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WIKI ANALYSIS
Headquartered in Minneapolis, Minnesota, Capella Education Company is the holding company for Capella University, an accredited and exclusively online academic institution. Capella University caters to the needs of working adult students. Capella University offers 19 undergraduate and graduate degree programs with 104 specializations and more than 870 courses. Graduate degree programs are offered in business, information technology, education, human services, public health, public safety, and psychology. Bachelor's degree programs are offered in business, information technology, and public safety. More than 20,200 students are currently enrolled, representing all 50 states and 56 countries. Capella University is accredited by The Higher Learning Commission and is a member of the North Central Association of Colleges and Schools (NCA).
In November 2006, Capella Education Company completed an initial public offering of 4,000,000 shares at $20.00 per share. Credit Suisse, Banc of America Securities, Piper Jaffray, and Stifel Nicolaus were the lead underwriters of the offering. In May 2007, Capella Education Company completed a secondary offering of 3,485,000 shares at $36.00 per share. Capella Education Company offered 299,201 shares of common stock and selling shareholders offered the remaining 3,185,799 shares. The offering was made through an underwriting syndicate led by Credit Suisse and co-managed by Piper Jaffray, Robert W. Baird, Stifel Nicolaus, and Signal Hill Capital.
Capella University's predecessor, The Graduate School of America, was established in 1993 and offered doctoral and master's degrees through distance learning programs in management, education, human services, and interdisciplinary studies. In 1995, the online delivery format was launched, and in 1997, the university received accreditation from the North Central Association of Colleges and Schools (later renamed The Higher Learning Commission of the North Central Association of Colleges and Schools). In 1998, the academic program was expanded by the introduction of doctoral and master's degrees in psychology and a master of business administration degree. Since management planned to expand into bachelor's degree market, The Graduate School of America changed its name to Capella University in 1999. Between 2000 and 2004, bachelor's degree programs were introduced in business administration and information technology. Starting in 2004, master's-level specializations in education for K-12 teachers were added. In 2006, seven other specializations were introduced, including healthcare management, accounting, and information assurance and security. Most recently, in 2007, two doctoral programs in information technology and public safety, a master's program in public safety, five doctoral-level specializations, and two master's-level specializations were introduced.
Management's growth strategies are to exclusively focus on online education designed for working adults grow through increasing enrollment and offering new programs and specializations and increase revenue by implementing annual tuition increases. With a growing acceptance of online education, demand has increased for Capella's programs. In addition, Capella University continues to develop selective new programs and specializations for targeted professions, especially in the master's and doctoral programs. The company strives obtain specialized accreditations, professional licensures, and endorsements for these programs. The company has also established relationships with large corporate employers, the U.S. Armed Forces, and other colleges and universities
Capella University implemented 2% to 6% tuition increases in ten of 13 programs in the 2006-2007 academic year (academic years begin in July). Tuition increases have not historically been consistent across all programs and specializations due to market conditions and/or changes in operating costs. However, tuition increases have contributed to top line growth over time.
Management is implementing an Enterprise Resource Planning (ERP) system and is preparing for the broadest module implementation in January 2008. When the full system is installed in the summer 2008, it will enable additional operating efficiencies.
Capella University participates in the federal student financial aid programs authorized by Title IV of the Higher Education Act of 1965, as amended, or Title IV, which are administered by the U.S. Department of Education. A large portion of students rely on funds from Title IV programs to pay a substantial portion of their tuition and other education-related expenses. To be certified to participate in Title IV programs, Capella University must receive and maintain authorization by the appropriate state educational agency, be accredited by an accrediting agency recognized by the Secretary of the Department of Education, and be certified as an eligible institution by the Department of Education. Capella University is accredited by The Higher Learning Commission and is a member of the North Central Association of Colleges and Schools (NCA). In the year ending December 31, 2006, approximately 71% of the company's revenues (calculated on a cash basis) were attributable to Title IV funds.
The company maintains a debt free balance sheet and generates strong cash flow. As of September 30, 2007, cash and cash equivalents were $125 million, up from $88 million at the end of 2006.
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