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 eventreported): November 7, 2023
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) | (IRS 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
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<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement<br>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<br> Stock, $0.01 par value per share | APEI | Nasdaq<br> 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 FinancialCondition.
On November 7, 2023, American Public Education, Inc. (the “Company”) issued a press release reporting financial results for the three months and nine months ended September 30, 2023. A copy of the Company’s press release is attached to this report as Exhibit 99.1 and is incorporated in this report by reference. The Company has scheduled a webcast for 5:00 p.m. ET on November 7, 2023 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.
Section 9 – Financial Statementsand Exhibits
Item 9.01 Financial Statements andExhibits.
| (d) | Exhibits |
|---|---|
| 99.1 | American Public Education, Inc. press release dated November 7, 2023, reporting financial results for the three and nine months ended September 30, 2023. |
| --- | --- |
| 99.2 | American Public Education, Inc. slides for November 7, 2023 conference call and Webcast for the three and nine months ended September 30, 2023. |
| 104 | Cover Page Interactive Data File (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: November 7, 2023 | By: | /s/ Richard W. Sunderland, Jr. |
| Richard W. Sunderland, Jr., | ||
| Executive Vice President and Chief Financial Officer |
Exhibit 99.1
American PublicEducation Reports Third Quarter 2023 Results
CHARLES TOWN, W.Va., Nov. 7, 2023 /PRNewswire/ -- American Public Education, Inc. (Nasdaq: APEI) announced financial results for the quarter ended September 30, 2023.
Third Quarter Highlights:
| · | American<br> Public University System ("APUS"), Hondros College of Nursing ("HCN"),<br> and Graduate School ("GSUSA") all produced year-over-year registration or enrollment<br> growth. |
|---|---|
| · | Consolidated<br> revenue increased 0.9% year-over-year to $150.8 million. |
| · | Net<br> loss was $3.3 million, compared to net loss of $3.8 million in the prior year period. The<br> loss includes a $5.2 million non-cash investment loss on a 2012 APEI minority equity investment<br> in a company that has entered into an agreement to be sold resulting in no proceeds to APEI. |
| · | Net<br> loss per diluted common share was $0.27, compared to a net loss per diluted common share<br> of $0.20 in the same period of 2022. Excluding non-cash equity investment loss, net income<br> available to common shareholders was positive $0.4 million and EPS per diluted share of $0.02. |
| · | APEI<br> maintained a strong liquidity position, with total cash and cash equivalents increasing $25.7<br> million or 19.9% to approximately $155.2 million, compared to $129.5 million as of December<br> 31, 2022. |
| · | Adjusted<br> EBITDA increased 91.4% year-over-year to $18.1 million. |
“APEI’s third quarter adjusted EBITDA exceeded our expectations, thanks in part to our concentrated efforts on enhancing operational efficiency. Furthermore, overall performance this quarter was generally in line with our expectations, demonstrating our commitment to delivering more consistent results,” said Angela Selden, President and Chief Executive Officer of APEI.
“We are also pleased to see continued enthusiasm for our higher education offerings within military and veteran communities at APUS, as well as among aspiring nurses. As we work toward restoring growth and profitability at Rasmussen University, the opportunity is there for a promising and prosperous future,” added Selden.
Financial Results:
For the three months ended September 30,2023, as compared to the same period of 2022:
| · | Total consolidated revenue was $150.8 million, an increase of $1.3 million, or 0.9%, compared<br> to $149.5 million for the three months ended September 30, 2022. The increase was primarily<br> due to a $7.7 million, or 11.2%, increase in revenue in our APUS Segment, a $2.3 million,<br> or 20.4%, increase in revenue in our HCN Segment, and a $0.8 million, or 10.0%, increase<br> in GSUSA revenue included in Corporate and Other, partially offset by $9.5 million, or 15.4%,<br>decrease in revenue in our Rasmussen University (“RU”) Segment. The RU Segment revenue decrease was primarily due to a 10.0%<br>decrease in total student enrollment as compared to the prior year period, partially offset by increases in the tuition of certain programs<br>implemented in January 2023. The APUS Segment revenue increase was primarily due to a 7.6% increase in net course registrations and tuition<br>and fee increases implemented in April and July 2023, as compared to the prior year period. The HCN Segment revenue increase was primarily<br>due to a 17.0% increase in total student enrollment, as well as a 5% tuition increase implemented during the second quarter, compared<br>to the prior year period. |
|---|
| · | Total costs and expenses were $144.4 million, a decrease of $6.1 million, or 4.1%, compared<br> to $150.6 million for the three months ended September 30, 2022. The decrease in costs<br> and expenses was due primarily to decreases in advertising costs, depreciation and amortization<br> costs, and marketing support material costs, partially offset by increases in technology<br> costs, bad debt expense, and employee compensation costs in our APUS and HCN Segments due<br> to an increase in registrations at APUS and enrollments at HCN. Costs and expenses as a percentage<br> of revenue decreased to 95.8% from 100.7% for the three months ended September 30, 2022. |
|---|---|
| · | Instructional costs and services expenses were $73.2 million, an increase of $1.4 million, or 2.0%,<br> compared to $71.8 million for the three months ended September 30, 2022. The increase<br> in instructional costs and services expenses was primarily due to increases in employee compensation<br> costs in our APUS and HCN Segments due to an increase in registrations at APUS and enrollments<br> at HCN, and Corporate and Other due to higher revenue at GSUSA, an increase in classroom<br> material costs in our RU and HCN Segments, and an increase in technology costs in our RU<br> Segment, partially offset by decreases in employee compensation costs in our RU Segment.<br> Instructional costs and services expenses as a percentage of revenue increased to 48.5% from<br> 48.0% for the three months ended September 30, 2022. |
| --- | --- |
| · | Selling and promotional expenses were $33.3 million, a decrease of $7.6 million, or 18.6%, compared<br> to $40.9 million for the three months ended September 30, 2022. The decrease in selling<br> and promotional expenses was primarily due to decreases in advertising costs in all our segments,<br> a decrease in marketing support materials costs in our APUS Segment and decreases in employee<br> compensation costs in our RU and HCN Segments and Corporate and Other. Selling and promotional<br> expenses as a percentage of revenue decreased to 22.1% from 27.4% for the three months ended<br> September 30, 2022. |
| · | General and administrative expenses were $30.9 million, an increase of $1.2 million, or 4.1%,<br> compared to $29.7 million for the three months ended September 30, 2022. The increase<br> in general and administrative expenses was primarily due to an increase in bad debt expense<br> in our APUS and HCN Segments, an increase in technology costs in our HCN and APUS Segments<br> and Corporate and Other, an increase in professional fees in Corporate and Other, partially<br> offset by decreases in employee compensation costs, primarily in our APUS Segment. Consolidated<br> bad debt expense was $4.5 million, or 3.0% of revenue, compared to $3.7 million, or 2.5%<br> of revenue in the prior year period. General and administrative expenses as a percentage<br> of revenue increased to 20.5% from 19.8% for the three months ended September 30, 2022.<br> As we continue to evaluate enhancements to our business capabilities, particularly in technology,<br> we expect to incur additional costs and that our general and administrative expenses will<br> vary from time to time. |
| · | Net interest expense was $0.8 million and $3.6 million for the three months ended September 30,<br> 2023 and 2022, respectively. The decrease in net interest expense was primarily due to the<br> decrease in the outstanding balance in our senior secured term loan facility and due to higher<br> yield on cash balances. In December 2022, we made $65.0 million in prepayments to reduce<br> our outstanding debt. |
|---|---|
| · | During<br> the three-month period ended September 30, 2023, $1.5 million of dividends were declared<br> and paid on our Series A Senior Preferred Stock. The Series A Senior Preferred Stock was<br> issued in December 2022, and therefore there were no preferred stock dividends in the comparable<br> prior year period. |
| · | Net loss available to common stockholders was $4.9 million, compared to net loss available<br> to common stockholders of $3.8 million for the three months ended September 30, 2022,<br> primarily driven by a one-time non-cash write-off of a 2012 APEI minority equity investment<br> along with the changes in revenue and expenses discussed above. |
| · | Net loss per diluted common share was $0.27, compared to a net loss per diluted common share<br> of $0.20 in the same period of 2022. Excluding non-cash equity investment loss, net income available to common shareholders was positive $0.4 million and EPS per diluted share<br> of $0.02. |
| · | Adjusted EBITDA was $18.1 million, compared to $9.5 million for the three months ended September 30,<br> 2022. Adjusted EBITDA excludes non-cash compensation expense, (gain)/loss on disposals of<br> long-lived assets, severance expense, and M&A-related professional fees. |
Balance Sheetand Liquidity:
| · | Total cash and cash equivalents were $155.2 million and $129.5 million at September 30,<br> 2023 and December 31, 2022, respectively, representing an increase of $25.7 million,<br> or 19.9%. The increase in cash was primarily due to payments received by APUS from the Army,<br> which totaled approximately $51.3 million during the nine months ended September 30,<br> 2023, of which approximately $18.1 million in payments related to periods prior to 2023,<br> and the timing of other receipts and payments. As of September 30, 2023, approximately $13.5<br> million, of which $5.0 million is older than 60 days from the course start date, was due<br> from the Army. |
|---|
Registrations and Enrollment:
| 2023 | 2022 | % Change | |||||
|---|---|---|---|---|---|---|---|
| American Public University System ^1^ | |||||||
| For the three months ended September 30, <br><br>Net Course<br> Registrations | 92,300 | 85,800 | 8 | % | |||
| For the nine months ended September 30,<br><br> Net Course Registrations | 276,900 | 263,200 | 5 | % | |||
| RasmussenUniversity ^2^ | |||||||
| For the three months ended September 30, <br><br>Total Student Enrollment | 13,500 | 15,000 | (10 | )% | |||
| HondrosCollege of Nursing ^3^ | |||||||
| For the three months ended September 30, <br><br>Total Student Enrollment | 2,800 | 2,400 | 17 | % |
^1^ APUS NetCourse Registrations represents the approximate aggregate number of courses for which students remain enrolled after the date by whichthey may drop a course without financial penalty. Excludes students in doctoral programs.^2^ RU Total Student Enrollment represents students in an active status as of the full-term census or billing date^3^ HCN Total Student Enrollment represents the approximate number of students enrolled in a course after the dateby which students may drop a course without financial penalty.
Fourth Quarter 2023 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. Refer to APEI's earnings conference call and presentation for further details.
| (% Yr/Yr Change) | |
| APUS Net course registrations | 2% to 4% |
| HCN Student enrollment | 19 % |
| RU Student enrollment | -10 % |
| - Nursing | -25 % |
| - Non-Nursing | 5 % |
| ( in millions except EPS) | |
| APEI Consolidated revenue | -2% to -1% |
| APEI Net income available to common stockholders | n.m. |
| APEI Adjusted EBITDA | -3% to +10% |
| APEI Diluted EPS | n.m. |
All values are in US Dollars.
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 they allow investors to better evaluate APEI's operating profit and cash generation capabilities.
For the three months ended September 30, 2023 and 2022, adjusted EBITDA excludes non-cash compensation expense, (gain) loss on disposals of long-lived assets, severance expense, 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 our non-GAAP measures is that they exclude 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 captions "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 third quarter 2023 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 to listeners through APEI's investor relations website for one year.
About American Public Education
American Public Education, Inc. (Nasdaq: APEI), through its institutions American Public University System (APUS), Rasmussen University, Hondros College of Nursing, and Graduate School USA (GSUSA), provides education that transforms lives, advances careers, and improves communities.
APUS, which operates through American Military University and American Public University, is the leading educator to active-duty military and veteran students* and serves approximately 90,000 adult learners worldwide via accessible and affordable higher education.
Rasmussen University is a 120-year-old nursing and health sciences-focused institution that serves approximately 13,500 students across its 22 campuses in six states and online. It also has schools of Business, Technology, Design, Early Childhood Education and Justice Studies.
Hondros College of Nursing focuses on educating pre-licensure nursing students at eight campuses (six in Ohio, one in Indiana, and one in Michigan). It is the largest educator of PN (LPN) nurses in the state of Ohio** and serves approximately 2,800 total students.
Graduate School USA is a leading training provider to the federal workforce with an extensive portfolio of government agency customers. It serves the federal workforce through customized contract training (B2G) to federal agencies and through open enrollment (B2C) to government professionals.
Both APUS and Rasmussen are institutionally accredited by the Higher Learning Commission (HLC), an institutional accreditation agency recognized by the U.S. Department of Education. Hondros is accredited by the Accrediting Bureau of Health Education Schools (ABHES). GSUSA is accredited by the Accrediting Council for Continuing Education & Training (ACCET). For additional information, visit www.apei.com.
*Based on FY 2019 Department of Defensetuition assistance data, as reported by Military Times, and Veterans Administration student enrollment data as of 2023.
**Based on information compiled bythe National Council of State Boards of Nursing and Ohio Board of Nursing.
Forward Looking Statements
Statements 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. In some cases, forward-looking statements can be identified by words such as "anticipate," "believe," "seek," "could," "estimate," "expect," "intend," "may," "plan," "should," "will," "would," and similar words or their opposites. Forward-looking statements include, without limitation, statements regarding the Company’s future path, expected growth, registration and enrollments, revenues, income and adjusted EBITDA and EBITDA, the growth and profitability of Rasmussen University 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: APEI's failure to comply with regulatory and accrediting agency requirements, including the “90/10 Rule”, and to maintain institutional accreditation and the impacts of any actions APEI may take to prevent or correct such failure; APEI's dependence on the effectiveness of its ability to attract students who persist in its institutions' programs; changing market demands; APEI's inability to effectively market its institutions' programs; APEI's inability to maintain strong relationships with the military and maintain course registrations and enrollments from military students; the loss or disruption of APEI's ability to receive funds under tuition assistance programs or the reduction, elimination, or suspension of tuition assistance; 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 need to successfully adjust to future market demands by updating existing programs and developing new programs; APEI's loss of eligibility to participate in Title IV programs or ability to process Title IV financial aid; economic and market conditions and changes in interest rates; difficulties involving acquisitions; the Company's indebtedness and preferred stock; APEI's dependence on and the need to continue to invest in its technology infrastructure; the inability to recognize the intended benefits of APEI's cost savings efforts; APEI’s ability to manage and influence its bad debt expense; and the various risks described in the "Risk Factors" section and elsewhere in APEI's Quarterly Report on Form 10-Q for the period ended September 30, 2023 and Annual Report on Form 10-K for the year ended December 31, 2022, and in 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:
Frank Tutalo**.**Director, Public Relations
American Public Education, Inc
ftutalo@apei.com
571-358-3042
American Public Education, Inc.
Consolidated Statement of Income
(In thousands, except per share data)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | ||||||
| 2023 | 2022 | |||||
| (unaudited) | ||||||
| Revenues | $ | 150,838 | $ | 149,535 | ||
| Costs and expenses: | ||||||
| Instructional costs and services | 73,228 | 71,817 | ||||
| Selling and promotional | 33,315 | 40,917 | ||||
| General and administrative | 30,885 | 29,667 | ||||
| Impairment of goodwill and intangible assets | — | — | ||||
| (Gain) loss on disposals of long-lived assets | (16 | ) | 178 | |||
| Depreciation and amortization | 7,026 | 7,982 | ||||
| Total costs and expenses | 144,438 | 150,561 | ||||
| Income (loss) from operations before interest income and income taxes | 6,400 | (1,026 | ) | |||
| Gain on acquisition | — | — | ||||
| Interest (expense) income | (792 | ) | (3,594 | ) | ||
| Income (loss) before income taxes | 5,608 | (4,620 | ) | |||
| Income tax (benefit) expense | 3,712 | (860 | ) | |||
| Equity investment loss, net of tax | (5,224 | ) | (2 | ) | ||
| Net loss | $ | (3,328 | ) | $ | (3,762 | ) |
| Preferred stock dividends | 1,525 | — | ||||
| Net loss available to common stockholders | $ | (4,853 | ) | $ | (3,762 | ) |
| Net loss per common share: | ||||||
| Basic | $ | (0.27 | ) | $ | (0.20 | ) |
| Diluted | $ | (0.27 | ) | $ | (0.20 | ) |
| Weighted average number of common shares: | ||||||
| Basic | 17,778 | 18,885 | ||||
| Diluted | 17,820 | 18,927 | ||||
| Three Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Segment Information: | September 30, | |||||
| 2023 | 2022 | |||||
| Revenues: | ||||||
| APUS Segment | $ | 76,406 | $ | 68,735 | ||
| RU Segment | $ | 52,073 | $ | 61,548 | ||
| HCN Segment | $ | 13,741 | $ | 11,409 | ||
| Corporate and other^1^ | $ | 8,618 | $ | 7,843 | ||
| Income (loss) from<br> operations before interest and income taxes: | ||||||
| APUS Segment | $ | 21,948 | $ | 12,532 | ||
| RU Segment | $ | (10,570 | ) | $ | (7,900 | ) |
| HCN Segment | $ | (641 | ) | $ | (1,392 | ) |
| Corporate and other | $ | (4,337 | ) | $ | (4,266 | ) |
| Nine Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| September 30, | ||||||
| 2023 | 2022 | |||||
| (unaudited) | ||||||
| Revenues | $ | 447,741 | $ | 453,890 | ||
| Costs and expenses: | ||||||
| Instructional costs and services | 222,115 | 215,604 | ||||
| Selling and promotional | 106,205 | 116,082 | ||||
| General and administrative | 96,907 | 89,179 | ||||
| Impairment of goodwill and intangible assets | 64,000 | 144,900 | ||||
| Loss on disposals of long-lived assets | 17 | 962 | ||||
| Depreciation and amortization | 22,735 | 24,249 | ||||
| Total costs and expenses | 511,979 | 590,976 | ||||
| (Loss) income from operations before interest income and<br> income taxes | (64,238 | ) | (137,086 | ) | ||
| Gain on acquisition | — | 3,828 | ||||
| Interest (expense) income | (3,668 | ) | (10,339 | ) | ||
| (Loss) income before income taxes | (67,906 | ) | (143,597 | ) | ||
| Income tax (benefit) expense | (12,839 | ) | (35,152 | ) | ||
| Equity investment loss, net of tax | (5,233 | ) | (13 | ) | ||
| Net loss | $ | (60,300 | ) | $ | (108,458 | ) |
| Preferred stock dividends | 4,469 | — | ||||
| Net loss available to common stockholders | $ | (64,769 | ) | $ | (108,458 | ) |
| Net loss per common share: | ||||||
| Basic | $ | (3.55 | ) | $ | (5.75 | ) |
| Diluted | $ | (3.54 | ) | $ | (5.74 | ) |
| Weighted average number of common shares: | ||||||
| Basic | 18,230 | 18,854 | ||||
| Diluted | 18,294 | 18,906 | ||||
| Nine Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Segment Information: | September 30, | |||||
| 2023 | 2022 | |||||
| Revenues: | ||||||
| APUS Segment | $ | 223,941 | $ | 211,729 | ||
| RU Segment | $ | 161,511 | $ | 192,538 | ||
| HCN Segment | $ | 41,147 | $ | 34,436 | ||
| Corporate and other^1^ | $ | 21,142 | $ | 15,187 | ||
| (Loss) income from operations before interest income and income taxes: | ||||||
| APUS Segment | $ | 57,963 | $ | 39,338 | ||
| RU Segment | $ | (100,708 | ) | $ | (153,562 | ) |
| HCN Segment | $ | (2,179 | ) | $ | (3,017 | ) |
| Corporate and other^1^ | $ | (19,314 | ) | $ | (19,845 | ) |
1. Corporate and Other includes tuition and contract training revenue earned by GSUSA and the elimination of intersegment revenue for courses taken by employees of one segment at other segments.
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 months ended September 30, 2023 and 2022:
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | September 30, | |||||||||||
| (in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||
| Net loss available to common stockholders | $ | (4,853 | ) | $ | (3,762 | ) | $ | (64,769 | ) | $ | (108,458 | ) |
| Preferred stock dividends | 1,525 | - | 4,469 | - | ||||||||
| Net loss | $ | (3,328 | ) | $ | (3,762 | ) | $ | (60,300 | ) | $ | (108,458 | ) |
| Income tax expense (benefit) | 3,712 | (860 | ) | (12,839 | ) | (35,152 | ) | |||||
| Interest expense | 792 | 3,594 | 3,668 | 10,339 | ||||||||
| Equity investment loss, net of tax | 5,224 | 2 | 5,233 | 13 | ||||||||
| Depreciation and amortization | 7,026 | 7,982 | 22,735 | 24,249 | ||||||||
| EBITDA | 13,426 | 6,956 | (41,503 | ) | (109,009 | ) | ||||||
| Impairment of goodwill and intangible assets | - | - | 64,000 | 144,900 | ||||||||
| Adjustment to gain on acquisition | - | - | - | (3,828 | ) | |||||||
| Stock Compensation | 1,733 | 1,997 | 6,025 | 6,703 | ||||||||
| (Gain) loss on disposals of long-lived assets | (16 | ) | 178 | 17 | 962 | |||||||
| M&A - related professional | - | 329 | - | 1,602 | ||||||||
| Transition services cost | - | - | 2,403 | - | ||||||||
| Severance expense | 2,959 | - | 2,959 | - | ||||||||
| Adjusted EBITDA | $ | 18,102 | $ | 9,460 | $ | 33,901 | $ | 41,330 |
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 months ending December 31, 2023:
| Three Months Ending | ||||
|---|---|---|---|---|
| December 31, 2023 | ||||
| (in thousands, except per share data) | Low | High | ||
| Net income available to common stockholders | $ | 1,258 | $ | 2,658 |
| Preferred dividends | 1,488 | 1,488 | ||
| Net Income | 2,746 | 4,146 | ||
| Income tax expense | 1,177 | 1,777 | ||
| Interest expense | 2,555 | 2,555 | ||
| Depreciation and amortization | 5,318 | 5,318 | ||
| EBITDA | 11,796 | 13,796 | ||
| Stock compensation | 2,024 | 2,024 | ||
| Transition services cost | 1,100 | 1,100 | ||
| Adjusted EBITDA | $ | 14,920 | $ | 16,920 |
Exhibit 99.2
American Public Education, Inc. Third Quarter 2023 Results November 7, 2023 PRESENTED BY Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO
Safe Harbor Statement Statements made in this presentation regarding American Public Education, Inc. or its subsidiaries (“APEI” or the “Company”) tha t are not historical facts are forward - looking statements based on current expectations, assumptions, estimates and projections about APEI and the industry. In some cases, forward - looking statements can be identified by words such as “anticipate,” “believe,” “seek,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will,” “would,” “potentially,” and similar words or their opposites. Forward - looki ng statements include, without limitation, statements regarding expectations for growth, registration, enrollments, revenues, net income, earnings p er share, EBITDA and Adjusted EBITDA, and plans with respect to and future impacts of recent, current and future initiatives. Forward - looking statements are subject to risks and uncertainties that could cause actual results to differ materially from thos e expressed or implied by such statements. Such risks and uncertainties include, among others, risks related to: failure to comply with regu lat ory and accrediting agency requirements, including the “90/10” Rule”, or to maintain institutional accreditation and the impacts of a ny actions the Company may take to prevent or correct such failure, APEI’s dependence on the effectiveness of its ability to attract student s w ho persist in its institutions’ programs, the inability to effectively market the Company’s programs or expand into new markets, the loss or di sru ption of the Company’s ability to receive funds under tuition assistance programs or the reduction, elimination, or suspension of tuition ass istance, the inability to maintain enrollments from military students, effects of changes the Company makes to improve the student experie nce and enhance the ability to identify and enroll students who are likely to succeed, the inability to adjust to future market demands, cont inu ed strong competition in the education market, the impact of recent regulatory rulemakings, the loss of eligibility to participate in Title IV prog ram s or ability to process Title IV financial aid, economic and market conditions and changes in interest rates, difficulties involving business combina tio ns and acquisitions, the Company’s indebtedness and preferred stock, dependence on and the need to continue to invest in the Company ’s technology infrastructure, inability to recognize the intended benefits of the Company’s cost savings efforts, inability to attract, ret ain , and develop skilled personnel, impacts of changes in management, and the risk factors described in the risk factor section and elsewhere in the C omp any’s most recent annual report on Form 10 - K and quarterly report on Form 10 - Q and in the Company’s other SEC filings. You should not place any undue reliance on any forward - looking statements. The Company undertakes no obligation to update publicly any forward - looking statemen ts for any reason, unless required by law, even if new information becomes available or other events occur in the future.
3Q23 APEI Executive Summary 3 1) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non - recurring expenses, such as severance, and non - cash expenses, such as stock compensation) is a non - GAAP financial measure. Refer to appendix for GAAP to non - GAAP reconciliation. Key Take - Aways 4Q23 Guidance Summary ▪ APEI Revenue: $ 150.8 million – exceeding high end of third quarter guidance ▪ Net loss available to common stockholders: $(4.9) million and EPS loss per diluted common share of $(0.27) ▪ Includes a $5.2 million non - cash investment loss on a 2012 APEI minority equity investment in a company that was sold with no recovery to APEI ▪ Excluding non - cash equity investment loss, net income available to common stockholders of positive $0.4 million and earnings per diluted share of $0.02, both above guidance ranges ▪ APEI Adjusted EBITDA: $18.1 million – exceeding high end of guidance ▪ Positive enrollment trends: APUS, HCN, RU Online and GSUSA ▪ Meaningful NCLEX - RN improvements: RU and HCN ▪ Right - sized cost structure to align expenses with current revenue profile: APEI, RU, HCN ▪ Improved marketing efficiencies from insourced marketing function: RU
Education Unit Updates
APUS Summary 5 *Note: 3Q23 reflects mid - point of registration guidance Guidance Period Mid - point □ Net course registrations grew +7.6% in 3Q23 vs. 3Q22 □ Continued positive 3Q23 enrollment growth driven by military (+12%) and veteran students (+5%) □ Continued margin expansion due to higher enrollments, tuition and fee increases earlier in 2023 and lower advertising costs □ 4Q23 registration guidance of +2% to +4% (88,900 to 90,700 registrations) Guidance Period Mid - point
Hondros Summary 6 □ 15 consecutive quarters of yr / yr enrollment growth □ 4Q23 enrollment guidance is approximately 3,100 (+19% vs. 4Q22) □ 3Q23 EBITDA slightly negative due to higher bad debt expense, and ongoing new campus start - up costs □ Hondros NCLEX - RN scores continued to improve in 3Q23
Rasmussen Summary 7 □ Strong growth in BSN enrollments and other on - ground programs offset by continued declines in ADN program □ NCLEX scores continue to improve sequentially □ 20 out of 24 programs met the applicable state benchmark in 3Q23 □ Took further cost savings actions in 3Q23 to align cost structure to current revenue levels □ 3Q23 financial results driven by lower revenue from fewer ADN enrollments vs. prior year offset partially by lower advertising
Financial Results
Revenue Summary by Education Unit 1 Graduate School USA includes nominal amount of corporate revenue eliminations 9 APEI Revenue » 3 of 4 Units delivering solid revenue growth » Double - digit revenue growth at APUS, HCN and GSUSA » RU revenue declined due primarily to lower ADN nursing enrollments 1 ($ in millions) 3Q22 3Q23 % Change YTD 9/30/2022 YTD 9/30/2023 % Change 68.7$ 76.4$ 11% 211.7$ 223.9$ 6% 61.5$ 52.1$ -15% 192.5$ 161.5$ -16% 11.4$ 13.7$ 20% 34.4$ 41.1$ 19% 7.8$ 8.6$ 10% 15.2$ 21.1$ 39% 149.5$ 150.8$ 1% 453.9$ 447.7$ -1%
Education Unit Operating Income and Margin Profile 10 Notes: See note 9 to the financial statements included in the 3Q23 10Q. Reflects income (loss) from operations before interest, inco me taxes, and gain (loss) from acquisitions. 1 Rasmussen includes a non - cash impairment of $144.9M in 2Q22 and $64M in 2Q23. 2 Graduate School and Corporate combined comprise the Corporate & Other segment Operating Income ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 APUS 13.2$ 13.6$ 12.5$ 19.1$ 17.1$ 18.9$ 21.9$ Margin 18% 19% 18% 26% 23% 26% 29% Rasmussen 0.9$ (146.6)$ (7.9)$ (13.0)$ (12.9)$ (77.3)$ (10.6)$ Margin 1% -229% -13% -21% -22% -149% -20% Hondros (1.0)$ (0.6)$ (1.4)$ (1.0)$ (1.3)$ (0.2)$ (0.6)$ Margin -9% -5% -12% -8% -10% -2% -5% Graduate School (1.6)$ (1.7)$ 1.6$ (0.0)$ (1.4)$ 0.7$ 1.4$ Margin -50% -39% 20% 0% -27% 9% 16% Corporate (6.3)$ (6.0)$ (5.9)$ (5.4)$ (6.9)$ (7.4)$ (5.8)$ Consolidated Operating Income 5.2$ (141.3)$ (1.0)$ (0.3)$ (5.4)$ (65.3)$ 6.4$ (+) Goodwill & intangible impairments -$ 144.9$ -$ 2.0$ -$ 64.0$ -$ Consolidated Adj. Operating Income 5.2$ 3.6$ (1.0)$ 1.7$ (5.4)$ (1.3)$ 6.4$ Margin 3% 2% -1% 1% -4% -1% 4% 2 1 2
EBITDA ($ in millions) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 APUS 14.9 15.2 14.1 20.6 18.5 20.2 23.3 Margin 20% 22% 21% 28% 25% 28% 30% Rasmussen 7.0 4.5 (1.9) (5.0) (6.9) (7.1) (5.3) Margin 10% 7% -3% -8% -12% -14% -10% Hondros (0.8) (0.4) (1.1) (0.7) (1.0) 0.1 (0.3) Margin -7% -3% -10% -6% -8% 1% -2% Graduate School (1.4) (1.6) 1.8 0.1 (1.3) 0.8 1.6 Margin -46% -36% 22% 2% -24% 11% 18% Corporate (6.3) (6.0) (5.9) (5.4) (6.9) (7.4) (5.7) Consolidated EBITDA 13.3 11.8 7.0 9.6 2.4 6.7 13.4 (+) Adjustments 4.0 2.8 2.5 5.8 4.6 2.1 4.7 Consolidated Adj. EBITDA 17.3 14.6 9.5 15.4 7.0 8.8 18.1 Margin 11% 10% 6% 10% 5% 6% 12% Education Unit EBITDA and Margin Profile 11 900 basis point improvement in margin driven by higher enrollments, select price increases, lower marketing costs and lower G&A expenses EBITDA decline and margin contraction driven by impact of lower enrollments, especially nursing, on RU’s fixed operating cost structure Improved EBITDA due to higher enrollments and revenue, partially offset by higher bad debt expense and central costs Higher enrollments and contract business driving operating leverage Note: See note 9 to the financial statements included in the 3Q23 10Q. Reflects income (loss) from operations before interest, inco me taxes, gain (loss) from acquisitions, + depreciation & amortization Please refer to slide 15 and appendix for GAAP to non - GAAP reconciliation 1 Rasmussen excludes a non - cash impairment of $144.9M in 2Q22 and $64M in 2Q23. 2 Graduate School and Corporate combined comprise the Corporate & Other segment, as discussed in footnote 9 within the 3Q23 10Q di sclosure. 2 1 2
Capitalization & Liquidity 12 (1) Includes effective interest rate, net of hedge, for Term Loan and represents the annualized 3Q23 amount for Preferred Equity ($ in millions) 12/31/2022 9/30/2023 Cash 129$ 155$ (-) Restricted cash (27) (27) Unrestricted cash 103$ 128$ Term Loan (principal) 99$ 99$ Revolver, drawn - - Total Debt 99$ 99$ Cash (net of debt) 3$ 29$ Preferred equity 40$ 40$
These statements are based on current expectations. These statements are forward - looking and actual results may differ materially. (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) HCN and Rasmussen student enrollment represents the total number of students enrolled in a course after the date by which stu den ts may drop a course without financial penalty. (3) Please refer to Appendix for GAAP to Non - GAAP reconciliation APEI’s 4Q23 Outlook 13
Thank You
Education Unit Overview – Operating Income to EBITDA Reconciliation (1) See note 9 to the financial statements in the 3Q23 10Q. Reflects income (loss) from operations before interest, income taxes, an d gain / (loss) from acquisition. 15 Corporate + APEI Revenue Full Year ($ in millions) 1Q22 2Q22 3Q22 4Q22 2022 1Q23 2Q23 3Q23 Revenue 73.1 69.9 68.7 73.4 285.1 74.0 73.6 76.4 Operating Income (1) 13.2 13.6 12.5 19.1 58.5 17.1 18.9 21.9 (+) D&A 1.7 1.6 1.6 1.5 6.4 1.4 1.3 1.3 EBITDA 14.9 15.2 14.1 20.6 64.8 18.5 20.2 23.3 EBITDA Margin 20.4% 21.8% 20.5% 28.1% 22.7% 25.0% 27.5% 30.4% Revenue 67.1 63.9 61.5 60.7 253.3 57.5 52.0 52.1 Operating Income (1) 0.9 (146.6) (7.9) (13.0) (166.6) (12.9) (77.3) (10.6) (+) D&A 6.1 6.2 6.0 6.0 24.2 5.9 6.2 5.2 (+) Impairment / Other - 144.9 - 2.0 151.2 - 64.0 - EBITDA 7.0 4.5 (1.9) (5.0) 8.8 (6.9) (7.1) (5.3) EBITDA Margin 10.4% 7.1% -3.1% -8.3% 3.5% -12.1% -13.6% -10.3% Revenue 11.5 11.5 11.4 12.6 47.1 13.1 14.3 13.7 Operating Income (1) (1.0) (0.6) (1.4) (1.0) (4.0) (1.3) (0.2) (0.6) (+) D&A 0.2 0.2 0.2 0.3 1.0 0.3 0.3 0.3 EBITDA (0.8) (0.4) (1.1) (0.7) (3.1) (1.0) 0.1 (0.3) EBITDA Margin -6.7% -3.3% -10.0% -5.8% -6.5% -7.7% 0.6% -2.4% Revenue 3.0 4.3 7.8 5.7 20.9 5.1 7.4 8.6 Operating Income (1) (7.9) (7.7) (4.3) (5.4) (25.2) (8.3) (6.7) (4.3) (+) D&A 0.1 0.2 0.1 0.1 0.6 0.1 0.1 0.2 EBITDA (7.7) (7.55) (4.1) (5.2) (24.6) (8.1) (6.6) (4.2) Revenue 154.7 149.6 149.5 152.4 606.3 149.7 147.2 150.8 Operating Income (1) 5.2 (141.3) (1.0) (0.3) (137.3) (5.4) (65.3) 6.4 (+) D&A 8.1 8.1 8.0 7.9 32.1 7.8 8.0 7.0 (+) Impairment / Other - 144.9 - 2.0 151.2 - 64.0 - EBITDA 13.3 11.8 7.0 9.6 46.0 2.4 6.7 13.4 EBITDA Margin 8.6% 7.9% 4.7% 6.3% 7.6% 1.6% 4.5% 8.9% (+) Adjustments 4.0 2.8 2.5 5.8 11.2 4.6 2.1 4.7 Adjusted EBITDA 17.3 14.5 9.5 15.4 57.2 7.0 8.8 18.1 Adjusted EBITDA Margin 11.2% 9.7% 6.3% 10.1% 9.4% 4.7% 6.0% 12.0%
Enrollment and Registration Summary 16 3Q 2023 3Q 2022 % Change APUS Registrations 92,300 85,800 8% Total Nursing Enrollment 8,500 10,110 -16% Rasmussen Nursing Enrollment 5,700 7,700 -26% HCN Nursing Enrollment 2,800 2,410 16% Rasmussen Non-Nursing 7,700 7,300 5%
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 measure that is included in the table below (under the caption “GAAP Net Income to Adjusted EBITDA”) and not to rely on any single financial measure to evaluate its business . Non - GAAP Disclosures 17 GAAP Net Income to Adjusted EBITDA: (in thousands, except per share data) Net loss available to common stockholders $ (4,853) $ (3,762) $ (64,769) $ (108,458) Preferred stock dividends 1,525 - 4,469 - Net loss $ (3,328) $ (3,762) $ (60,300) $ (108,458) Income tax expense (benefit) 3,712 (860) (12,839) (35,152) Interest expense 792 3,594 3,668 10,339 Equity investment loss, net of tax 5,224 2 5,233 13 Depreciation and amortization 7,026 7,982 22,735 24,249 EBITDA 13,426 6,956 (41,503) (109,009) Impairment of goodwill and intangible assets - - 64,000 144,900 Adjustment to gain on acquisition - 0 - - (3,828) Stock Compensation 1,733 1,997 6,025 6,703 (Gain) loss on disposals of long-lived assets (16) 178 17 962 M&A - related professional - 329 - 1,602 Transition services cost - - 2,403 - Severance expense 2,959 - 2,959 - Adjusted EBITDA $ 18,102 $ 9,460 $ 33,901 $ 41,330 Nine Months Ended September 30, 2023 2022 The following table sets forth the reconciliation of the Company’s reported GAAP net income to the calculation of adjusted EBITDA for the three months ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 2022
American Public Education is presenting adjusted EBITDA in connection with its GAAP outlook and urges investors to review the reconciliation of projected adjusted net income to the comparable GAAP financial measure 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 . Non - GAAP Disclosures (continued) 18 GAAP Outlook Net Income to Outlook Adjusted EBITDA: (in thousands, except per share data) Net income available to common stockholders$ 1,258 $ 2,658 Preferred dividends 1,488 1,488 Net Income 2,746 4,146 Income tax expense 1,177 1,777 Interest expense 2,555 2,555 Depreciation and amortization 5,318 5,318 EBITDA 11,796 13,796 Stock compensation 2,024 2,024 Transition services cost 1,100 1,100 Adjusted EBITDA $ 14,920 $ 16,920 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 months ending December 31, 2023: Three Months Ending December 31, 2023 Low High