| Item 2.02 | Results of Operations and Financial Condition |
On July 28, 2022, 2U, Inc. (the “Company”) issued a press release announcing its results for the quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated by reference herein.
The information in this Item 2.02, and Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any incorporation language in such a filing, except as expressly set forth by specific reference in such a filing.
| Item 2.05 | Costs Associated with Exit or Disposal Activities |
On July 28, 2022, the Company announced a plan to accelerate its transition to a platform company (the “2022 Strategic Realignment Plan”). The plan is designed to reorient the Company around the edX platform, allowing the Company to pursue a portfolio-based marketing strategy that drives traffic to the edX marketplace. The plan is designed to achieve durable growth that increases profitability by simplifying the current executive structure to reduce silos, reducing employee headcount, optimizing marketing spend and rationalizing the company’s real estate footprint. The Company committed to the Strategic Realignment Plan on June 29, 2022.
The Company expects that implementation of the headcount reductions will be completed in the third quarter of 2022 while the remainder of the plan is expected to be completed by the end of 2022. The Company expects that it will generate approximately $70 million of annualized savings through headcount reduction and reduced real estate costs.
The Company estimates that it will incur aggregate restructuring costs associated with the 2022 Strategic Realignment Plan ranging from approximately $35 million to $40 million. The major components of the restructuring costs will include (i) severance and employee-related costs of approximately $16 million, (ii) real estate exist costs of ranging from approximately $17 million to $20 million, and (iii) fees for professional services of approximately $3 million. The Company recorded $15.8 million in restructuring charges related to the 2022 Strategic Realignment Plan during each of the three and six months ended June 30, 2022, primarily related to severance and employee-related costs and professional fees.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On July 27, 2022, Mark Chernis resigned from his position as Chief Operating Officer of the Company to pursue other professional opportunities. Mr. Chernis’ resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.
In connection with his resignation, Mr. Chernis and the Company have entered into a Separation, Consulting and Release Agreement, effective as of July 27, 2022 (the “Consulting Agreement”), pursuant to which Mr. Chernis will remain an employee through October 3, 2022, and thereafter shall serve as a consultant providing advisory and transition services to the Company until January 1, 2024 (such 15-month period, the “Consulting Period”). Pursuant to the Consulting Agreement, as compensation for these consulting services, the Company has agreed to pay Mr. Chernis a consulting fee of $187,500, paid in equal monthly installments over the Consulting Period, and a one-time payment of $200,000 following the successful completion of the Consulting Period.
The description of the Consulting Agreement set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the Consulting Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein to this Item 5.02.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
