8-K
AMERICAN PUBLIC EDUCATION INC (APEI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 09, 2021
| American Public Education, Inc. | ||
|---|---|---|
| (Exact Name of Registrant as Specified in its Charter) | ||
| Delaware | 001-33810 | 01-0724376 |
| --- | --- | --- |
| (State or other jurisdiction<br><br><br>of Incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
| 111 W. Congress Street<br><br><br>Charles Town, West Virginia | 25414 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 304-724-3700
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value | APEI | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
On March 9, 2021, American Public Education, Inc. issued a press release reporting financial results for the three and twelve months ended December 31, 2020. A copy of American Public Education’s press release is attached to this report as Exhibit 99.1 and is incorporated in this report by reference. American Public Education has scheduled a webcast for 5:00 p.m. EDT on March 9, 2021 to discuss its financial results, and slides for that webcast are attached to this report as Exhibit 99.2 and are incorporated in this report by reference. A copy of an investor fact sheet is attached to this report as Exhibit 99.3 and is incorporated in this report by reference
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
| 99.1 | American Public Education, Inc. press release dated March 9, 2021, reporting financial results for the three and twelve months ended December 31, 2020. |
|---|---|
| 99.2 | American Public Education, Inc. slides for March 9, 2021 conference call and Webcast for the three and twelve months ended December 31, 2020. |
| 99.3 | American Public Education, Inc. fact sheet posted to its website on March 9, 2021. |
| 104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| American Public Education, Inc. | |||
|---|---|---|---|
| Date: | March 9, 2021 | By: | /s/ Richard W. Sunderland, Jr. |
| Richard W. Sunderland, Jr., Executive Vice<br><br><br>President and Chief Financial Officer |
Exhibit 99.1
American Public Education Reports Strong Fourth Quarter and Full Year 2020 Results
Enrollment Momentum Continued for a Fifth Consecutive Quarter at APUS; Record Enrollment at Hondros College of Nursing
CHARLES TOWN, W.Va., March 9, 2021 /PRNewswire/ -- American Public Education, Inc. (Nasdaq: APEI) – parent company of online learning provider American Public University System (APUS) and on-ground pre-licensure Hondros College of Nursing (HCN) – announced financial results for the fourth quarter and full year ended December 31, 2020 that reflect continued momentum in enrollment growth across both institutions.
Fourth Quarter & Recent Highlights:
- Consolidated revenue increased 15.4% year-over-year to $85.9 million
- Net income increased 25% year-over-year to $7.1 million, or $0.47 per share
- Adjusted EBITDA increased 18% year-over-year to $15.8 million
- Net course registrations by new students at APUS increased 17% and total net course registrations increased 11% year-over-year to 88,400 – the fifth consecutive quarter of year-over-year growth
- New student enrollment at HCN increased 34% and total student enrollment increased 34% year-over-year to 2,139 – the highest in school history
- On March 1, 2021, APEI closed its previously announced underwritten public offering of 3,680,000 shares for net proceeds of approximately $86.4 million
Full Year Highlights:
- Consolidated revenue increased 12.4% year-over-year to $321.8 million
- Net income increased 88% year-over-year to $18.8 million, or $1.25 per diluted share
- Adjusted EBITDA increased 9.1% year-over-year to $50.6 million
- On October 28, 2020, APEI announced plans to acquire regionally accredited Rasmussen University – which would make APEI the #1 educator of pre–licensure ADN (RN) and PN (LPN) nurses
- APUS successfully completed its online campus modernization by converting its courses to a new more robust cloud solution
Angela Selden, APEI's Chief Executive Officer said, "Our successful efforts to bring our value proposition to a wider audience have contributed to five consecutive quarters of net course registration growth at APUS and record enrollment at Hondros."
"By creating affordable pathways to support employment and career advancement, APEI aims to help learners of all backgrounds maximize their HEROI™, Higher Education Return on Investment. We believe this focus, combined with our ongoing enterprise transformation, market leadership and increased scale, will drive sustainable growth and operating leverage, as well as help us maintain an attractive regulatory profile," added Selden.
Financial Results:
Total consolidated revenue for the fourth quarter of 2020 increased by 15.4% to $85.9 million, compared to total revenue of $74.4 million in the fourth quarter of 2019. The increase was driven by a $9.0 million, or 13.5%, increase in APEI Segment revenue and a $2.5 million, or 31.8%, increase in HCN Segment revenue resulting from increases in student enrollment.
Consolidated income from operations before interest income and income taxes in the fourth quarter of 2020 increased 12.8% to $9.7 million, compared to $8.6 million in the prior year period. APEI Segment income from operations before interest income and income taxes decreased to $8.5 million, compared to $9.2 million in the prior year period. APEI Segment expenses include $1.2 million in professional fees associated with strategic growth opportunities, including the Rasmussen University acquisition. HCN Segment income from operations before interest income and income taxes was $1.2 million during the three months ended December 31, 2020, compared to a loss of $0.6 million in the same period in 2019.
GAAP net income for the three months ended December 31, 2020 was $7.1 million, or $0.47 per diluted share, compared to net income of $5.7 million, or $0.37 per diluted share, in the same period of 2019. Adjusted EBITDA for the three months ended December 31, 2020 was $15.8 million, compared to $13.4 million in the prior year period. The weighted average diluted shares outstanding for the fourth quarter of 2020 and 2019 were approximately 15.1 million and 15.6 million, respectively.
For the twelve months ended December 31, 2020, total consolidated revenue increased by 12.4% to $321.8 million, compared to total revenue of $286.3 million in the prior year period. The increase was driven by a $28.9 million, or 11.2%, increase in APEI Segment revenue and a $6.6 million, or 22.4%, increase in HCN Segment revenue, both resulting from increases in student enrollment.
Consolidated income from operations before interest income and income taxes for the twelve months ended December 31, 2020 was $24.8 million, compared to $12.8 million in the prior year period. This increase was primarily driven by $11.5 million increase in HCN Segment income from operations before interest income and income taxes. APEI Segment income from operations before interest income and income taxes increased $0.5 million, or 2.2%, compared to the prior year.
In 2020, costs and expenses include the following items on a pretax basis: a $10.4 million increase in advertising costs in our APEI and HCN Segments; $5.6 million in information technology costs related to the evaluation and investment in replacements and upgrades to our information technology systems, including replacements of our learning management and customer relationship management systems, and to inform the scope and duration of our larger overall information technology transformation program in our APEI Segment; and $5.0 million in professional fees associated with strategic growth opportunities, including the Rasmussen Acquisition in our APEI Segment. In 2019, costs and expenses include the following on a pretax basis: approximately $2.8 million in pretax employee compensation costs for post-employment benefits payable to the former APUS President upon his retirement; a non-cash impairment of goodwill of $7.3 million in our HCN segment; a $3.5 million increase in advertising costs in our APEI and HCN Segments; and $2.1 million in information technology costs related to the evaluation and investment in replacements and upgrades to our information technology systems.
GAAP net income for the twelve months ended December 31, 2020 was $18.8 million, or $1.25 per diluted share, compared to net income of $10.0 million, or $0.62 per diluted share, in the prior year period. Adjusted EBITDA for the twelve months ended December 31, 2020 was $50.6 million, compared to $46.4 million in the prior year period. The weighted average diluted shares outstanding for the twelve months ended December 31, 2020 and 2019 were approximately 15.0 million and 16.3 million, respectively.
Total cash and cash equivalents as of December 31, 2020 were approximately $227.7 million, compared to $202.7 million as of December 31, 2019. Capital expenditures were approximately $4.9 million for the twelve months ended December 31, 2020, compared to $7.3 million in the prior year period. Depreciation and amortization expense was $13.0 million for the twelve months ended December 31, 2020, compared to $15.6 million in the prior year period.
Registrations and Enrollment:
| American Public University System^1^ | |||
|---|---|---|---|
| For the three months ended December 31, | 2020 | 2019 | % Change |
| Net Course Registrations by New Students | 11,600 | 9,900 | 17% |
| Net Course Registrations | 88,400 | 79,800 | 11% |
| For the twelve months ended December 31, | |||
| Net Course Registrations by New Students | 47,400 | 40,200 | 18% |
| Net Course Registrations | 353,100 | 316,700 | 11% |
| As of December 31, | |||
| APUS Student Enrollment^2,3^ | 90,400 | 81,000 | 12% |
| Hondros College of Nursing^4^ | |||
| For the three months ended December 31, | 2020 | 2019 | % Change |
| New Student Enrollment | 710 | 530 | 34% |
| Total Student Enrollment | 2,140 | 1,600 | 34% |
| ^1^APUS Net Course Registrations represents the approximate aggregate number of courses for which students<br><br>remain enrolled after the date by which they may drop a course without financial penalty. | |||
| ^2^APUS Student Enrollment represents the number of unique active students, including those who are<br><br>currently on an approved leave of absence, who are currently in class or have completed a course within the<br><br>past 12 months. Excludes students in doctoral programs. | |||
| ^3^APUS Student Enrollment as of December 31, 2020, includes 1,900 students whose last 8-week course<br><br>started October 7, 2019 ended in early December 2019. In the fourth quarter of 2020, year-over-year<br><br>enrollment growth would have been approximately 9% absent this factor. | |||
| ^4^HCN Student Enrollment represents the approximate number of students enrolled in a course after the date<br><br>by which students may drop a course without financial penalty. |
Rasmussen University Transaction:
On October 28, 2020, APEI announced plans to acquire regionally accredited Rasmussen University, the largest educator of ADN nurses. Post-acquisition, APEI expects to have revenue of approximately $600 million on an annual pro forma basis^1^ and to become the #1 educator of pre-licensure nurses (ADN/RN and PN/LPN) with over 10,000 nursing students. The pending acquisition is expected to close by the middle of the third quarter 2021, subject to closing conditions that include review by the Department of Education, approval by the Higher Learning Commission and approval of or notices to other regulatory and accrediting bodies.
^1^ Annual pro forma revenue determined as if the transaction hadclosed on January 1, 2021.
First Quarter 2021 Outlook:
The following statements are based on APEI's current expectations. These statements are forward-looking and actual results may differ materially. APEI undertakes no obligation to update publicly any forward-looking statements for any reason unless required by law.
- APEI anticipates first quarter 2021 consolidated revenue to increase approximately 18%, compared to the prior year period.
- Net income is expected to be between $6.4 and $7.3 million or between $0.39 and $0.44 per diluted share.
- Adjusted EBITDA is anticipated to be between $13.8 and $14.7 million.
American Public Education expects the following results from its subsidiaries in the first quarter of 2021:
- At APUS, net course registrations by new students are expected increase by approximately 13% and net course registrations are expected to increase by approximately 9% compared to the prior year period.
- At HCN, new and total student enrollment increased approximately 45% year-over-year for the three months ended March 31, 2021.
Non-GAAP Financial Measures:
This press release contains the non-GAAP financial measures of EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA (EBITDA less non-cash expenses such as stock compensation and non-recurring expenses). APEI believes that the use of these measures is useful because it allows investors to better evaluate APEI's cash generation capabilities.
For the three and twelve months ended December 31, 2019 and 2020, adjusted EBITDA excludes non-cash compensation expense, loss on disposals of long-lived assets, goodwill impairment, compensation expense adjustment, and M&A-related professional fees.
These non-GAAP measures should not be considered in isolation or as an alternative to measures determined in accordance with generally accepted accounting principles in the United States (GAAP). The principal limitation of adjusted EBITDA is that it excludes expenses that are required by GAAP to be recorded. In addition, non-GAAP measures are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses are excluded.
APEI is presenting EBITDA and adjusted EBITDA in connection with its GAAP results and urges investors to review the reconciliation of EBITDA and adjusted EBITDA to the comparable GAAP financial measures that is included in the tables following this press release (under the caption "GAAP Net Income to Adjusted EBITDA" and "GAAP Outlook Net Income to Outlook Adjusted EBITDA") and not to rely on any single financial measure to evaluate its business.
**Webcast:**A live webcast of the APEI's fourth quarter 2020 earnings conference call will be held today at 5:00 p.m. Eastern time. This webcast will be open to listeners who log in through the APEI's investor relations website, www.apei.com.
A replay of the live webcast will also be available starting approximately one hour after the conclusion of the live webcast. The replay will be archived and available to listeners through APEI's investor relations website for one year.
About American Public EducationAmerican Public Education, Inc . (Nasdaq: APEI is a leading provider of higher learning dedicated to preparing students all over the world for excellence in service, leadership and achievement. APEI offers respected, innovative and affordable academic programs and services to students, universities and partner organizations through wholly owned subsidiaries: American Public University System and National Education Seminars Inc., which we refer to in this press release as Hondros College of Nursing. Together, these institutions serve more than 90,000 adult learners worldwide and offer more than 240 degree and certificate programs in fields ranging from homeland security, military studies, intelligence, and criminal justice to technology, business administration, public health, nursing and liberal arts. For additional information, please visit www.apei.com.
Forward Looking StatementsStatements made in this press release regarding APEI or its subsidiaries that are not historical facts are forward-looking statements based on current expectations, assumptions, estimates and projections about APEI and the industry. Forward-looking statements can be identified by words such as "anticipate," "believe," "seek," "could," "estimate," "expect," "intend," "may," "plan," "should," "will" and "would." These forward-looking statements include, without limitation, statements regarding benefits of the acquisition of Rasmussen University (the "Acquisition"), the timing of the closing of the Acquisition, expected growth, expected registration and enrollments, expected revenues, expected earnings, income and EBITDA, expected financial results for Rasmussen University, expected capital structure, the ability to deliver a return on learners' educational investment, the ability to maintain an attractive risk profile, and plans with respect to recent, current and future initiatives.
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, among others, risks related to: the effects of and APEI's response to the COVID-19 pandemic; risks related to the Acquisition, including the satisfaction of closing conditions related to the Acquisition; APEI's ability to obtain financing to fund the Acquisition; and other events that could impact the Acquisition and its closing; APEI's dependence on the effectiveness of its ability to attract students who persist in its institutions' programs; APEI's ability to effectively market its institutions' programs; adverse effects of changes APEI makes to improve the student experience and enhance the ability to identify and enroll students who are likely to succeed; APEI's ability to maintain strong relationships with the military and maintain course registrations and enrollments from military students; APEI's ability to comply with regulatory and accrediting agency requirements and to maintain institutional accreditation; APEI's reliance on Department of Defense tuition assistance, Title IV programs, and other sources of financial aid; APEI's dependence on its technology infrastructure; strong competition in the postsecondary education market and from non-traditional offerings; and the various risks described in the "Risk Factors" section and elsewhere in APEI's Annual Report on Form 10-K for the year ended December 31, 2020 and other filings with the SEC. You should not place undue reliance on any forward-looking statements. APEI undertakes no obligation to update publicly any forward-looking statements for any reason, unless required by law, even if new information becomes available or other events occur in the future.
**Contacts:**Richard W. Sunderland, Jr., CPA
Executive Vice President and Chief Financial Officer
304.885.5371
Christopher L. Symanoskie, IRC
Vice President, Investor Relations
703.334.3880
| American Public Education, Inc. | ||||||||
|---|---|---|---|---|---|---|---|---|
| Consolidated Statement of Income | ||||||||
| (In thousands, except per share data) | ||||||||
| Three Months Ended | ||||||||
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| (audited) | ||||||||
| Revenues | $ | 85,909 | $ | 74,381 | ||||
| Costs and expenses: | ||||||||
| Instructional costs and services | 31,103 | 28,008 | ||||||
| Selling and promotional | 19,224 | 15,021 | ||||||
| General and administrative | 22,729 | 18,873 | ||||||
| Loss on disposals of long-lived assets | 109 | 32 | ||||||
| Impairment of goodwill | — | — | ||||||
| Depreciation and amortization | 3,029 | 3,838 | ||||||
| Total costs and expenses | 76,194 | 65,772 | ||||||
| Income from operations before | ||||||||
| interest income and income taxes | 9,715 | 8,609 | ||||||
| Interest income, net | 90 | 701 | ||||||
| Income before income taxes | 9,805 | 9,310 | ||||||
| Income tax expense | 2,729 | 3,591 | ||||||
| Equity investment (loss) income | (5) | — | ||||||
| Net income | $ | 7,071 | $ | 5,719 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 0.48 | $ | 0.37 | ||||
| Diluted | $ | 0.47 | $ | 0.37 | ||||
| Weighted average number of | ||||||||
| common shares: | ||||||||
| Basic | 14,863 | 15,379 | ||||||
| Diluted | 15,084 | 15,563 | ||||||
| Three Months Ended | ||||||||
| Segment Information: | December 31, | |||||||
| 2020 | 2019 | |||||||
| Revenues: | ||||||||
| American Public Education, Inc. | $ | 75,515 | $ | 66,513 | ||||
| Hondros College of Nursing | $ | 10,409 | $ | 7,895 | ||||
| Intersegment Elimination^1^ | $ | (15) | $ | (27) | ||||
| Income (loss) from operations before | ||||||||
| interest income and income taxes: | ||||||||
| American Public Education, Inc. | $ | 8,539 | $ | 9,164 | ||||
| Hondros College of Nursing | $ | 1,177 | $ | (554) | ||||
| Intersegment Elimination^1^ | $ | (1) | $ | (1) | ||||
| Twelve Months Ended | ||||||||
| December 31, | ||||||||
| 2020 | 2019 | |||||||
| (audited) | ||||||||
| Revenues | $ | 321,785 | $ | 286,270 | ||||
| Costs and expenses: | ||||||||
| Instructional costs and services | 122,161 | 111,916 | ||||||
| Selling and promotional | 72,989 | 60,028 | ||||||
| General and administrative | 88,043 | 78,082 | ||||||
| Loss on disposals of long-lived assets | 851 | 556 | ||||||
| Impairment of Goodwill | — | 7,336 | ||||||
| Depreciation and amortization | 12,984 | 15,596 | ||||||
| Total costs and expenses | 297,028 | 273,514 | ||||||
| Income from operations before | ||||||||
| interest income and income taxes | 24,757 | 12,756 | ||||||
| Interest income, net | 1,092 | 3,908 | ||||||
| Income before income taxes | 25,849 | 16,664 | ||||||
| Income tax expense | 7,020 | 5,187 | ||||||
| Equity investment (loss) income | (7) | (1,464) | ||||||
| Net income | $ | 18,822 | $ | 10,013 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 1.27 | $ | 0.62 | ||||
| Diluted | $ | 1.25 | $ | 0.62 | ||||
| Weighted average number of | ||||||||
| common shares: | ||||||||
| Basic | 14,876 | 16,094 | ||||||
| Diluted | 15,047 | 16,255 | ||||||
| Twelve Months Ended | ||||||||
| Segment Information: | December 31, | |||||||
| 2020 | 2019 | |||||||
| Revenues: | ||||||||
| American Public Education, Inc. | $ | 285,766 | $ | 256,899 | ||||
| Hondros College of Nursing | $ | 36,091 | $ | 29,479 | ||||
| Intersegment Elimination^1^ | $ | (72) | $ | (108) | ||||
| Income (loss) from operations before | ||||||||
| interest income and income taxes: | ||||||||
| American Public Education, Inc. | $ | 24,034 | $ | 23,522 | ||||
| Hondros College of Nursing | $ | 722 | $ | (10,768) | ||||
| Intersegment Elimination^1^ | $ | 1 | $ | 2 | ||||
| 1.The APEI Segment charges the HCN Segment for the value of courses taken by HCN Segment employees at APUS. The intersegment elimination represents the elimination of this intersegment revenue in consolidation. | ||||||||
| GAAP Net Income to Adjusted EBITDA: | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| The following table sets forth the reconciliation of the Company's reported GAAP net income to the calculation of adjusted EBITDA for the three and twelve months ended December 31, 2020 and 2019: | ||||||||
| Three Months EndedDecember 31, | Twelve Months EndedDecember 31, | |||||||
| (in thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||
| Net income | $ | 7,071 | $ | 5,719 | $ | 18,822 | $ | 10,013 |
| Income tax expense | 2,729 | 3,591 | 7,020 | 5,187 | ||||
| Interest income | (90) | (701) | (1,092) | (3,908) | ||||
| Equity investment loss (income) | 5 | — | 7 | 1,464 | ||||
| Depreciation and amortization | 3,029 | 3,838 | 12,984 | 15,596 | ||||
| EBITDA | 12,744 | 12,447 | 37,741 | 28,352 | ||||
| Stock Compensation | 1,810 | 929 | 7,075 | 5,960 | ||||
| Loss on disposals of long-lived assets | 109 | 32 | 851 | 556 | ||||
| Goodwill impairment | — | — | — | 7,336 | ||||
| Compensation expense adjustment | — | — | — | 2,814 | ||||
| M&A- related professional fees | 1,153 | 17 | 4,956 | 1,374 | ||||
| Adjusted EBITDA | $ | 15,816 | $ | 13,425 | $ | 50,623 | $ | 46,392 |
| GAAP Outlook Net Income to Outlook Adjusted EBITDA: | ||||||||
| --- | --- | --- | --- | --- | ||||
| The following table sets forth the reconciliation of the Company's outlook GAAP net income to the calculation of outlook adjusted EBITDA for the three a months ended March 31, 2021: | ||||||||
| Three Months Ended March 31, 2021 | ||||||||
| (in thousands, except per share data) | Low | High | ||||||
| Net income | $ | 6,350 | $ | 7,250 | ||||
| Income tax expense | 2,600 | 2,575 | ||||||
| Interest income | (40) | (40) | ||||||
| Equity investment loss (income) | — | — | ||||||
| Depreciation and amortization | 2,300 | 2,300 | ||||||
| EBITDA | 11,210 | 12,085 | ||||||
| Stock compensation | 2,250 | 2,250 | ||||||
| Integration expenses | 400 | 400 | ||||||
| Adjusted EBITDA | $ | 13,860 | $ | 14,735 |
PRESENTED BY
Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO American Public Education, Inc. Fourth Quarter & Full Year 2020 Results Exhibit 99.2
Safe Harbor Statement Statements made in this presentation regarding APEI or its subsidiaries that are not historical facts are forward-looking statements based on current expectations, assumptions, estimates and projections about APEI and the industry. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “seek,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will” and “would.” These forward-looking statements include, without limitation, statements regarding benefits of the acquisition of Rasmussen University, the timing of the closing of the transaction, expected growth, expected registration and enrollments, expected revenues, earnings and expected income, expenses, expected financial results for Rasmussen University, expected capital structure, the ability to deliver a return on learners’ educational investment, and plans with respect to recent, current and future initiatives. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, among others, risks related to: the satisfaction of closing conditions, including the failure or delay in obtaining required regulatory and accreditor approvals; APEI’s ability to obtain financing to fund the transaction; the significant transaction and integration costs APEI has incurred and expects to incur in connection with the acquisition; the integration of Rasmussen’s business and APEI’s ability to realize the expected benefits of the acquisition; that Rasmussen may have liabilities that are not known to APEI; other events that could impact the transaction and its closing; APEI’s dependence on the effectiveness of its ability to attract students who persist in its institutions’ programs; impacts of the COVID-19 pandemic; APEI’s ability to effectively market its institutions’ programs; adverse effects of changes APEI makes to improve the student experience and enhance the ability to identify and enroll students who are likely to succeed; APEI’s ability to maintain strong relationships with the military and maintain enrollments from military students; APEI’s ability to comply with regulatory and accrediting agency requirements and to maintain institutional accreditation; APEI’s reliance on Department of Defense tuition assistance, Title IV programs, and other sources of financial aid; APEI’s dependence on its technology infrastructure; strong competition in the postsecondary education market and from non-traditional offerings; and the various risks described in the “Risk Factors” section and elsewhere in APEI’s Annual Report on Form 10-K for the year ended December 31, 2020 and other filings with the SEC. You should not place undue reliance on any forward-looking statements. APEI undertakes no obligation to update publicly any forward-looking statements for any reason, unless required by law, even if new information becomes available or other events occur in the future. 2
2020 in Review – A Year of Transformation and Acceleration Setting adult learners on the path toward achieving their dreams and helping maximize the return on their higher education investment Nearly Doubles Size of APEI & Adds Significant Scale
Strength in Nursing - largest national ADN/RN nursing school HCN + Rasmussen = $165MM of Nursing Revenue2
32 Campuses Across 9 States with 10,000+ Nursing Students3
Strong Demand for Nurses: 175k annual RN openings over next decade APUS: 5 Straight Quarters of YoY Growth 18% New and 11.5% Total Course Registration Growth in FY’20
HCN: Turnaround Complete +50% Nursing Starts Growth in FY’20 Scale driving strong incremental profit performance, disciplined capital allocation framework Angela Selden named APEI CEO in September 2019
New core business chief executives at APUS and HCN
New SVP Strategy & Corporate Development; new CHRO Diversifying Revenue: Approximately 1/3 Military, 1/3 Nursing, 1/3 Adult Online3
#1 Market Positions: Active-Duty Military, Veterans, Pre-licensure Nursing3
APEI Poised for Additional Acquisitions The acquisition is expected to close in the third quarter of 2021subject to closing conditions that include review by the Department of Education, approval by the Higher Learning Commission and approval of or notices to other regulatory and accrediting bodies.. Rasmussen nursing revenue based on FYE9/30/20 and HCN nursing revenue based on FYE12/31/2020. Expected at the time of closing of Rasmussen acquisition.
2020 – A Return to Enrollment Momentum
Increased investment in marketing, especially in micro-segments where HEROITM resonates
Expanded APUS-funded Freedom Grant® for active-duty military in graduate programs which helps eliminate out-of-pocket expenses
Technology transformation to improve student experience and drive increased referral rates
Driven by Targeted Investments in Marketing & Student Experience Nimble and flexible in adapting to COVID Campuses remained open per guidelines Virtual course/learning capabilities added
New Direct-Entry program driving rebound in ADN programs
Launched institutional affordability grants – generally limits payments to $200 per month*
Improved admissions/onboarding processes All admissions processes fully online Improved conversion driven by Salesforce integration
*After consideration of financial aid and other resources. Minimums apply.
Strong Top-Line Revenue Growth +17% +12.4% +16% Military, Veteran and Nursing Demand Drives Revenue Increase 11% +14% APEI – New Initiatives Lead to Strong Growth APEI has continued to demonstrate consistent results with strong top-line trends through 2020 (in thousands) +2% +17% Hondros College of Nursing +32% +22%
Strategic Acquisition: Scale and Growth in Nursing Education Building a National Nursing Platform Rasmussen – A Transformational Acquisition Campuses1 2020 Nursing Revenue2 7 $36MM 25 $129MM 32 ~$165MM 2020 Enrollment Growth 34% 19% 22% = APEI’s Nursing Platform1 + Expected at the time of closing of Rasmussen acquisition. Rasmussen Nursing revenue based on FYE 9/30/20, Hondros nursing revenue based on FYE 12/31/2020. Industry Tailwinds Expected to Cement PF APEI’s Leadership in Nursing Education & Enrollment 10,000+ Number of nurses PF APEI will be able to educate through Rasmussen + Hondros APEI will be the #1 Educator in pre-licensure nursing education (ADN/RN and PN/LPN) in the country, with expertise in RN (RU) and PN (HCN) Scale platform allows for operating leverage
APEI Positioned for Growth in 2021 & Beyond Capital Structure Diversification Adding Rasmussen to APEI’s platform expected to diversify revenue to 35% Military, 29% Nursing and 36% Online Education
#1 Market Positions: Active-Duty Military, Veterans, Pre-licensure Nursing2
Pro forma revenue: 48% APUS, 45% RU & 7% HCN
Several delivery modes – online, blended and campus-based education, including CBE (competency-based education) Several Key Accreditations APUS HCN RU APEI closed its previously announced underwritten public offering of shares with net proceeds of $86.4 million1 - adding to APEI’s existing cash position of $227.7 million as of December 31, 2020.
$329MM Rasmussen acquisition to be funded by: $125MM cash on hand $175MM term loan $29MM non-voting, redeemable preferred shares or cash at closing, at APEI’s discretion
Further liquidity to be supported by a $20MM revolving line of credit 1. After deducting the underwriting discounts and commissions and other estimated offering expenses payable by APEI 2. Expected at the time of closing of Rasmussen acquisition.
Fourth Quarter 2020 Highlights 9 Fifth Consecutive Quarter of YoY Enrollment Growth at APUS & Record Enrollment at HCN APUS Net Course Registrations. New student registrations at APUS increased 17% yr/yr.
Total net course registrations increased 11% yr/yr. Net Income. APEI net income increased to $7.1 million, an increase of 25% compared to the prior year period. Record Enrollment at Hondros. New and total enrollment increased 34% yr/yr.
In 1Q’21, total and new enrollment increased 45% - the highest total enrollment in school history. Adjusted EBITDA. APEI adjusted EBITDA increased to $15.8 million, an increase of 17.9% compared to the prior year period.
12% Consolidated Revenue
$321.8MM 88% Net Income Increase
$18.8MM
17% Cash Flow from Operations
$44.8MM
FY2020 Financial Highlights $24.9MM Cash and Equivalents
$227.7MM 10 ($ in millions)
APEI’s Financial & Operational Outlook 11 These statements are based on current expectations. These statements are forward-looking and actual results may differ materially. APUS Net course registrations represent the approximate aggregate number of courses for which students remain enrolled after the date by which they may drop a course without financial penalty. HCN Student enrollment represents the total number of students enrolled in a course after the date by which students may drop a course without financial penalty. Represents the sixth consecutive quarter of y/y growth at APUS Represents the highest enrollment in HCN’s history
Priorities for 2021 – “Maximize Learner HEROITM” A Durable, High-Quality Scale Platform w/ Organic and Inorganic Growth Opportunities; Operating Margin Improvement Driven by Growth, Enterprise Transformation and Shared Services; New Leadership w/ Demonstrated Track Record Growth w/ Emphasis on HEROITM Expand enrollments in large and growing markets - #1 in nursing, military and veterans Continue to capitalize on secular growth in nursing and healthcare Increase investment in marketing with emphasis on affordability message Accelerate offerings in “Right to Win” markets Advance strategic corporate development initiatives
Integration of Rasmussen University Execute integration of key Rasmussen corporate and administrative functions utilizing APEI’s existing shared services model
Expand programmatic and competency-based education opportunities Strong mission alignment and attractive regulatory profiles support effective business integration Newly assembled leadership team experienced at integration and enterprise transformation
Accelerate organic growth through focused investments in marketing and technology Drive greater efficiency and improved student satisfaction and outcomes through technology modernization Elevate human resources processes and capabilities Increased scale to drive strong incremental profit performance – create true operating leverage Transformation Drive Operational Excellence
Thank You 13
APPENDIX 14
APPENDIX: DISCLOSURES (Continued) American Public Education is presenting adjusted EBITDA in connection with its GAAP results and urges investors to review the reconciliation of adjusted net income to the comparable GAAP financial measures that is included in the table below (under the caption “GAAP to Adjusted EBITDA”) and not to rely on any single financial measure to evaluate its business. 21
APPENDIX: DISCLOSURES (Continued) American Public Education is presenting adjusted EBITDA in connection with its GAAP outlook and urges investors to review the reconciliation of adjusted net income to the comparable GAAP financial measures that is included in the table below (under the caption “GAAP Outlook Net Income to Outlook Adjusted EBITDA”) and not to rely on any single financial measure to evaluate its business. 21
apei-ex993_94.htm
Exhibit 99.3
DECEMBER 2020 TICKER: APEI EXCHANGE: NASDAQ AMERICAN PUBLIC EDUCATION, INC. HEROI TM Mission of Helping Learners of all Backgrounds Maximize their Higher Education Return on Investment (HEROI) A leading provider of higher education for adult learners, American Public Education, Inc. (APEI) offers affordable, accessible, relevant and quality academic programs and services to students, universities and partner organizations through its wholly owned subsidiaries American Public University System (APUS) and National Education Seminars Inc., which we refer to as Hondros College of Nursing (HCN). On October 28, 2020, APEI announced the transformational deal to acquire Rasmussen University, the nation’s largest educator of ADN nurses.1 APEI would become the #1 educator of pre-licensure nurses (ADN/RN and PN/LPN), serving over 10,000 nursing students. The acquisition is expected to close by the middle of the third quarter 2021, subject to satisfaction or waiver of certain closing conditions. 97% APUS ALUMNI SURVEYED Respondents indicated that APUS programs met their overall expectations.2 110K+ APUS ALUMNI 6K+ HCN ALUMNI 55+ HCN RELATIONSHIPS with healthcare employers 34% OF APUS STUDENTS returned for a second degree3Revenue (in thousands) 2017 $299,248 2018 $297,687 2019 $286,270 2020 $321,785 Net Income (in thousands) 2017 $21,121 2018 $25,639 2019 $10,013 2020 $18,822 Total Assets (in thousands) 2017 $399,038 2018 $370,958 2019 $354,897 2020 $371,018 Net Cash Provided by Operating Activities (in thousands) 2017 $47,938 2018 $44,179 2019 $38,370 2020 $44,810 Chris Symanoskie, IRC, Vice President, Investor Relations 703-334-3880 or csymanoskie@apei.com NOTE: Past performance is not indicative of future results. Additional information, including important details about risk factors, can be found in APEI’s filings with the U.S. Securities and Exchange Commission, www.sec.gov. 1. Integrated Postsecondary Education Data System and APEI analysis. 2. APUS, 2017 End of Program Survey 3. APUS undergraduate students who completed an associate or bachelor’s degree in 2020.
American Public University System An online institution of higher learning serving the needs of military, public service and civilian communities through American Military University (AMU) and American Public University (APU). AMU APU At-A-Glance 3 88% of Students Are Working Adults Avg. Age of Students: 32 years Avg. Undergraduate Class Size: 19 students Avg. Graduate Class Size: 10 students Gender Diversity: 62% male / 33% female / 5% unreported Over 220 Degree and Certificate Programs Approximately 1,800 Faculty Members 117,000 conferred degrees and certificates Focus on Affordability APUS programs rank #93 nationally, or in the top 2%, for 20-year return on educational investment or net present value.4 72% of AMU and APU alumni have graduated with no APUS-incurred student loan debt.5 Student Satisfaction 51% of APUS students were referred by others6 1. APUS Net Course Registrations represent the approximate aggregate number of courses for which students remain enrolled after the date by which they may drop a course without financial penalty. 2. APUS Student Enrollment represents the number of unique active students, including those who are currently on an approved leave of absence, who are currently in class or have completed a course within the past 12 months. Excludes students in doctoral programs. APUS Student Enrollment as of December 31, 2020 includes 1,900 students whose last 8-week course started October 7, 2019 ended in early December 2019. In the fourth quarter of 2020, year-over-year enrollment growth would have been approximately 9% absent this factor. 3. As of December 31, 2020. 4. Georgetown University Center on Education and Workforce, A First Try at ROI: Ranking 4,500 Colleges, 2019. 5. Includes alumni who graduated with an Associate’s, Bachelor’s or Master’s degree from APUS as of December 31, 2020. Student loan debt is defined as student loans and private education loans and considers tuition, fees, living expenses, and book costs associated with courses taken at APUS. 6. Students starting in 2020. Enrollment and Registrations1 For the three months ended December 31, 2020 2019 % Change Net Course Registrations by New Students 11,600 9,900 17% Net Course Registrations 88,400 79,800 11% For the twelve months ended December 31, Net Course Registrations by New Students 47,400 40,200 18% Net Course Registrations 353,100 316,700 11% As of December 31, 2020 2019 % Change APUS Student Enrollment2 90,400 81,000 12% Registrations by Primary Funding Source For the three months ended December 31, 2020 VA 20% FSA 20% TA 47% Other 13% Enrollment by Degree Level3 Health Science 13% Science, Technology, Engineering & Math 16% Education 2% Arts & Humanities 22% Business 24% Security & Global Sudies 23%
Hondros College of Nursing Serving the needs of nurses and the healthcare community online and through campus locations in Akron, Cincinnati, Cleveland, Columbus, Dayton, Toledo, and Indianapolis. HONDROS COLLEGE OF NURSING Student Enrollment 1 For the three months ended December 31, 2020 2019 % Change New Student Enrollment 710 530 34% Total Student Enrollment 2,140 1,600 34% Approximate Cost (Tuition & Fees) of Degree Completion Practical Nursing $19,700 Associate Degree in Nursing $28,500 Alumni Tuition is $24,5222 Enrollment by Program3 For the full year ended December 31, 2020.Licensed Practical Nurse 63% Associate’s Degree in Nursing 37% At-A-Glance3 Avg. Age of Students: 30 years Gender Ratio: 93% female / 7% male Avg. Class Size: 15 students Graduates3 6,000+ alumni Transformational Acquisition of Rasmussen University ^^With the pending transaction scheduled to close in the middle of the third quarter of 2021, subject to satisfaction or waiver of certain closing conditions, APEI will become the largest educator of ADN nurses, serving over 10,000 students. Rasmussen University offers degree programs to adult learners through 24 campuses in six states.4 1. HCN Student Enrollment represents the total number of students enrolled in a course after the date by which students may drop a course without financial penalty. 2. Tuition for alumni of HCN’s Practical Nursing program is $23,790. 3. For the twelve months ended December 31 2020. 4. On an annual pro forma basis, assuming the transaction had closed as of January 1, 2021.