Dive Brief:
- 2U is at risk of being delisted from the Nasdaq Stock Market’s Global Select Market, according to a Thursday filing with the U.S. Securities and Exchange Commission.
- The company's stock value has dropped below $1 per share for 30 straight business days, putting it out of compliance with Nasdaq’s Global Select Market’s requirements. As of Monday, the stock price closed at $0.32.
- To remain listed on Nasdaq, the company must boost its closing share price to $1 or more for 10 business days in a row. It has until Sept. 10 to comply.
Dive Insight:
2U has become a powerhouse in the higher ed sector since its founding in 2008, helping colleges start and operate online degree programs. Its revenue grew from $55.9 million in 2012 to $946 million in 2023, and it boasts clients like Harvard, Vanderbilt and New York universities.
But the company has yet to post a profitable year since going public in 2014.
The Nasdaq news comes amid a tumultuous period at 2U. The company went through a round of layoffs in September, and co-founder Chip Paucek stepped down as CEO in November.
2U is also in the process of ending most of its work with the University of Southern California, one of its first and largest clients. The announcement coincided with the company's stock price dropping by more than half, from about $2.40 on Nov. 9 to just over $1 on Nov. 10.
“We anticipated this notice and have been working on several options to return to compliance,” a 2U spokesperson said Monday. “Importantly, while we take steps to come back into compliance before September 10, our stock will continue to trade on the exchange.”
The spokesperson also said the company continues to have enough liquidity to operate and that there will be no impact on its programs.
However, officials at 2U in February issued a required "going concern" disclosure related to its ability to refinance one of its debts — a term loan with a balance of $380 million. If more than $40 million of the loan is still owed by January 2025, the sum will be due in full that month.
“Our immediate focus in 2024 is to strengthen the fundamentals of our business in order to extend our debt maturities and restore a healthy balance sheet,” Matthew Norden, 2U’s chief financial officer, said in a statement last month.
At the end of 2023, 2U reported $73.4 million in cash, cash equivalents and restricted cash.
Correction: A previous version of this article misstated the implications of 2U’s outstanding term loan on company operations. The article has been updated.
