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 SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported): May 9, 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 communications pursuant to Rule 425 under the Securities<br>Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange<br>Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under<br>the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br>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, $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 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 andFinancial Condition.
On May 9, 2023, American Public Education, Inc. (the “Company”) issued a press release reporting financial results for the three months ended March 31, 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 May 9, 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 Statements and Exhibits
Item 9.01 Financial Statements andExhibits.
| (d) | Exhibits | |
|---|---|---|
| 99.1 | American Public Education, Inc. press release dated May 9, 2023, reporting<br>financial results for the three months ended March 31, 2023. | |
| 99.2 | American Public Education, Inc. slides for May 9, 2023 conference call<br>and Webcast for the three months ended March 31, 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: May 9, 2023 | By: | /s/ Richard W. Sunderland, Jr. |
| Richard W. Sunderland, Jr.<br><br>Executive Vice President and Chief Financial Officer |
Exhibit 99.1
American Public Education Reports First Quarter2023 Results
Revenue Growth at APUS, Hondros, and GSUSA;
New President and Leadership in Place at Rasmussen
CHARLES TOWN, WV (May 09, 2023) – American Public Education, Inc. (Nasdaq: APEI) announced financial results for the quarter ended March 31, 2023.
First Quarter Highlights:
| · | APUS, Hondros, and Graduate School all<br> produced year-over-year enrollment growth |
|---|---|
| · | Consolidated revenue decreased 3.3% year-over-year<br> to $149.7 million. |
| --- | --- |
| · | Total cash and cash equivalents was approximately<br> $136.2 million, compared to $129.5 million as of December 31, 2022, representing<br> an increase of $6.7 million or 5.2%. |
| --- | --- |
| · | Net loss available to common stockholders<br> was $7.2 million, compared to net income of $5.3 million in the prior year period,<br> which included a non-cash gain on acquisition of $4.5 million, representing a year-over-year<br> decrease in earnings of $12.5 million. |
| --- | --- |
| · | Adjusted EBITDA decreased 59.7% year-over-year to $7.0 million. |
| --- | --- |
“APEI delivered first quarter adjusted EBITDA above our expectations. APUS achieved a seven year enrollment record and Hondros an all-time high record enrollment. In second quarter, we expect three of our four education units -- APUS, Hondros, and GSUSA to continue to deliver enrollment gains,” said Angela Selden, President and Chief Executive Officer of APEI, “Additionally, we recently appointed Paula Singer as the President at Rasmussen University to lead the efforts in reinvigorating enrollments and improving outcomes. Her 27 years of experience in higher education have established her as a highly regarded education and business leader with a track record of achieving significant enrollment growth.”
Financial Results:
Three months ended March 31, 2023 comparedto three months ended March 31, 2022:
| · | Total consolidated revenue for 2023 decreased 3.3% to $149.7 million,<br> compared to total revenue of $154.7 million in 2022. This was primarily due to a $9.6<br> million, or 14.4%, decrease in revenue in our Rasmussen University (“RU”) Segment,<br> partially offset by a $2.0 million, or 63.9%, increase in Graduate School USA (“GSUSA”)<br> revenue included in Corporate and Other, a $1.6 million, or 13.9%, increase in revenue in<br> our Hondros College of Nursing (“HCN”) Segment and a $0.9 million, or 1.2% increase<br> in revenue in our American Public University System (“APUS”) Segment. The RU<br> Segment revenue decrease was primarily due to an 11.7% decrease in total student enrollment<br>as compared to the prior year period. The APUS Segment revenue increase was primarily due to a 2.4% increase in net course registrations<br>as compared to the prior year period. The HCN Segment revenue increase was primarily due to a 36.0% increase in new student enrollment,<br>which contributed to a 10.1% increase in total student enrollment compared to the prior year period. |
|---|---|
| · | Total costs and expenses increased 3.7% to $155.1 million in<br> 2023, compared to $149.5 million for the same period in 2022. Costs and expenses for<br> the three months ended March 31, 2023 included $2.4 million in non-recurring transition<br> services fees in our RU Segment related to the termination of the marketing contract with<br> Collegis, LLC (“Collegis”), effective January 31, 2023. Increases in costs and<br> expenses for the three months ended March 31, 2023 as compared to the prior year period also<br> included increases in bad debt expense and employee compensation and technology costs, and<br> were partially offset by a decrease in advertising costs. |
| --- | --- |
| o | Instructional costs and services<br> increased $2.2 million in 2023 to $73.9 million, compared to $71.7 million<br> in 2022, primarily due to an increase in nursing faculty compensation costs, technology costs,<br> and classroom costs in our HCN Segment, increases in employee compensation and related costs,<br> travel costs, and technology costs in Corporate and Other, and an increase in technology<br> costs in our RU Segment, partially offset by decreases in employee compensation costs in<br> our APUS and RU Segments. |
| --- | --- |
| o | Selling and promotional expenses<br> increased $0.6 million in 2023 to $39.9 million, compared to $39.3 million<br> in 2022, primarily due to $2.4 million in transition services fees in our RU Segment related<br> to the termination of the Collegis marketing contract. This increase was partially offset<br> by decreases in advertising costs in our APUS and HCN Segments. |
| --- | --- |
| o | General and administrative expenses<br> increased $3.9 million in 2023 to $33.5 million, compared to $29.6 million<br> in 2022, primarily due to increases in technology costs in all segments and Corporate and<br> Other, an increase in bad debt expense in our RU and HCN Segments, and increases in employee<br> compensation costs in Corporate and Other. |
| --- | --- |
| · | Interest expense was $1.8 million in 2023, compared to $3.4 million<br> in 2022. The decrease in interest expense was primarily due to the decrease in the outstanding<br> balance in our senior secured term loan facility. In December 2022, we made $65.0 million<br> in prepayments to reduce our outstanding debt. |
| --- | --- |
| · | During the three-month period ended March 31, 2023, $1.5 million<br> of dividends were declared and paid on our Series A Senior Preferred Stock that was originally<br> issued in December 2022. |
| --- | --- |
| · | Net loss available to common stockholders<br> was $7.2 million in 2023, compared to net income available to common stockholders of<br> $5.3 million in 2022, driven by a decrease in revenue and increases in costs as discussed<br> above. |
| --- | --- |
| · | Net loss per diluted common share was<br> $0.38 in 2023, compared to net income per diluted common share of $0.28 in the same period<br> of 2022. |
| --- | --- |
| · | Adjusted EBITDA was $7.0 million in 2023, compared to $17.4 million<br> in 2022, with the decrease primarily driven by the same impacts as those impacting net loss<br> available to common stockholders. |
| --- | --- |
Balance Sheet and Liquidity:
| · | Total cash and cash equivalents as of March 31, 2023 was approximately<br> $136.2 million, compared to $129.5 million as of December 31, 2022, representing<br> an increase of $6.7 million, or 5.2%. The increase in cash and cash equivalents was<br> primarily due to cash provided by operating activities, partially offset by increases in<br> capital expenditures and preferred dividend payments. |
|---|---|
| · | As of March 31, 2023, approximately $19.2 million was due from<br> the Army, of which $10.0 million was older than 60 days from the course start date, as compared<br> to $26.0 million due from the Army as of December 31, 2022, of which $16.5 million was older<br> than 60 days from the course start date. |
| --- | --- |
Registrations and Enrollment:
| 2023 | 2022 | % Change | |||||
|---|---|---|---|---|---|---|---|
| American Public University System^1^ | |||||||
| For the three months ended March 31, <br> Net Course Registrations | 96,300 | 94,000 | 2 | % | |||
| Rasmussen University^2^ | |||||||
| For the three months ended March 31, <br> Total Student Enrollment | 14,300 | 16,200 | (12 | )% | |||
| Hondros College of Nursing^3^ | |||||||
| For the three months ended March 31, <br> Total Student Enrollment | 2,700 | 2,500 | 10 | % |
^1^APUS Net Course Registrationsrepresents the approximate aggregate number of courses for which students remain enrolled after the date by which they may drop a course without financial penalty.
Excludes students in doctoral programs.
^2^Rasmussen Student Enrollment represents students in an active status as of the full-term census or billing date.
^3^HCN Student Enrollment represents the approximate number of students enrolled in a course after the date by which students may drop a course without financial penalty.
Second 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.
| APUS Net course registrations | 85,300 to 88,700 | 2% to 6 | % |
| HCN Student enrollment | 3,000 | 22 | % |
| RU Student enrollment | 13,900 | -12 | % |
| - Nursing | 6,400 | -22 | % |
| - Non-Nursing | 7,500 | -3 | % |
| ( in millions except EPS) | |||
| APEI Consolidated revenue | 145.5 to 147.5 | -3% to -1 | % |
| APEI Net loss available to common stockholders | -6.4 to -5.0 | n.m. | |
| APEI Adjusted EBITDA | 4.4 to 6.4 | -70% to -56 | % |
| APEI Diluted EPS | -0.36 to -0.28 | 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-recurring expenses and non-cash expenses such as stock compensation). 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 March 31, 2023 and 2022, Adjusted EBITDA excludes non-cash compensation expense, loss on disposals of long-lived assets, M&A-related professional fees, and transition services fees related to the termination of the Collegis marketing contract.
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 our non-GAAP measures 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 first 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 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
American Public Education, Inc. (Nasdaq: APEI), through its institutions American Public University System (APUS), Rasmussen University, Hondros College of Nursing, and Graduate School USA, educate the service-minded student by providing career-focused higher education and career learning.
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 89,600 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 13,900 students across its 22 campuses and student service centers in six states and online. It also has schools of Business, Technology, Design, Early Education and Justice Studies.
Hondros College of Nursing focuses on educating pre-licensure nursing students at its six campuses in Ohio, one in Indiana, and one campus in suburban Detroit, Michigan that opened in October 2022. It is the largest educator of PN (LPN) nurses in the state of Ohio** with approximately 3,000 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 Defense tuition assistance andVeterans Administration student enrollment data, as reported by Military Times, 2020.
**Based on information compiled by the National Council of StateBoards 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,” “potentially,” and similar words or their opposites. Forward-looking statements include, without limitation, statements regarding expectations for growth, registration, enrollments, revenues, net income, earnings per 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 those expressed or implied by such statements. Such risks and uncertainties include, among others, risks related to: APEI’s dependence on the effectiveness of its ability to attract students who persist in its institutions’ programs, the inability to effectively market the Company’s programs or expand into new markets, the loss or disruption of the Company’s ability to receive funds under tuition assistance programs or the reduction, elimination, or suspension of tuition assistance, the inability to maintain enrollments from military students, effects of changes the Company makes to improve the student experience and enhance the ability to identify and enroll students who are likely to succeed, the inability to adjust to future market demands, continued strong competition in the education market, failure to comply with regulatory and accrediting agency requirements or to maintain institutional accreditation and the impacts of any actions the Company may take to prevent or correct such failure, the impact of recent regulatory rulemakings, the 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 business combinations 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 attract, retain, and develop skilled personnel, impacts of changes in management, and the risk factors described in the risk factor section and elsewhere in the Company’s annual report on Form 10-K 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 statements for any reason, unless required by law, even if new information becomes available or other events occur in the future.
Contacts:
Ryan Koren
AVP, Investor Relations & Corporate Development
(610) 428-7376
AmericanPublic Education, Inc.
ConsolidatedStatement of Income
(In thousands, except per share data)
| Three Months<br> Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2023 | 2022 | |||||
| (unaudited) | ||||||
| Revenues | $ | 149,689 | $ | 154,747 | ||
| Costs and expenses: | ||||||
| Instructional costs and services | 73,889 | 71,698 | ||||
| Selling and promotional | 39,924 | 39,319 | ||||
| General and administrative | 33,489 | 29,589 | ||||
| Loss on disposals of long-lived assets | 1 | 793 | ||||
| Depreciation and amortization | 7,756 | 8,148 | ||||
| Total costs and expenses | 155,059 | 149,547 | ||||
| (Loss) Income from operations before interest and income taxes | (5,370 | ) | 5,200 | |||
| Gain on acquisition | — | 4,533 | ||||
| Interest (expense) income | (1,779 | ) | (3,355 | ) | ||
| (Loss) Income before income taxes | (7,149 | ) | 6,378 | |||
| Income tax (benefit) expense | (1,414 | ) | 1,040 | |||
| Equity investment loss | (5 | ) | (5 | ) | ||
| Net (loss) income | $ | (5,740 | ) | $ | 5,333 | |
| Preferred stock dividends | 1,457 | - | ||||
| Net (loss) income available to common stockholders | $ | (7,197 | ) | $ | 5,333 | |
| Earnings per common share: | ||||||
| Basic | $ | (0.38 | ) | $ | 0.28 | |
| Diluted | $ | (0.38 | ) | $ | 0.28 | |
| Weighted average number of common shares: | ||||||
| Basic | 18,982 | 18,805 | ||||
| Diluted | 19,072 | 18,879 | ||||
| Three Months<br> Ended | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Segment Information: | March 31, | |||||
| 2023 | 2022 | |||||
| Revenues: | ||||||
| APUS Segment | $ | 73,978 | $ | 73,090 | ||
| RU Segment | $ | 57,467 | $ | 67,099 | ||
| HCN Segment | $ | 13,140 | $ | 11,541 | ||
| Corporate and other^1^ | $ | 5,104 | $ | 3,017 | ||
| Income (loss) from operations before interest and income taxes: | ||||||
| APUS Segment | $ | 17,074 | $ | 13,182 | ||
| RU Segment | $ | (12,864 | ) | $ | 891 | |
| HCN Segment | $ | (1,303 | ) | $ | (995 | ) |
| Corporate and other | $ | (8,277 | ) | $ | (7,878 | ) |
1. Corporate and Other includes tuition and contract training revenue earned by GSUSA in 2023 and in 2022 and the elimination of intersegment revenue for courses taken by employees of one segment at other segments.
GAAPNet 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 March 31, 2023 and 2022:
| Three Months<br> Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| (in thousands, except per share data) | 2023 | 2022 | ||||
| Net (loss) income available to common stockholders | $ | (7,197 | ) | $ | 5,333 | |
| Preferred dividends | 1,457 | - | ||||
| Net (loss) income | $ | (5,740 | ) | $ | 5,333 | |
| Income tax (benefit) expense | (1,414 | ) | 1,040 | |||
| Interest expense | 1,779 | 3,355 | ||||
| Equity investment loss | 5 | 5 | ||||
| Depreciation and amortization | 7,756 | 8,148 | ||||
| EBITDA | 2,386 | 17,881 | ||||
| Gain on acquisition | - | (4,533 | ) | |||
| Stock compensation | 2,224 | 2,356 | ||||
| Loss on disposals of long-lived assets | 1 | 793 | ||||
| M&A - related professional and integration fees | - | 908 | ||||
| Transition services | 2,403 | - | ||||
| Adjusted EBITDA | $ | 7,014 | $ | 17,405 |
GAAPOutlook 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 June 30, 2023:
| Three Months Ending | ||||||
|---|---|---|---|---|---|---|
| June 30,<br> 2023 | ||||||
| (in thousands, except per share data) | Low | High | ||||
| Net loss available to common stockholders | $ | (6,448 | ) | $ | (5,048 | ) |
| Preferred dividends | 1,488 | 1,488 | ||||
| Net loss | (4,960 | ) | (3,560 | ) | ||
| Income tax benefit | (2,126 | ) | (1,526 | ) | ||
| Interest expense | 2,555 | 2,555 | ||||
| Depreciation and amortization | 7,050 | 7,050 | ||||
| EBITDA | 2,519 | 4,519 | ||||
| Stock Compensation | 1,855 | 1,855 | ||||
| Adjusted EBITDA | $ | 4,374 | $ | 6,374 |
Exhibit 99.2
PRESENTED BY Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO American Public Education, Inc. First Quarter 2023 Results May 9, 2023
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 . 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 - looking statements include, without limitation, statements regarding expectations for growth, registration, enrollments, revenues, net income, earnings per 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 those expressed or implied by such statements . Such risks and uncertainties include, among others, risks related to : APEI’s dependence on the effectiveness of its ability to attract students who persist in its institutions’ programs, the inability to effectively market the Company’s programs or expand into new markets, the loss or disruption of the Company’s ability to receive funds under tuition assistance programs or the reduction, elimination, or suspension of tuition assistance, the inability to maintain enrollments from military students, effects of changes the Company makes to improve the student experience and enhance the ability to identify and enroll students who are likely to succeed, the inability to adjust to future market demands, continued strong competition in the education market, failure to comply with regulatory and accrediting agency requirements or to maintain institutional accreditation and the impacts of any actions the Company may take to prevent or correct such failure, the impact of recent regulatory rulemakings, the 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 business combinations 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 attract, retain, and develop skilled personnel, impacts of changes in management, and the risk factors described in the risk factor section and elsewhere in the Company’s annual report on Form 10 - K 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 statements for any reason, unless required by law, even if new information becomes available or other events occur in the future . 2
Executive Summary 3 □ APEI exceeded Adjusted EBITDA guidance for 1Q’23, delivering $7.0 million • Net loss available to common stockholders of $7.2 million □ 1Q 2023 positive enrollment momentum in 3 out of 4 education units expected to continue throughout 2023 • APUS: Continued growth in the military, focus on margin expansion, selective price increases, increased marketing efficiency, brand re - positioning and strong cash flow generation • HCN: Record total enrollment; new and relocated campus; price increase in 2Q’23 • GSUSA: Substantial YoY 1Q’23 revenue; platform to grow our career learning business □ 2023 is a rebuilding year at Rasmussen • Enrollment trends continue to reflect increased student graduations, and starts are constrained by nursing caps in two markets, both due to COVID enrollment bump • Filled critical leadership roles during 2Q’23 to lead the transformation and execute on key priorities 1) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non - recurring expenses and non - cash expenses, such as stock compensation) is a non - GAAP financial measure. Refer to appendix for GAAP to non - GAAP reconciliation Highlights Guidance Summary
• 2Q’23 registrations of approximately 2% to 6% growth versus prior year period, or approximately 85.3K to 88.7K enrollments • Strong military registrations, green shoots in new non - military, offset partly by returning non - military declines • 2023 focus is on increasing retention and brand awareness, implementing select price increases to offset inflationary costs, and increased marketing efficiency APUS Registration and Education Unit Update 1Q’23 Forecast 2Q’23 and Education Unit Update 4 APUS Net Course Registrations 94.0K 83.5K 96.3K 1Q 2Q 2% to 6% Forecast Period 85.3k to 88.7k 2022 2023 2022 2023 +2% • 1Q’23 is a seven - year high for net course registrations driven by: • 1Q’23 military registrations +7% compared to 1Q’22 • 1Q’23 Army registrations +6% compared to 1Q’22 • Approximately $21 million of payments received from Army during 1Q’23 resulting in a decrease of receivables older than 60 days by approximately $6.5 million
2,460 2,440 2,700 3,000 1Q 2Q +10% Forecast Period 2022 2023 2022 2023 +22% • 1Q’23 HCN enrollment growth of 10% versus prior year comparable period, all - time high enrollment • Strong initial Detroit Michigan demand, which has benefitted from word - of - mouth marketing HCN Enrollment and Education Unit Update 5 1Q’23 Forecast 2Q’23 and Education Unit Update HCN Enrollment • 2Q’23 HCN again sets all - time high enrollment of 3,000 and growth of 22% versus prior year comparable period • 2Q’23 price increase initiated • Relocated Dayton campus now open • HCN focused on stabilizing cost structure and driving more revenue through each campus by offering additional programs
Rasmussen Enrollment and Education Unit Update 6 1Q’23 8,400 6,800 8,200 6,400 7,800 7,500 7,700 7,500 16,200 14,300 15,900 13,900 1Q 2022 1Q 2023 2Q 2022 2Q 2023 Rasmussen Enrollment Non-nursing Nursing Forecast Period • 4Q’22 organizational realignment created disruption in 4Q and 1Q’23 • 1Q’23 nursing enrollment contracted by 19% compared to 1Q’22 • Impacted by caps/enrollment policies in IL and Twin Cities markets • 1Q’23 non - nursing enrollment contracted by 4% compared to 1Q’22 • Online enrollments up • Selective price increases implemented • Rehired leader responsible for strong 4Q’22 starts as the Chief Operations Officer Rasmussen Leadership Update • Hired new President, Paula Singer, 27 - year veteran at Laureate Education and Walden University • Also hired new leaders for Finance/Transformation and School of Nursing, filling remaining open leadership positions • New leadership team has established priorities and dedicated a team to unlock value and operationalize improvements • Increase marketing and enrollments in uncapped programs across all campuses • Reduce costs across all categories to offset increasing marketing, faculty and other costs Enrollment Trends Reflect COVID Bump Impact • Rasmussen experienced elevated enrollments beginning 2Q’20 • Pre - licensure nursing enrollments accelerated to record highs • Shift to Online made it easier for students to enroll and to recruit faculty • Large COVID enrollment cohorts continue to graduate • The online education modality also created outcomes challenges resulting in caps • Over 70% of 1H’23 start declines are attributed to eight campuses in IL and the Twin Cities due to tightened admissions policies and enrollment caps
1Q’23 Financial Highlights Financial Summary Capitalization and Liquidity (1) During the first quarter of 2022, we added Graduate School USA to Corporate and Other. (2) EBITDA plus stock compensation, loss on disposal of long - lived assets, goodwill and intangible impairments and M&A - related prof essional and integration fees. Please refer to Appendix for GAAP to Non - GAAP reconciliation. 7 Solid liquidity position: • $109 million of unrestricted cash • $20 million undrawn revolver • $0 million of net debt Three Months Ended Twelve Months Ended March 31, March 31, 2022 2023 % Change ($ in millions) APUS Revenue 73.1 74.0 1% Rasmussen Revenue 67.1 57.5 -14% HCN Revenue 11.5 13.1 14% Corporate and Other Revenue (1) 3.0 5.1 69% Total revenue 154.7 149.7 -3% Net (loss) income available to common stockholders 5.3 (7.2) NM Adjusted EBITDA (2) 17.4 7.0 -60% EPS (diluted) 0.28 (0.38) NM
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 2Q’23 Outlook 8 Second Quarter 2023 Guidance Full Year 2021 Guidance (Approximate) (% Yr/Yr Change) APUS Net course registrations 1 85,300 to 88,700 2% to 6% HCN Student enrollment 2 3,000 22% RU Student enrollment 2 13,900 -12% - Nursing 6,400 -22% - Non-Nursing 7,500 -3% ($ in millions except EPS) APEI Consolidated revenue $145.5 to $147.5 -3% to -1% APEI Net loss available to common stockholders -$6.4 to -$5.0 n.m. APEI Adjusted EBITDA 3 $4.4 to $6.4 -70% to -56% APEI Diluted EPS -$0.36 to -$0.28 n.m.
Thank You
Appendix: Enrollment and Registration Summary 10 1Q 2023 1Q 2022 % Change APUS Registrations 96,300 94,000 2% Total Rasmussen Enrollment 14,300 16,200 -12% Rasmussen Nursing Enrollment 6,800 8,400 -19% Rasmussen Non-Nursing Enrollment 7,500 7,800 -4% HCN Enrollment 2,700 2,460 10%
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 . Appendix: Disclosures 11 GAAP Net Income to Adjusted EBITDA: (in thousands, except per share data) Net (loss) income available to common stockholders $ (7,197) $ 5,333 Preferred dividends 1,457 - Net (loss) income $ (5,740) $ 5,333 Income tax (benefit) expense (1,414) 1,040 Interest expense 1,779 3,355 Equity investment loss 5 5 Depreciation and amortization 7,756 8,148 EBITDA 2,386 17,881 Gain on acquisition - (4,533) Stock compensation 2,224 2,356 Loss on disposals of long-lived assets 1 793 M&A - related professional and integration fees - 908 Transition services 2,403 - Adjusted EBITDA $ 7,014 $ 17,405 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 March 31, 2023 and 2022: Three Months Ended March 31, 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 . Appendix: Disclosures (continued) 12 GAAP Outlook Net Income to Outlook Adjusted EBITDA: (in thousands, except per share data) Net loss available to common stockholders $ (6,448) $ (5,048) Preferred dividends 1,488 1,488 Net loss (4,960) (3,560) Income tax benefit (2,126) (1,526) Interest expense 2,555 2,555 Depreciation and amortization 7,050 7,050 EBITDA 2,519 4,519 Stock Compensation 1,855 1,855 Adjusted EBITDA $ 4,374 $ 6,374 June 30, 2023 Low High 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 June 30, 2023: Three Months Ending