165 million in January.
Coding bootcamps is aimed at adult learners, a market that K12 officials say it has strived to serve. As if to double this effort, the company also this week entered into an agreement to acquire MedCerts, a provider of workforce development and training for the healthcare industry, for $ 70 million in cash.
On December 16, K12 will officially become “Stride”, a name that “recognizes that we as a company are no longer limited by the boundaries of the K-12 market and that we are dedicated to supporting lifelong learning and providing personal training of high quality in important career paths that start a well-paying career, ”said K12 director Nate Davis in a prepared statement.
Why does the K12 need two coding bootcamps? “Where Galvanize bootcamps enroll advanced beginners in software engineering and computer science bootcamps, Tech Elevator Strides is expanding its total addressable market by admitting students across the country with no coding experience,” the company said in a statement.
A new name could also create some brand separation from some of the bad news associated with the company in the past. K12 has been at the crossroads of public officials, researchers and investors similar to operate more virtual charter schools posting dismal results. It has been fines by then-California Attorney General Kamala Harris as part of a settlement of false claims and advertising.
Recently, problems with its online learning platform have removed the distance learning experience for many students and teachers at Miami-Dade County Public Schools, leading the district to Exit its contract. This high-profile announcement was followed by a sale of company shares. The company’s stock traded at $ 24 per share. Share at the end of Thursday, approx. half of its highest value during the summer.
However, this has not slowed down the company’s growth. According to the latest economic update, K12 reported $ 314 million in revenue from its K-12 programs in the third quarter of 2020, marking a 34 percent increase from the same period in 2019. Revenue from its career-learning offerings to middle school, high school and adult students more than doubled $ 57 million over the same period.
In total, the company generated $ 371 million in revenue or a 44 percent increase from the previous period. Enrollment in K-12 and career programs grew by 57 percent to over 195,000 over the same time period.
In the 12 months ending Sept. 30, 2020, Medcerts and Tech Elevator generated approx. $ 19 million and $ 11 million.
On a earnings calls, Davis said the company wants to expand its partnership with community organizations such as churches and the YMCA to rent their facilities to provide students with a hybrid learning experience.
“I think students who go to an online school should go somewhere at regular intervals where they face the rest of their peers and face their teachers. And then I think that’s a big part of what we need to do, especially in career learning, because there will be a need for more practical experience, ”said Davis.
“To [community partners] it is incremental revenue. For us, it is a cheap way to make these mixed operations occur, ”he added.