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 TheSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 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> of<br> incorporation) | (Commission<br><br> File Number) | (IRS Employer<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 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<br> 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, $0.01 par value per share | 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 Securities 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 August 9, 2021, American Public Education, Inc. issued a press release reporting financial results for the three and six months ended June 30, 2021. 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 August 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.
| Section 9 | – | Financial Statements and Exhibits |
|---|---|---|
| Item 9.01 | Financial Statements and Exhibits. | |
| --- | --- | |
| (d) | Exhibits | |
| --- | --- | --- |
| 99.1 | American Public Education, Inc. press release dated August 9, 2021, reporting financial results for the three and six months ended June 30, 2021. | |
| 99.2 | American Public Education, Inc. slides for August 9, 2021 conference call and Webcast for the three and six months ended June 30, 2021. | |
| 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: | August 9, 2021 | By: | /s/ Richard W. Sunderland, Jr. |
| Richard W. Sunderland, Jr., Executive Vice President and Chief Financial Officer |
Exhibit 99.1
American PublicEducation Reports Second Quarter 2021 Results
CHARLES TOWN,WV (August 09, 2021) – 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 or Hondros) – announced financial results for the second quarter ended June 30, 2021
Second QuarterHighlights:
| · | Consolidated<br> revenue decreased 5% year-over-year to $78.0 million |
|---|---|
| · | Net<br> income decreased to $0.5 million, or $0.03 per diluted share, compared to net income of $6.7<br> million, or $0.45 per diluted share, in the second quarter of 2020. |
| --- | --- |
| · | Adjusted<br> EBITDA decreased 36% year-over-year to $9.9 million |
| --- | --- |
| · | Total<br> net course registrations at APUS decreased 8% year-over-year to 82,600, |
| --- | --- |
| · | Total<br> student enrollment at HCN increased 36% year-over-year to 2,380 – the highest<br> in school history |
| --- | --- |
Angela Selden, APEI’s Chief Executive Officer, said, “Second quarter financial results reflected the challenging enrollment environment at APUS due predominantly to the outage of the Army’s new tuition assistance registration portal, Army IgnitED for the entirety of the quarter. This was offset in part by the continued strong enrollment and financial performance at Hondros, which once again recorded record student enrollments and continued profitability this quarter. While Army IgnitED started to process Tuition Assistance in the third week of July and we have begun to enroll students through that portal, the system does not yet appear to be operating at full capacity and the enrollment ramp has been slow. Despite this, we have taken several steps to shore up enrollment momentum and improve financial performance in the back half of 2021.”
Financial Results:
Total consolidated revenue for the second quarter of 2021 decreased by 5% to $78.0 million, compared to total revenue of $82.1 million in the second quarter of 2020. The decrease was driven by a $6.7 million, or 9%, decrease in APEI Segment revenue, offset by a $2.5 million, or 29%, increase in HCN Segment revenue resulting from increases in student enrollment.
Consolidated income from operations before interest income and income taxes in the second quarter of 2021 decreased to $2.0 million, compared to $9.0 million in the prior year period. APEI Segment income from operations before interest income and income taxes decreased to $1.9 million, compared to $9.1 million in the prior year period. APEI Segment expenses include $3.3 million in professional fees associated with strategic growth opportunities, including the Rasmussen University acquisition, compared to $1.3 million in professional fees associated with strategic growth opportunities in the prior year period. HCN Segment income from operations before interest income and income taxes was $0.1 million during the three months ended June 30, 2021, compared to a loss of $35,000 in the same period in 2020.
GAAP net income for the three months ended June 30, 2021 was $0.5 million, or $0.03 per diluted share, compared to net income of $6.7 million, or $0.45 per diluted share, in the same period of 2020. Adjusted EBITDA for the three months ended June 30, 2021 was $9.9 million, compared to $15.5 million in the prior year period. The weighted average diluted shares outstanding for the second quarter of 2021 and 2020 were approximately 18.8 million and 14.9 million, respectively.
For the six months ended June 30, 2021, total consolidated revenue increased by 6% to $166.6 million, compared to total revenue of $156.7 million in the prior year period. The increase was driven by an $3.6 million, or 3%, increase in APEI Segment revenue and a $6.1 million, or 38%, increase in HCN Segment revenue, both resulting from increases in student enrollment.
Consolidated income from operations before interest income and income taxes for the six months ended June 30, 2021 was $12.6 million, compared to $11.7 million in the prior year period. This increase was driven by a $1.8 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 decreased $0.9 million, or 7%, compared to the prior year.
Net income for the six months ended June 30, 2021 was $8.6 million, or $0.49 per diluted share, compared to net income of $9.1 million, or $0.61 per diluted share, in the prior year period. The weighted average diluted shares outstanding for the six months ended June 30, 2021 and 2020 were approximately 17.7 million and 15.0 million, respectively.
Total cash and cash equivalents as of June 30, 2021 were approximately $317.0 million, compared to $227.7 million as of December 31, 2020. Total cash and cash equivalents as of June 30, 2021 reflects that on March 1, 2021, APEI closed its previously announced underwritten public offering of 3,680,000 shares for net proceeds of approximately $86.2 million.
Capital expenditures were approximately $3.0 million for the six months ended June 30, 2021, compared to $2.9 million in the prior year period. Depreciation and amortization expense was $2.5 million for the three months ended June 30, 2021, compared to $3.4 million in the prior year period.
Registrationsand Enrollment:
| American Public University System^1^ | |||||||
|---|---|---|---|---|---|---|---|
| For the three months ended June 30, | 2021 | 2020 | % Change | ||||
| Net Course Registrations | 82,600 | 89,600 | -8 | % | |||
| For the six months ended June 30, | |||||||
| Net Course Registrations | 175,600 | 174,400 | 1 | % | |||
| As of June 30, | |||||||
| APUS Student Enrollment^2^ | 89,100 | 83,700 | 7 | % | |||
| Hondros College of Nursing^3^ | |||||||
| For the three months ended June 30, | 2021 | 2020 | % Change | ||||
| Total Student Enrollment | 2,380 | 1,750 | 36 | % |
^1^APUSNet Course Registrations represents 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^*APUSStudent 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.
^3^HCNStudent Enrollment represents the approximate number of students enrolled in a course after the date by which students may drop a course without financial penalty.
Rasmussen UniversityTransaction:
“We remain on track to close our transaction with Rasmussen University in the third quarter. We have worked collaboratively with Rasmussen on integration planning for the past several months and are looking forward to welcoming that institution. Our focus is to ensure a smooth transition so as not to disrupt Rasmussen’s momentum. As we have become more familiar with the Rasmussen team, its leaders and the business, we are extremely pleased that the institution we’re acquiring is as good as we thought and even better in many areas.” added Selden.
Third Quarter2021 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<br> expects third quarter 2021 consolidated revenue to decline between 4% and 7% compared to<br> the prior year period. |
|---|---|
| · | APEI<br> anticipates net income of between $0 and $1.0 million or between $0.00 and $0.05 per diluted<br> share. |
| --- | --- |
| · | Adjusted<br> EBITDA is expected to be between $6.5 million and $8.5 million in the third quarter of 2021 |
| --- | --- |
American Public Education expects the following results from its subsidiaries in the third quarter of 2021:
| · | At<br> APUS, total net course registrations are expected to decline between 8% and 13% year-over-year<br> to 78,500 to 83,000. |
|---|---|
| · | At<br> HCN total student enrollment increased to over 2,300 or 19% year-over-year. |
| --- | --- |
Non-GAAP FinancialMeasures:
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 June 30, 2020 and 2021, adjusted EBITDA excludes non-cash compensation expense, loss on disposals of long-lived assets, 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 are 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 second quarter 2021 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 Education
AmericanPublic 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 91,500 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.
ForwardLooking 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 impacts of and APEI’s response to the recent disruption of the Army’s tuition assistance program, expected growth, registration and enrollments, revenues, income and EBITDA, benefits of the acquisition of Rasmussen University (the “Acquisition”), the timing of the closing of the Acquisition, 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: actions taken by the Department of Defense or branches of the U.S. Armed Forces, including actions taken related to the disruption and suspension of Department of Defense tuition assistance; the effects, duration, and severity of and APEI’s response to the COVID-19 pandemic; moderation or decrease in demand as the pandemic abates; risks related to the Acquisition, including the inability to complete the Acquisition on the anticipated timeline or at all, and other events that could impact the Acquisition and its closing; changes to and expectations regarding enrollment, registrations and composition of APEI’s student body; APEI’s dependence on the effectiveness of its ability to attract students who persist in its institutions’ programs; APEI’s inability 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 inability to maintain strong relationships with the military and maintain course registrations and enrollments from military students; APEI’s failure to comply with regulatory and accrediting agency requirements and to maintain institutional accreditation; APEI’s loss of eligibility to participate in Title IV programs or ability to process Title IV financial aid; APEI’s need to successfully adjust to future market demands by updating existing programs and developing new programs; APEI’s dependence on its technology infrastructure; 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 June 30, 2021 and Annual Report on Form 10-K for the year ended December 31, 2020, 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:
Richard W. Sunderland, Jr., CPA
Executive Vice President and Chief Financial Officer
(304) 885-5371
American Public Education, Inc.
Consolidated Statement of Income
(In thousands, except per share data)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, | ||||||
| 2021 | 2020 | |||||
| (unaudited) | ||||||
| Revenues | $ | 78,014 | $ | 82,127 | ||
| Costs and expenses: | ||||||
| Instructional costs and services | 30,394 | 30,744 | ||||
| Selling and promotional | 17,490 | 17,056 | ||||
| General and administrative | 25,457 | 21,737 | ||||
| Loss on disposals of long-lived assets | 174 | 158 | ||||
| Depreciation and amortization | 2,524 | 3,391 | ||||
| Total costs and expenses | 76,039 | 73,086 | ||||
| Income from operations before interest income and income taxes | 1,975 | 9,041 | ||||
| Interest income, net | 24 | 179 | ||||
| Income before income taxes | 1,999 | 9,220 | ||||
| Income tax expense | 646 | 2,532 | ||||
| Equity investment income (loss) | (822 | ) | 1 | |||
| Net income | $ | 531 | $ | 6,689 | ||
| Net income per common share: | ||||||
| Basic | $ | 0.03 | $ | 0.45 | ||
| Diluted | $ | 0.03 | $ | 0.45 | ||
| Weighted average number of | ||||||
| common shares: | ||||||
| Basic | 18,684 | 14,789 | ||||
| Diluted | 18,840 | 14,948 | ||||
| Three Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Segment Information: | June 30, | |||||
| 2021 | 2020 | |||||
| Revenues: | ||||||
| American Public Education, Inc. | $ | 66,893 | $ | 73,547 | ||
| Hondros College of Nursing | $ | 11,134 | $ | 8,602 | ||
| Intersegment Elimination^1^ | $ | (13 | ) | $ | (22 | ) |
| Income (loss) from operations before interest income and income taxes: | ||||||
| American Public Education, Inc. | $ | 1,859 | $ | 9,077 | ||
| Hondros College of Nursing | $ | 117 | $ | (35 | ) | |
| Intersegment Elimination^1^ | $ | (1 | ) | $ | (1 | ) |
| Six Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | |
| June 30, | ||||||
| 2021 | 2020 | |||||
| (unaudited) | ||||||
| Revenues | $ | 166,555 | $ | 156,743 | ||
| Costs and expenses: | ||||||
| Instructional costs and services | 62,713 | 59,974 | ||||
| Selling and promotional | 36,892 | 35,242 | ||||
| General and administrative | 48,981 | 42,740 | ||||
| Loss on disposals of long-lived assets | 182 | 324 | ||||
| Depreciation and amortization | 5,175 | 6,729 | ||||
| Total costs and expenses | 153,943 | 145,009 | ||||
| Income from operations before interest income and income taxes | 12,612 | 11,734 | ||||
| Interest income, net | 138 | 881 | ||||
| Income before income taxes | 12,750 | 12,615 | ||||
| Income tax expense | 3,285 | 3,506 | ||||
| Equity investment income (loss) | (827 | ) | — | |||
| Net income | $ | 8,638 | $ | 9,109 | ||
| Net income per common share: | ||||||
| Basic | $ | 0.49 | $ | 0.61 | ||
| Diluted | $ | 0.49 | $ | 0.61 | ||
| Weighted average number of | ||||||
| common shares: | ||||||
| Basic | 17,454 | 14,907 | ||||
| Diluted | 17,654 | 15,026 | ||||
| Six Months Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Segment Information: | June 30, | |||||
| 2021 | 2020 | |||||
| Revenues: | ||||||
| American Public Education, Inc. | $ | 144,315 | $ | 140,641 | ||
| Hondros College of Nursing | $ | 22,266 | $ | 16,141 | ||
| Intersegment Elimination^1^ | $ | (26 | ) | $ | (39 | ) |
| Income (loss) from operations before | ||||||
| interest income and income taxes: | ||||||
| American Public Education, Inc. | $ | 11,713 | $ | 12,655 | ||
| Hondros College of Nursing | $ | 900 | $ | (921 | ) | |
| Intersegment Elimination^1^ | $ | (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 months ended June 30, 2021 and 2020:
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| (in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Net income | $ | 531 | $ | 6,689 | 8,638 | 9,109 | ||||||
| Income tax expense | 646 | 2,532 | 3,285 | 3,506 | ||||||||
| Interest income, net | (24 | ) | (179 | ) | (138 | ) | (881 | ) | ||||
| Equity investment loss (income) | 822 | (1 | ) | 827 | - | |||||||
| Depreciation and amortization | 2,524 | 3,391 | 5,175 | 6,729 | ||||||||
| EBITDA | 4,499 | 12,432 | 17,787 | 18,463 | ||||||||
| Stock Compensation | 1,985 | 1,573 | 4,165 | 3,323 | ||||||||
| Loss on disposals of long-lived assets | 174 | 158 | 182 | 324 | ||||||||
| M&A - related professional fees | 3,264 | 1,295 | 3,725 | 1,866 | ||||||||
| Adjusted EBITDA | $ | 9,922 | $ | 15,458 | 25,859 | 23,976 |
GAAP Net Income to Outlook 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, 2021:
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30,<br> 2021 | ||||||
| (in thousands, except per share data) | Low | High | ||||
| Net income | $ | - | $ | 1,000 | ||
| Income tax expense | - | 280 | ||||
| Interest income, net | (23 | ) | (23 | ) | ||
| Equity investment loss | - | - | ||||
| Depreciation and amortization | 2,600 | 2,600 | ||||
| EBITDA | 2,577 | 3,857 | ||||
| Stock Compensation | 2,000 | 2,000 | ||||
| Integration Expenses | 1,900 | 2,600 | ||||
| Adjusted EBITDA | $ | 6,477 | $ | 8,457 |
Exhibit 99.2
PRESENTED BY Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO American Public Education, Inc. Second Quarter 2021 Results
Safe Harbor Statement Please note that statements made in this conference call and in the accompanying presentation materials regarding American Public Education, its subsidiaries, or Rasmussen University that are not historical facts may be forward - looking statements based on current expectations, assumptions, estimates and projections about American Public Education and the industry . These forward - looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from those expressed or implied by such statements . Forward - looking statements may be able to 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 impact of recent disruption to the Army’s tuition assistance programs, expected growth, registrations and enrollments, revenues, net income, earnings per share and EBITDA, expected benefits of the acquisition of Rasmussen University, the closing of the acquisition and its timing, expected financial results for Rasmussen, future impacts of the COVID - 19 pandemic, the ability to transform the student experience and deliver a return on learners’ educational investment, the impact of organizational changes, the ability to maintain an attractive risk profile, plans with respect to recent, current and future initiatives, and future demand for online and nursing education . Actual results could differ materially from those expressed or implied by these forward - looking statements as a result of various factors, including risks related to actions taken by the Department of Defense or branches of the U . S . Armed Forces, including actions related to the disruption and suspension of tuition assistance, the effects of and APEI’s response to the COVID - 19 pandemic, including impacts on the demand environment as the pandemic abates, the acquisition of Rasmussen University, changes to and expectations regarding our enrollment, registrations and the composition of our student body, and the risk factors described in the risk factor section and elsewhere in the Company's quarterly report on Form 10 - Q filed with the SEC today, in the Company’s most recent annual report on Form 10 - K, and in the Company’s other SEC filings . The Company 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
Second Quarter 2021 Update Topics 3 » Rasmussen Transaction » APUS Enrollment Momentum » Army Portal Discussion » Action Plans » Hondros Enrollment » 2Q21 Financial Results » Third Quarter 2021 Guidance » Second Half 2021 Priorities
Rasmussen Acquisition 4 On track to close in the third quarter of 2021 » HLC approval received » Awaiting clearing of other final closing conditions » Integration planning completed » Conducted in close collaboration with Rasmussen team Expect to exceed initial synergy estimate of $5MM » Rasmussen’s first half 2021 results through June » 9% Revenue growth » 20%+ Adjusted EBITDA Growth » Will share updated financial expectations after transaction closes
APUS Enrollment Update 5 » 2Q21 Registrations sharply impacted by Army tuition assistance (TA) portal outage » Former portal taken offline on February 12 and new one brought online on July 19 (5+ months of inaccessibility) » Total net course registrations decreased 8% in 2Q21 to 82,600 » Army registrations decreased by 26% » Also reflects difficult comparison to 2Q20 when Army registrations grew 51% » 2Q21 registrations still up 4% on a 2 - year CAGR compared with 2Q19’s registrations of 75,900 2Q21 Commentary » 3Q21 Registrations in July and August continue to be impacted by the portal outage » July Army registrations decreased by 21% » August Army registrations expected to decrease by an estimated 4% » Total net course registrations expected to decline by 8% to 13% » Slow registration ramp since new Army portal came online » 3Q21 also impacted by students delaying registration due to post - COVID summer plans 3Q21 Commentary
APUS Action Plans 6 » APUS has engaged Hondros’s CEO, Harry Wilkins, to assist with modernizing APUS’s enrollment and admissions processes » 13 - year tenure and former CFO of APUS » Supported by external consultants » Cost reductions taken across APUS and APEI that are expected to improve EBITDA by $5MM - $6MM over the balance of 2021 » Includes a modest headcount reduction » Focused on high ROI areas » APUS hired a new leader to focus on growing corporate partnerships APUS has implemented several actions to improve registration momentum and financial performance in 2H21
Hondros Enrollment Update 7 » 2Q21 Total student enrollment increased 36% » ~2,400 students – highest in school history » Growth in ADN (RN) program of 45 % » LTM average quarterly growth of 47% » PN Program LTM average quarterly growth of 35% » HCN opened its 7th campus location in Akron, OH 2Q21 Commentary » 3Q21 Total student enrollment of 2,300+ » 19% year - over - year growth » Some new student softness due in part to post - COVID summer enrollment deferral » Fall term enrollment on pace to rebound and be best - ever » Obtaining approvals for a new campus in the Detroit, MI area » Enrollment caps raised at Indianapolis campus 3Q21 Commentary
5% Decrease in Consolidated Revenue to $78.0MM 92% Decrease in Net Income to $0.5MM 36% Decrease in Adjusted EBITDA to $9.9MM Second Quarter 2021 Financial Highlights $89.3MM Increase in Cash and Equivalents $317.0MM 8
APEI’s Financial & Operational Outlook 9 Third Quarter 2021 (% Approximate Y/Y Change) APUS Net course registrations 1 - 8% to - 13% HCN Student enrollment 2 19% APEI Consolidated revenue - 4% to - 7% APEI Consolidated net income $0MM to $1MM APEI EPS $0.00 to +$0.05 APEI Adjusted EBITDA $6.5MM to $8.5MM 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 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. Includes $1.5M - $2.5M of Rasmussen University integration costs Adversely impacted by transition and outage of Army registration portal
10 Priorities for 2H21 Growth w/ Emphasis on HEROI TM • Stabilize and grow APUS registrations • Right - size cost structure to align with lower registrations • Optimize admissions and enrollments processes at APUS • Continue to drive momentum at Hondros • Execute on Hondros campus expansion Integration of Rasmussen University • Close Rasmussen Transaction • Execute integration of key Rasmussen corporate and administrative functions utilizing APEI’s existing shared services model • Leverage size and scale of collective Nursing school operations • Focus on capturing synergies • 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 10
Thank You 11
American Public Education, Inc. APPENDIX: DISCLOSURES 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 . 12 GAAP Net Income to Adjusted EBITDA: (in thousands, except per share data) Net income $ 531 $ 6,689 Income tax expense 646 2,532 Interest income, net (24) (179) Equity investment loss (income) 822 (1) Depreciation and amortization 2,524 3,391 EBITDA 4,499 12,432 Stock Compensation 1,985 1,573 Loss on disposals of long-lived assets 174 158 M&A - related professional fees 3,264 1,295 Adjusted EBITDA $ 9,922 $ 15,458 Three Months Ended June 30, 2021 2020 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 June 30, 2021 and 2020:
American Public Education, Inc. APPENDIX: DISCLOSURES (C ONTINUED ) 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 . 13