Online Education Provider K12 Changes Name to Stride; Announces Two Acquisitions

K12, an online and blended education provider, is changing its corporate name to Stride, Inc., effective Dec. 16. The company said that the new brand reflects its aim to grow beyond the K-12 market and support lifelong learning from kindergarten through adulthood. Shares advanced 1.9% in pre-market trading today.

K12’s (LRN) CEO Nate Davis said, “The Stride brand recognizes that, as a company, we are no longer limited by the boundaries of the K-12 market, and that we are dedicated to supporting lifelong learning and providing personalized, high-quality education in important career pathways that launch good paying careers.”

The company also announced that it is growing its portfolio of adult education offerings with the acquisitions of Tech Elevator and MedCerts. At Tech Elevator’s campuses across the U.S. and through live virtual programs, students can gain exposure to the rapidly growing field of software engineering and take part in intensive coding bootcamps in Java, C#, and .NET coding languages.

“Bringing the Tech Elevator team, their passion, and expertise into the Stride ecosystem will strengthen our ability to address the nation’s technology skills gap,” said CEO Davis.

The company is acquiring Tech Elevator for $23.5 million in cash and expects to close the deal by the end of 2Q FY21.

Meanwhile, MedCerts provides online and hands-on career training courses in healthcare and medical fields for students who are preparing for national healthcare certifications. Stride expects to acquire MedCerts for $70 million in cash plus contingent consideration that could become due in FY22. The acquisition is expected to be completed by the end of 2Q FY21.

With these acquisitions, the company is more exposed to the career learning market with a portfolio that includes Galvanize, Tech Elevator, MedCerts, Tallo, and Nepris. Meanwhile, it continues to offer Destinations Career Academy programs and serve more than 70 K12-powered General Education Schools. (See LRN stock analysis on TipRanks)

Last month, BMO Capital analyst Jeffrey Silber lowered his price target on K12 to $43 from $60 but reiterated a Buy rating following its 1Q FY21 earnings beat and above-consensus guidance for the full-year. The analyst stated that the company’s “better-than-expected” operating income reflected accelerated enrollment growth due to the pandemic, but warns that after a “strong” FY21, K12 may be heading for “some decline” in FY22.

The Street is bullish on K12, with a Strong Buy consensus based on 4 unanimous Buys. The average price target stands at $49.33, reflecting a significant upside potential of 122.3%. Shares have risen 9% so far this year.