Image Source: Princeton Review. 

One of the curiosities of Match Group (MTCH) is its division devoted to non-dating activities, made up of the Princeton Review and 

It's rare to see a publicly traded company with an extra appendage like Match's education division that doesn't readily fit in with the majority of its business. The company offers an explanation, saying, "Our Non-dating businesses rely on many of the same competencies as our Dating business, such as paid customer acquisition, a combination of free and paid features, deep understanding of the lifetime values of customers, and strong expertise in user interface development."

A little background

In 2012, Match Group's former parent IAC (IAC) acquired, a company that connects qualified tutors to students for immediate one-on-one sessions, offering a version of educational match-making. It paid about $40 million. 

In 2014, IAC followed up that deal by purchasing the Princeton Review, the well-known test-prep service and maker of college guidebooks, which it hoped would pair well with Terms of the deal were not disclosed.

When IAC spun off Match in late 2015, it included Princeton Review and, as it sees them as complementary businesses. 

Match has also expressed an interest in expanding its non-dating portfolio to other such businesses and websites, but it's unclear what exactly would fit with that strategy.

Still, there's evidence that the non-dating segment may be weighing on the overall company. 

Where it stands today

In Match's most recent quarter, non-dating revenue was flat at $25.8 million, and now makes up just 8% of the overall business, as dating revenue has grown briskly this year thanks to the recent acquisition of PlentyofFish and strong performance at Tinder.

Its education segment is also losing money. In the past quarter, the non-dating group posted an operating loss of $3.8 million and an adjusted EBITDA loss of $1.3 million. Those losses have narrowed from a year ago, but still constitute a drag on the bottom line from a business that isn't complementary to Match's mission to increase romantic connectivity around the world. Match's non-dating segment was not even mentioned once in the recent conference call -- it's such a small part of the business that it was ignored by both analysts and the company, more evidence that it may be overlooked.

Could a sale be in the offing?

While it may be a promising sign that the Princeton Review's operating loss is narrowing, selling such a non-complementary, loss-generating business with a well-known brand name seems worth contemplating.

Last year, Match's education segment brought in $110 million in revenue. With a price-to-sales ratio for the overall business at 3.4, the upper range on a sale price would be $374 million. We don't know what IAC paid for Princeton Review, but we know it paid about $40 million for, which made about $33 million in 2014, meaning the company is valued at about 1.2 times sales based on the 2014 figure. An estimate for the sale price could be around $200 million then, which the company could spend on acquiring another dating site or paying down debt. 

The company had over $1.2 billion in debt as of its last report and is on track to have $82 million interest expense this year, which will take up a sizable percentage of its profits. 

Its most recent dating site acquisition, PlentyofFish, cost $575 million, meaning selling Princeton Review would only partially contribute to paying for another purchase of that size.

Considering it's only owned Princeton Review for 2 years, Match Group is unlikely to sell it so quickly, and IAC's majority ownership makes it difficult for an activist investor to push for a sale. But if the education segment is unable to grow and continues to rack up losses, parting with it seems to make the most sense. It will free the company of a distraction, shore up its bottom line, and give it cash to spend on a potential dating site acquisition or to pay down its debt burden.