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☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                 Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                                                                               Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x              Accelerated filer ☐              Non-accelerated filer ☐

Smaller reporting company ☐          Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class						Outstanding at September 30, 2023
Common stock, par value $0.004 per share						157,367,366 shares

Laureate Education, Inc. and subsidiaries (hereinafter Laureate, we, us, our, or the Company) provide higher education programs and services to students through licensed universities and higher education institutions (institutions). Laureate's programs are provided through institutions that are campus-based and through electronically distributed educational programs (online). We are domiciled in Delaware as a public benefit corporation, a demonstration of our long-term commitment to our mission to benefit our students and society. The Company completed its initial public offering (IPO) on February 6, 2017, and its shares are listed on the Nasdaq Global Select Market under the symbol “LAUR.”

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, these financial statements include all adjustments considered necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with Laureate's audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the 2022 Form 10-K).

Laureate's revenues primarily consist of tuition and educational service revenues. We also generate other revenues from student fees and other education-related activities. These other revenues are less material to our overall financial results and have a tendency to trend with tuition revenues. Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. These revenues are recognized net of scholarships and other discounts, refunds and waivers. Laureate's institutions have various billing and academic cycles.

We determine revenue recognition through the five-step model prescribed by ASC Topic 606, Revenue from Contracts with Customers, as follows:

•Identification of the contract, or contracts, with a customer;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, we satisfy a performance obligation.

We assess collectability on a portfolio basis prior to recording revenue. Generally, students cannot re-enroll for the next academic session without satisfactory resolution of any past-due amounts. If a student withdraws from an institution, Laureate's obligation to issue a refund depends on the refund policy at that institution and the timing of the student's withdrawal. Generally, our refund obligations are reduced over the course of the academic term. We record refunds as a reduction of deferred revenue as applicable.

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the three months ended September 30, 2023 and 2022:

(1) Includes the elimination of inter-segment revenues.

The following table shows the components of Revenues by reportable segment and as a percentage of total revenue for the nine months ended September 30, 2023 and 2022:

(1) Includes the elimination of inter-segment revenues.

The timing of billings, cash collections and revenue recognition results in accounts receivable (contract assets) and Deferred revenue and student deposits (contract liabilities) on the Consolidated Balance Sheets. We have various billing and academic cycles and recognize student receivables when an academic session begins, although students generally enroll in courses prior to the start of the academic session. Receivables are recognized only to the extent that it is probable that we will collect substantially all of the consideration to which we are entitled in exchange for the goods and services that will be transferred to the student. We receive advance payments or deposits from our students before revenue is recognized, which are recorded as contract liabilities in deferred revenue and student deposits. Payment terms vary by university with some universities requiring payment in advance of the academic session and other universities allowing students to pay in installments over the term of the academic session.

All of our contract assets are considered accounts receivable and are included within the Accounts and notes receivable balance in the accompanying Consolidated Balance Sheets. Total accounts receivable from our contracts with students were $159,730 and $133,105 as of September 30, 2023 and December 31, 2022, respectively. The increase in the contract assets balance at September 30, 2023 compared to December 31, 2022 was primarily driven by enrollment cycles. The first and third calendar quarters generally coincide with the primary and secondary intakes for our larger institutions.

All contract asset amounts are classified as current.

Contract liabilities in the amount of $81,039 and $51,264 were included within the Deferred revenue and student deposits balance in the current liabilities section of the accompanying Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively. The increase in the contract liability balance during the period ended September 30, 2023 was the result of semester billings and cash payments received in advance of satisfying performance obligations, partially offset by revenue recognized during that period. Substantially all of the contract liability balance at the beginning of the year was recognized as revenue during the nine months ended September 30, 2023.

During the second quarter of 2023, two of the Company’s subsidiaries that operate K-12 educational programs in Mexico met the criteria for classification as held for sale under ASC 360-10-45-9, “Long-Lived Assets Classified as Held for Sale.” The sale of the K-12 campuses is intended to allow the Mexico segment to focus on its core business. The planned sale of this disposal group does not represent a strategic shift and therefore does not qualify for presentation as a discontinued operation in the Consolidated Financial Statements. In addition, during the third quarter of 2023, a parcel of land at one of our campuses in Mexico met the criteria for classification as held for sale under ASC 360-10-45-9. The assets and liabilities are recorded at the lower of their carrying values or their estimated fair values less costs to sell. The carrying amounts of the major classes of assets and liabilities that were classified as held for sale are presented in the following table:

The long-term debt balance represents a finance lease for property.

Laureate’s educational services are offered through two reportable segments: Mexico and Peru. Laureate determines its segments based on information utilized by the chief operating decision maker to allocate resources and assess performance.

public institutions in both countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below.

In Mexico, the private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 35 campuses. Students in our Mexican institutions typically finance their own education.

In Peru, private universities are increasingly providing the capacity to meet growing demand in the higher-education market. Laureate owns three institutions in Peru, with a footprint of 19 campuses.

Inter-segment 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 inter-segment items.

We evaluate segment performance based on Adjusted EBITDA, which is a non-GAAP performance measure defined as Income from continuing operations before income taxes and equity in net income of affiliates, adding back the following items: Gain on disposal of subsidiaries, net, Foreign currency exchange loss, net, Other income, net, 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. Our EiP initiative was completed as of December 31, 2021, except for certain EiP expenses related to the completion of programs that began in prior periods. EiP was 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), as well as improvements to the Company's system of internal controls over financial reporting. The EiP initiative also included other back- and mid-office areas, as well as certain student-facing activities, expenses associated with streamlining the organizational structure, an enterprise-wide program aimed at revenue growth, and certain non-recurring costs that were incurred in connection with previous dispositions.

Adjusted EBITDA is a key measure used by our management and Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial measure used by the compensation committee of our Board of Directors and our Chief Executive Officer in connection with the payment of incentive compensation to our executive officers and other members of our management team. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. 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 income of affiliates, as reported in the Consolidated Statements of Operations:

The change in the net carrying amount of Goodwill from December 31, 2022 through September 30, 2023 was composed of the following items:

Outstanding long-term debt was as follows:

On September 18, 2023, the Company entered into an amendment of its Senior Secured Credit Facility (as defined below) (the “Third Amendment”) to the Third Amended and Restated Credit Agreement, dated as of October 7, 2019 (the “Credit Agreement”; as amended by the First Amendment, dated as of July 20, 2020, the Second Amendment, dated as of December 23, 2022 and, as further amended by the Third Amendment, the “Amended Credit Agreement”). Among other things, the Company incurred a new tranche of revolving credit loans maturing September 2028 (the “Series 2028 Tranche”). The credit available to be borrowed under the Amended Credit Agreement, whether as revolving loans or term loans, if any, are referred to herein collectively as the “Senior Secured Credit Facility.”

The Amended Credit Agreement, among other things, provides for $145,000 of revolving credit loans maturing October 2024 (the “Series 2024 Tranche”) and $155,000 of revolving credit loans under the Series 2028 Tranche for a $300,000 aggregate revolving credit facility (the “Revolving Credit Facility”). As a subfacility under the Revolving Credit Facility, the Amended Credit Agreement provides for letter of credit commitments in the aggregate amount of $10,000. The Amended Credit Agreement also provides, subject to the satisfaction of certain conditions, for incremental revolving and term loan facilities, at the request of the Company, not to exceed (i) the greater of (a) $172,500 and (b) 50% of the Company’s Consolidated EBITDA, plus (ii) additional amounts so long as both immediately before and after giving effect to such incremental facilities the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA Ratio, as defined in the agreement, on a pro forma basis, does not exceed 2.25 to 1.00, plus (iii) the aggregate amounts of any voluntary repayments of term loans, if any, and aggregate amount of voluntary repayments of revolving credit facilities that are accompanied by a corresponding termination or reduction of revolving credit commitments.

The maturity date for the Amended Credit Agreement is September 18, 2028. The Revolving Credit Facility bears interest at a per annum interest rate, at the option of the Company, at either the EURIBOR rate, the Term SOFR rate or the ABR rate plus an applicable margin of 2.50% per annum, 2.25% per annum, 2.00% per annum or 1.75% per annum for EURIBOR loans or Term SOFR loans, and 1.50% per annum, 1.25% per annum, 1.00% per annum or 0.75% per annum for ABR loans, in each case, based on the Company’s Consolidated Total Debt to Consolidated EBITDA ratio as defined in the agreement.

As of September 30, 2023 and December 31, 2022, the Senior Secured Credit Facility had a total outstanding balance of $28,000 and $100,000, respectively.

As of September 30, 2023 and December 31, 2022, the estimated fair value of our debt approximated its carrying value.

As of September 30, 2023, our Amended Credit Agreement contained certain negative covenants including, among others: (1) limitations on additional indebtedness; (2) limitations on dividends; (3) limitations on asset sales, including the sale of ownership interests in subsidiaries and sale-leaseback transactions; and (4) limitations on liens, guarantees, loans or investments. The Amended Credit Agreement also provides, solely with respect to the revolving credit facility, that the Company shall not permit its Consolidated Senior Secured Debt to Consolidated EBITDA ratio, as defined in the Amended Credit Agreement, to exceed 3.00x as of the last day of each quarter commencing with the quarter ending December 31, 2019 and thereafter. The agreement also provides that if (i) the Company’s Consolidated Total Debt to Consolidated EBITDA ratio, as defined in the Amended Credit Agreement, is not greater than 3.00x as of such date and (ii) less than 25% of the revolving credit facility is utilized as of that date, then such financial covenant shall not apply. As of September 30, 2023, these conditions were satisfied and, therefore, we were not subject to the leverage ratio covenant. In addition, indebtedness at some of our locations contain financial maintenance covenants. We were in compliance with these covenants as of September 30, 2023.

Laureate conducts a significant portion of its operations at leased facilities, including many of Laureate's higher education facilities and other office locations. In accordance with ASC Topic 842, “Leases,” Laureate analyzes each lease agreement to determine whether it should be classified as a finance lease or an operating lease.

Our finance lease agreements are for property and equipment. The lease assets are included within buildings as well as furniture, equipment and software, and the related lease liability is included within debt and finance leases on the Consolidated Balance Sheets.

Our operating lease agreements are primarily for real estate space and are included within operating lease right-of-use (ROU) assets and operating lease liabilities on the Consolidated Balance Sheets. The terms of our operating leases vary and generally contain renewal options. Certain of these operating leases provide for increasing rent over the term of the lease. Laureate also leases certain equipment under noncancellable operating leases, which are typically for terms of 60 months or less.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Our variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. On occasion, Laureate has entered into sublease agreements for certain leased office space; however, the sublease income from these agreements is immaterial.

Laureate is subject to legal actions arising in the ordinary course of its business. In management's opinion, we have adequate legal defenses, insurance coverage and/or accrued liabilities with respect to the eventuality of such actions. We do not believe that any settlement would have a material impact on our Consolidated Financial Statements.

As of September 30, 2023 and December 31, 2022, Laureate had recorded cumulative liabilities for income tax contingencies of $135,805 and $130,323, respectively.

Laureate has accrued liabilities for certain civil actions against our institutions, a portion of which existed prior to our acquisition of these entities. Laureate intends to vigorously defend against these matters. As of September 30, 2023 and December 31, 2022, approximately $15,800 and $11,400, respectively, of loss contingencies were included in Other long-term liabilities and Other current liabilities on the Consolidated Balance Sheets.

We have also identified certain loss contingencies that we have assessed as being reasonably possible of loss, but not probable of loss, and could have an adverse effect on the Company’s results of operations if the outcomes are unfavorable. In the aggregate, we estimate that the reasonably possible loss for these unrecorded contingencies could be up to approximately $17,800 if the outcomes were unfavorable.

In connection with a loan agreement entered into by a Laureate subsidiary in Peru, all of the shares of Universidad Privada del Norte, one of our universities, were pledged to the third-party lender as a guarantee of the payment obligations under the loan.

During the first quarter of 2021, one of our Peruvian institutions issued a bank guarantee in order to appeal a preliminary tax assessment received related to tax audits of 2014 and 2015. As of September 30, 2023 and December 31, 2022, the amount of the guarantee was $7,141 and $7,076, respectively.

The components of net changes in stockholders’ equity for the fiscal quarters of 2023 are as follows:

			Laureate Education, Inc. Stockholders
			Common stock						Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Treasury stock at cost			Non-controlling interests			Total stockholders’ equity
			Shares			Amount
Balance at December 31, 2022			157,013			$	923		$	2,204,755		$	39,244		$	(442,424)		$	(1,026,272)		$	(1,869)		$	774,357
Non-cash share-based compensation			—			—			1,124			—			—			—			—			1,124
Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding			161			1			(448)			—			—			—			—			(447)
Equitable adjustments to stock-based awards			—			—			(13)			—			—			—			—			(13)
Change in noncontrolling interests			—			—			16			—			—			—			(140)			(124)
Net loss			—			—			—			(26,607)			—			—			(155)			(26,762)
Foreign currency translation adjustment, net of tax of $0			—			—			—			—			72,791			—			6			72,797
Balance at March 31, 2023			157,174			$	924		$	2,205,434		$	12,637		$	(369,633)		$	(1,026,272)		$	(2,158)		$	820,932
Non-cash share-based compensation			—			—			1,976			—			—			—			—			1,976
Retirement of treasury stock			—			(295)			(1,025,977)			—			—			1,026,272			—			—
Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding			46			—			44			—			—			—			—			44
Equitable adjustments to stock-based awards			—			—			24			—			—			—			—			24
Net income			—			—			—			56,177			—			—			136			56,313
Foreign currency translation adjustment, net of tax of $0			—			—			—			—			92,007			—			(92)			91,915
Balance at June 30, 2023			157,220			$	629		$	1,181,501		$	68,814		$	(277,626)		$	—		$	(2,114)		$	971,204
Non-cash share-based compensation			—			—			1,794			—			—			—			—			1,794
Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding			147			—			1,032			—			—			—			—			1,032
Equitable adjustments to stock-based awards			—			—			2			—			—			—			—			2
Net income			—			—			—			36,158			—			—			(177)			35,981
Foreign currency translation adjustment, net of tax of $0			—			—			—			—			(46,373)			—			2			(46,371)
Balance at September 30, 2023			157,367			$	629		$	1,184,329		$	104,972		$	(323,999)		$	—		$	(2,289)		$	963,642

On May 24, 2023, the Company’s Board of Directors approved the retirement of all outstanding shares of treasury stock, which totaled 73,766 shares. The Company recorded the purchases of treasury stock at cost as a separate component within stockholders’ equity in the Consolidated Balance Sheets. Upon retirement of treasury stock, the Company allocates the excess of the purchase price over par value to additional paid-in capital, subject to certain limitations.

The components of net changes in stockholders’ equity for the fiscal quarters of 2022 are as follows:

			Laureate Education, Inc. Stockholders
			Common stock						Additional paid-in capital			Retained earnings (accumulated deficit)			Accumulated other comprehensive loss			Treasury stock at cost			Non-controlling interests			Total stockholders’ equity
			Shares			Amount
Balance at December 31, 2021			180,611			$	915		$	2,388,783		$	15,523		$	(520,204)		$	(744,174)		$	(1,285)		$	1,139,558
Non-cash share-based compensation			—			—			2,762			—			—			—			—			2,762
Purchase of treasury stock at cost			(9,485)			—			—			—			—			(112,874)			—			(112,874)
Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding			1,379			6			10,716			—			—			—			—			10,722
Equitable adjustments to stock-based awards			—			—			(189)			—			—			—			—			(189)
Net loss			—			—			—			(44,211)			—			—			(469)			(44,680)
Foreign currency translation adjustment, net of tax of $0			—			—			—			—			49,573			—			2			49,575
Minimum pension liability adjustment, net of tax of $0			—			—			—			—			14			—			—			14
Balance at March 31, 2022			172,505			$	921		$	2,402,072		$	(28,688)		$	(470,617)		$	(857,048)		$	(1,752)		$	1,044,888
Non-cash share-based compensation			—			—			2,360			—			—			—			—			2,360
Purchase of treasury stock at cost			(8,013)			—			—			—			—			(93,362)			—			(93,362)
Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding			171			1			(472)			—			—			—			—			(471)
Equitable adjustments to stock-based awards			—			—			(35)			—			—			—			—			(35)
Change in noncontrolling interests			—			—			2			—			—			—			(2)			—
Reclassification of redeemable equity to non-redeemable equity			—			—			316			—			—			—			—			316
Net income			—			—			—			43,423			—			—			136			43,559
Foreign currency translation adjustment, net of tax of $0			—			—			—			—			17,969			—			3			17,972
Balance at June 30, 2022			164,663			$	922		$	2,404,243		$	14,735		$	(452,648)		$	(950,410)		$	(1,615)		$	1,015,227
Non-cash share-based compensation			—			—			1,849			—			—			—			—			1,849
Purchase of treasury stock at cost			(77)			—			—			—			—			(862)			—			(862)
Exercise of stock options and vesting of restricted stock units, net of shares withheld to satisfy tax withholding			63			—			199			—			—			—			—			199
Special cash distribution accrued on outstanding common stock			—			—			(136,642)			—			—			—			—			(136,642)
Equitable adjustments to stock-based awards			—			—			(770)			—			—			—			—			(770)
Net income			—			—			—			31,117			—			—			(81)			31,036
Foreign currency translation adjustment, net of tax of $0			—			—			—			—			(42,160)			—			(1)			(42,161)
Minimum pension liability adjustment, net of tax of $0			—			—			—			—			983			—			—			983
Balance at September 30, 2022			164,649			$	922		$	2,268,879		$	45,852		$	(493,825)		$	(951,272)		$	(1,697)		$	868,859

As previously disclosed in the 2022 Form 10-K, on September 14, 2022, the Company announced that its Board approved, pursuant to the previously announced adoption of a Partial Liquidation Plan related to the distribution of net proceeds from the Company’s sale of Walden e-Learning LLC (the Walden Sale), the payment of a special cash distribution (the October 2022 Distribution) equal to $0.83 per each share of the Company’s common stock, par value $0.004 per share, to each holder of record on September 28, 2022. The proceeds that were distributed were attributable to the release during the third quarter of 2022 of $71,700 of escrowed funds from the Walden Sale, plus remaining net proceeds that had yet to be distributed. On October 12, 2022, the Company paid approximately $136,600 related to the October 2022 Distribution, which was the final distribution pursuant to the Partial Liquidation Plan.

During the three and nine months ended September 30, 2023 and 2022, the Company recorded share-based compensation expense for restricted stock unit awards of $1,794 and $1,849, respectively, and $4,894 and $6,971, respectively.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) (AOCI) in our Consolidated Balance Sheets includes the accumulated translation adjustments arising from translation of foreign subsidiaries’ financial statements, the unrealized gain on a derivative designated as an effective net investment hedge, and the accumulated net gains or losses that are not recognized as components of net periodic benefit cost for our minimum pension liability. The AOCI related to the net investment hedge will be deferred from earnings until the sale or liquidation of the hedged investee. The components of these balances were as follows:

Laureate's income tax provisions for all periods consist of federal, state and foreign income taxes. The tax provisions for the nine months ended September 30, 2023 and 2022 are based on estimated full-year effective tax rates, adjusted for discrete income tax items related specifically to the interim periods. Laureate has operations in multiple countries at various statutory tax rates and other operations that are loss-making entities for which it is not more likely than not that a tax benefit will be realized on the loss.

For the nine months ended September 30, 2023, the Company recognized income tax expense of $101,379, as compared to $159,213 in the prior year period.

Income tax expense for the nine months ended September 30, 2023 was attributable to pretax income, the jurisdictional mix of earnings, and pretax losses for which the Company cannot recognize a tax benefit.

Income tax expense for the nine months ended September 30, 2022 was attributable to pretax income, the jurisdictional mix of earnings, pretax losses for which the Company cannot recognize a tax benefit, and a discrete tax expense of approximately $32,500 that was recorded for income tax reserves related to the application of the high-tax exception to global intangible low-taxed income.

Laureate computes basic earnings per share (EPS) by dividing income available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted EPS reflects the potential dilution that would occur if share-based compensation awards were exercised or converted into common stock. To calculate the diluted EPS, the basic weighted average number of shares is increased by the dilutive effect of stock options, restricted stock units, and any other share-based compensation arrangements determined using the treasury stock method.

The following tables summarize the computations of basic and diluted earnings (loss) per share:

The following table summarizes the number of stock options and restricted stock units that were excluded from the diluted EPS calculations because the effect would have been antidilutive:

Laureate is subject to legal proceedings arising in the ordinary course of business. In management’s opinion, we have adequate legal defenses, insurance coverage, and/or accrued liabilities with respect to the eventuality of these actions. Management believes that any settlement would not have a material impact on Laureate’s financial position, results of operations, or cash flows.

Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations. Except as set forth below, there have been no material changes to the laws and regulations affecting our higher education institutions that are described in our 2022 Form 10-K.

Superintendencia Nacional de Educación Superior Universitaria (“SUNEDU”), the regulatory agency that supervises university standards and quality in Peru, is currently reviewing all regulations applicable to universities, with new regulations expected to be announced at a future time. This follows the appointment of new members to the board of SUNEDU in the first quarter of 2023 in connection with the implementation of the July 2022 law that modified SUNEDU’s board representation and authority.

On March 30, 2023, Cibertec, the Company’s technical-vocational institute, was granted a higher education colleges license for a six-year period. This license will now allow Cibertec to offer four-year programs for professional bachelor degrees.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets, as well as the September 30, 2022 balance. The September 30, 2023 and September 30, 2022 balances sum to the amounts shown in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022:

Restricted cash represents cash that is not immediately available for use in current operations.

On October 30, 2023, the Board of Directors of the Company approved the payment of a special cash dividend (the 2023 Special Dividend) equal to $0.70 per each share of the Company’s common stock, par value $0.004 per share, to each holder of record on November 15, 2023. The Special Dividend is scheduled to be paid on November 30, 2023. Based on the current number of shares outstanding, the aggregate amount of the 2023 Special Dividend is expected to be approximately $110,000.

In connection with the 2023 Special Dividend, the Board of Directors approved certain required adjustments under the Company’s equity award compensation plans. Subject to the payment of the 2023 Special Dividend, the exercise price of the Company’s options will be reduced by $0.70 per share, and holders of restricted and performance stock units will receive an amount in cash equal to $0.70 per unvested stock unit held payable when such unit vests. If all outstanding stock units vest, the aggregate amount to be paid in respect of the units will be approximately $700.

This Quarterly Report on Form 10-Q (this Form 10-Q) contains “forward‑looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. You can identify forward‑looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or similar expressions that concern our strategy, plans or intentions. All statements we make relating to estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results, and all statements we make relating to our current growth strategy and other future plans, strategies or transactions that may be identified, explored or implemented and any litigation or dispute resulting from any completed transaction are forward-looking statements. In addition, we, through our senior management, from time to time make forward‑looking public statements concerning our expected future operations and performance and other developments. All of these forward‑looking statements are subject to risks and uncertainties that may change at any time, including with respect to our current growth strategy and the impact of any completed divestiture or separation transaction on our remaining businesses. Accordingly, our actual results may differ materially from those we expected. We derive most of our forward‑looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, including, without limitation, in conjunction with the forward-looking statements and risk factor included in this Form 10-Q, are disclosed in “Item 1—Business,” and “Item 1A—Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the 2022 Form 10-K). Some of the factors that we believe could affect our results include:

•the risks associated with operating our portfolio of degree-granting higher education institutions in Mexico and Peru, including complex business, political, legal, regulatory, tax and economic risks;

•our ability to maintain and, subsequently, increase tuition rates and student enrollments in our institutions;

•our ability to effectively manage the growth of our business and increase our operating leverage;

•the risks associated with maintaining the value of our brands and our reputation;

•the effect of existing international and U.S. laws and regulations governing our business or changes to those laws and regulations or in their application to our business;

•changes in the political, economic and business climate in the markets in which we operate;

•risks of downturns in general economic conditions and in the educational services and education technology industries that could, among other things, impair our goodwill and intangible assets;

•possible increased competition from other educational service providers;

•market acceptance of new service offerings by us or our competitors and our ability to predict and respond to changes in the markets for our educational services;

•the effect of greater than anticipated tax liabilities;

•the effect on our business and results of operations from fluctuations in the value of foreign currencies;

•the fluctuations in revenues due to seasonality;

•the risks associated with disruptions to our computer networks and other cybersecurity incidents, including misappropriation of personal or proprietary information;

•the risks and uncertainties associated with an epidemic, pandemic or other public health emergency, such as the global coronavirus (COVID-19) pandemic, including, but not limited to, effects on student enrollment, tuition pricing, and collections in future periods;

•the risks associated with protests, strikes or natural or other disasters;

•our ability to attract and retain key personnel;

•our ability to maintain proper and effective internal controls necessary to produce accurate financial statements on a timely basis;

•the risks associated with indebtedness and disruptions to credit and equity markets;

•our focus on a specific public benefit purpose and producing a positive effect for society may negatively influence our financial performance; and

•the future trading prices of our common stock and the impact of any securities analysts’ reports on these prices.

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Form 10-Q may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (the MD&A) is provided to assist readers of the financial statements in understanding the results of operations, financial condition and cash flows of Laureate Education, Inc. This MD&A should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-Q. The consolidated financial statements included elsewhere in this Form 10-Q are presented in U.S. dollars (USD) rounded to the nearest thousand, with the amounts in MD&A rounded to the nearest tenth of a million. Therefore, discrepancies in the tables between totals and the sums of the amounts listed may occur due to such rounding. Our MD&A is presented in the following sections:

•Overview;

•Results of Operations;

•Liquidity and Capital Resources;

•Critical Accounting Policies and Estimates; and

•Recently Adopted Accounting Standards.

Our Business

We operate a portfolio of degree-granting higher education institutions in Mexico and Peru. Collectively, we have approximately 458,700 students enrolled at five institutions in these two countries. We believe that the higher education markets in Mexico and Peru present an attractive long-term opportunity, primarily because of the large and growing imbalance between the supply and demand for affordable, quality higher education in those markets. We believe that the combination of the projected growth in the middle class, limited government resources dedicated to higher education, and a clear value proposition demonstrated by the higher earnings potential afforded by higher education, creates substantial opportunities for high-quality private institutions to meet this growing and unmet demand. By offering high-quality, outcome-focused education, we believe that we enable students to prosper and thrive in the dynamic and evolving knowledge economy. We have two reportable segments as described below. We group our institutions by geography in Mexico and Peru for reporting purposes.

As discussed in Note 3, Assets Held for Sale, of our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, the Company has undertaken a process to sell two of our subsidiaries in Mexico that operate K-12 educational programs. As such, these subsidiaries are classified as assets held for sale as of September 30, 2023. The planned sale does not represent a strategic shift and therefore does not qualify for presentation as a discontinued operation in the consolidated financial statements. The completion of the sale is not expected to have a material effect on our financial results.

Our Segments

public institutions in both countries in which we operate, and it is difficult to predict how the markets will evolve and how many competitors there will be in the future. We expect competition to increase as the Mexican and Peruvian markets mature. Essentially all of our revenues were generated from private pay sources as there are no material government-sponsored loan programs in Mexico or Peru. Specifics related to both of our reportable segments are discussed below:

•Private education providers in Mexico constitute approximately 36% of the total higher-education market. The private sector plays a meaningful role in higher education, bridging supply and demand imbalances created by a lack of capacity at public universities. Laureate owns two nationally licensed institutions and is present throughout the country with a footprint of over 35 campuses. Students in our Mexican institutions typically finance their own education.

•In Peru, private universities are increasingly providing the capacity to meet growing demand and constitute approximately 73% of the total higher-education market. Laureate owns three institutions in Peru, with a footprint of 19 campuses.

Corporate is a non-operating business unit whose purpose is to support operations. Its departments are responsible for establishing operational policies and internal control standards, implementing strategic initiatives, and monitoring compliance with policies and controls throughout our operations. Our Corporate segment provides financial, human resource, information technology, insurance, legal, and tax compliance services. The Corporate segment also contains the eliminations of inter-segment revenues and expenses.

The following information for our reportable segments is presented as of September 30, 2023:

Challenges

Our operations are outside of the United States and are subject to complex business, economic, legal, regulatory, political, tax and foreign currency risks, which may be difficult to adequately address. As a result, we face risks that are inherent in international operations, including: fluctuations in exchange rates, possible currency devaluations, inflation and hyper-inflation; price controls and foreign currency exchange restrictions; potential economic and political instability in both countries in which we operate; expropriation of assets by local governments; key political elections and changes in government policies; multiple and possibly overlapping and conflicting tax laws; and compliance with a wide variety of foreign laws. See “Item 1A—Risk Factors—Risks Relating to Our Business—We operate a portfolio of degree-granting higher education institutions in Mexico and Peru and are subject to complex business, economic, legal, political, tax and foreign currency risks, which risks may be difficult to adequately address,” in our 2022 Form 10-K. We plan to grow our operations organically by: 1) adding new programs and course offerings, including online and hybrid offerings; 2) expanding target student demographics; and 3) increasing capacity at existing and new campus locations. Our success in growing our business will depend on the ability to anticipate and effectively manage these and other risks related to operating in various countries.

Regulatory Environment and Other Matters

Our business is subject to varying laws and regulations based on the requirements of local jurisdictions. These laws and regulations are subject to updates and changes. We cannot predict the form of the rules that ultimately may be adopted in the future or what effects they might have on our business, financial condition, results of operations and cash flows. We will continue to develop and implement necessary changes that enable us to comply with such laws and regulations. See also “Item 1A—Risk Factors—Risks Relating to Our Business—Our institutions are subject to uncertain and varying laws and regulations, and any changes to these laws or regulations or their application to us may materially adversely affect our business, financial condition and results of operations,” and “Item 1—Business—Industry Regulation” in our 2022 Form 10-K for a detailed discussion of our different regulatory environments.