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): September 22, 2022
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) |
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| ¨ | 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)) |
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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 7 – Regulation FD
Item 7.01 Regulation FD Disclosure.
On September 22, 2022, American Public Education, Inc. (the “Company”) issued a press release announcing second half- and full-year 2022 guidance and issued a supplemental financial presentation. The Company intends to use the presentation, in whole or in part, in meetings with investors from time to time. Copies of the press release and presentation are furnished herewith as Exhibit 99.1 and 99.2, respectively.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
|---|---|
| 99.1 | American Public Education,<br>Inc., press release dated September 22, 2022 |
| --- | --- |
| 99.2 | American Public Education, Inc.<br>Investor Update, September 2022 |
| --- | --- |
| 104 | Cover Page Interactive Data File<br>(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: September<br>22, 2022 | By: | /s/ Richard W. Sunderland, Jr. |
| Richard W. Sunderland, Jr.<br><br> <br>Executive Vice President and Chief Financial Officer |
Exhibit 99.1
American Public Education Issues 2022 Guidanceand Supplemental Financial Information
CHARLES TOWN, WV (September 22, 2022) – American Public Education, Inc. (Nasdaq: APEI) today initiated second half- and full-year 2022 guidance and issued a supplemental financial presentation.
Financial Supplement Highlights:
| · | Consolidated 2022 revenue is expected to be $600 million to $610 million |
|---|---|
| · | Consolidated 2022 adjusted EBITDA is expected to be $53 million to $59 million |
| --- | --- |
| · | Pro forma 2022 adjusted EBITDA is expected to be $70 million to $76 million |
| --- | --- |
APEI’s supplemental financial presentation published today can be found under Events & Presentations on APEI.com and as an exhibit to the Current Report on Form 8-K that APEI furnished with the Securities and Exchange Commission on September 22, 2022.
2022 Outlook:
The guidance highlighted above and the following statements are forward-looking statements based on APEI’s current expectations. These statements are forward-looking and actual results may differ materially from those expressed or implied in these statements. APEI undertakes no obligation to update publicly any forward-looking statements for any reason unless required by law. See “Forward-Looking Statements” below and refer to APEI’s supplemental financial presentation for further details.
| 2022 Guidance^1^ | ||
|---|---|---|
| ($ in millions) | Second Half 2022 | Full Year 2022 |
| APEI Consolidated Revenue | $295.6 to $305.6 | $600.0 to $610.0 |
| APEI Adjusted EBITDA | $21.1 to $27.1 | $53.0 to $59.0 |
| Pro forma Adjusted EBITDA^(1)^ | $70.0 to $76.0 |
^(1)^Pro forma Adjusted EBITDA = AdjustedEBITDA plus $15 million in cost savings run-rate and one-time items (annualized estimated cost savings for savings in labor costs expectedto occur in the fourth quarter of 2022 and one-time 2022 transition and integration items for Graduate School USA) plus $2 million inannualized non-recurring marketing costs (estimated marketing cost savings from in-sourcing marketing-related execution services in 2022)
Non-GAAP Financial Measures:
This press release contains the non-GAAP financial measure of Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non-cash expenses such as stock compensation and non-recurring expenses) and pro forma adjusted EBITDA (adjusted EBITDA plus annualized cost savings and one-time items plus non-recurring marketing costs). 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.
Each of these measures excludes non-cash impairment charges, the adjustment to the gain on acquisition, 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 adjusted EBITDA in connection with its GAAP results and urges investors to review the reconciliation of adjusted EBITDA to the comparable GAAP financial measures that is included in the tables following this press release (under the captions “GAAP Outlook Net Income to Outlook Adjusted EBITDA”) and not to rely on any single financial measure to evaluate its business.
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), 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 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 15,000 students across its 23 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 and one in Indiana. It is the largest educator of PN (LPN) nurses in the state of Ohio** with approximately 2,440 students. GSUSA 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 College of Nursing 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 and VeteransAdministration 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,” and similar words or their opposites. Forward-looking statements include, without limitation, statements regarding expected growth, registration and enrollments, revenues, income and adjusted EBITDA, pro forma adjusted EBITDA, EBITDA, estimated cost savings, benefits of the acquisition 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: the effects, duration, and severity of and APEI’s response to the COVID-19 pandemic; adverse effects on demand as the pandemic abates; 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; APEI’s loss of its 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 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; entering into and integrating acquisitions, including the integration of RU and GSUSA; 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, 2022 and Annual Report on Form 10-K for the year ended December 31, 2021, 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:
Ryan Koren
AVP, Investor Relations & Corporate Development
(610) 428-7376
| GAAP Outlook Net Income to Outlook Adjusted EBITDA: | ||||||
|---|---|---|---|---|---|---|
| The following table sets forth the reconciliation of the Company's projected GAAP net income to the calculation of projected adjusted EBITDA for the six and twelve months ending December 31, 2022: | ||||||
| --- | ||||||
| Outlook Periods | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Six Months <br><br>Ending | Twelve Months <br><br>Ending | |||||
| December 31, 2022 | December 31, 2022 | |||||
| (in thousands, except per share data) | Midpoint | Midpoint | ||||
| Net (loss) income | $ | (2,654 | ) | $ | (107,350 | ) |
| Income tax (benefit) expense | (1,945 | ) | (36,237 | ) | ||
| Interest expense (income) | 7,100 | 13,845 | ||||
| Equity investment loss | - | 11 | ||||
| Depreciation and amortization | 16,573 | 32,840 | ||||
| EBITDA | 19,074 | (96,891 | ) | |||
| Impairment of goodwill and intangible assets | - | 144,900 | ||||
| Adjustment to gain on acquisition | - | (3,828 | ) | |||
| Stock compensation | 4,943 | 9,649 | ||||
| (Gain) loss on disposals of long-lived assets | 52 | 836 | ||||
| M&A - related professional fees | 72 | 1,345 | ||||
| Accounting and other adjustments | - | - | ||||
| Adjusted EBITDA | $ | 24,141 | $ | 56,011 |
Exhibit 99.2
PRESENTED BY Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO American Public Education, Inc. Supplemental Financial Information September 2022
Safe Harbor Statement Please note that statements made in this presentation regarding American Public Education, Inc . and its subsidiaries (the “Company”) that are not historical facts may be forward - looking statements based on current expectations, assumptions, estimates and projections about the Company 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, expected growth, registrations and enrollments, revenues, net income, earnings per share, adjusted EBITDA, EBITDA, cost reductions, and other projected financial results, as well as progress on repositioning Graduate School USA and the potential impact of additional advertising expenditures . Actual results could differ materially from those expressed or implied by forward - looking statements as a result of various factors, including risks related to the effects of and the Company’s response to the COVID - 19 pandemic, including impacts on the demand environment as the pandemic abates, the Company’s dependence on the effectiveness of its ability to attract students who persist in its institutions’ programs, changing market demands, the Company’s inability to market its programs, the loss of the Company’s ability to receive funds under tuition assistance programs or ability to process tuition assistance financial aid, the Company’s inability to maintain strong relationships with the military and maintain course registrations and enrollments from military students, the Company’s failure to comply with regulatory and accrediting agency requirements and to maintain institutional accreditation, the Company’s loss of eligibility to participate in Title IV programs or ability to process Title IV financial aid, the Company’s need to successfully adjust to future market demands by updating existing programs and developing new programs, entering into and integrating acquisitions, including the integration of Rasmussen University and Graduate School USA, 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 is initiating second half and full year 2022 guidance □ Improving enrollment momentum seen across all education units: • Rasmussen: Positive 4Q22 YoY new student momentum by shifting to in - house marketing • APUS: Positive 3Q22 YoY new and total student registrations • Hondros : Positive 4Q22 YoY new student momentum and strong interest in programs / Approvals for new, Detroit campus received for fall 2022 enrollment □ Offsetting higher operating costs with targeted annualized cost savings Highlights Guidance Summary 1) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non - cash expenses such as stock compensation and non - recurring expenses) is a non - GAAP financial measure. Refer to appendix for GAAP to non - GAAP reconciliation 2) Pro forma adjusted EBITDA = Adjusted EBITDA + $15MM (annualized estimated cost savings & one - time GSUSA items) + $2MM (annualized estimated non - recurring third - party marketing costs)
$35.5 $15.0 $6.0 $2.0 $23.0 $(4.7) PF 2021 Adj. EBITDA Gross Profit Incremental Discretionary Advertising 2022 Adj. EBITDA Annualized Cost Savings Non-recurring Marketing Pro forma 2022 Adj. EBITDA $(15.8) ($4.1) ($7.4) ($4.3) Rasmussen Financial Bridge (PF21 to FY22) Rasmussen Pro forma 2021 vs. 2022 (guidance) Adjusted EBITDA Walk (1) Commentary 4 ($ in millions) (1) Figures displayed in chart represent 2022 guidance midpoints. Pro forma information is presented for illustrative purposes on ly and pro forma 2021 adjusted EBITDA does not necessarily reflect what APEI's financial condition or results of operations woul d h ave been had the RU acquisition occurred on the date indicated. The pro forma information also may not be useful in predicting the future fina nci al condition and results. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the pro forma information and are subject to change as additional information becomes available and analyses are performed (2) Assumes RU was acquired on 1/1/21 (3) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non - cash expenses such as stock compensati on and non - recurring expenses) is a non - GAAP financial measure. Refer to appendix for GAAP to non - GAAP reconciliation (4) Pro forma 2022 adjusted EBITDA = Adjusted EBITDA + cost savings run - rate (annualized estimated cost savings for headcount reduct ions expected to occur in 4Q 2022) + non - recurring marketing costs (annualized estimated marketing cost savings from in - sourcing marketing - related execution services in 2022) • $15.8MM decline in gross profit from: • Tuition price reduction on certain masters and early childhood education programs • Lower enrollments (volume) • Higher education delivery costs • $4.7MM of incremental discretionary advertising costs implemented to drive increased student leads for 4Q22 and beyond starts • $6.0MM in run - rate annual cost savings expected to be implemented in 4Q22 • $2.0MM of non - recurring marketing: • Includes outsourced marketing contract (third - party fees /media buying markup) (2) A A B B C C (4) (3)
$31.9 $24.1 $56.0 $15.0 $2.0 $73.0 1H 2022 (Actual) 2H 2022 (Guidance) FY 2022 (Guidance) APEI Annualized Cost Savings & One-time Items Rasmussen non-recurring Marketing Pro forma 2022 Adj. EBITDA $21.1 - $27.1 $53 .0 - $59.0 $70.0 - $76.0 • Consolidated APEI revenue of $600MM to $610MM APEI 2022 Guidance Summary Pro forma 2022 (guidance) Adjusted EBITDA (1) 5 ($ in millions) 2022 Revenue Guidance • $15MM of annual costs savings & one - time Items include: • $12 - $15MM announced during 2nd quarter earnings call • One - time transition and integration items for GSUSA (included in Corporate and Other) that will not reoccur • $2MM of non - recurring marketing: • Associated with Rasmussen outsourced marketing contract (third - party fees and media buying markup) Commentary (1) Figures displayed in chart represent 2022 guidance midpoints (2) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non - cash expenses such as stock compensati on and non - recurring expenses) is a non - GAAP financial measure. Refer to appendix for GAAP to non - GAAP reconciliation (3) Pro forma 2022 adjusted EBITDA = Adjusted EBITDA + cost savings run - rate & one - time items (annualized estimated cost savings for headcount reductions expected to occur in 4Q 2022 and one - time 2022 transition and integration items for GSUSA) + non - recurring marketing costs (annualized estimated marketing cost savings from in - sourcing marketing - related execution services in 2022) (3) (2)
$55.0 $9.7 $90.5 $(20.5) +$6.0 $(6.2) $(13.8) $56.0 $15.0 $2.0 $73.0 $25.8 2021 (ex. Ras) 2021 (Rasmussen) 2021 (pro forma) Rasmussen APUS Hondros Corporate & Other FY 2022 (midpoint) APEI Annualized Cost Savings & One-time Items Rasmussen Non-recurring Marketing Pro forma 2022 (midpoint) Ras pre - acquisition $35.5 $(4.6) $(9.2) APEI Consolidated Financial Bridge (PF 2021 to 2022 Forecast) Pro forma 2021 vs. 2022 (guidance) Adjusted EBITDA Walk (1) 6 ($ in millions) 2021 2022 • Rasmussen is primary driver (see p. 4) • APUS driven by improved margins • Hondros decline driven by investment in new campuses and increased teaching expenses • Corporate and Other includes APEI corporate, shared services ( - $9.2MM), and GSUSA ( - $4.6MM) • $15MM of annual costs savings & one - time items • $12 - $15MM announced during 2 nd quarter earnings call • One - time transition and integration items for GSUSA • 2022 Adjusted EBITDA Guidance Range: $53MM to $59MM • PF Adjusted EBITDA margin of 12% Commentary (1) Figures displayed in chart represent 2022 guidance midpoints. Pro forma information is presented for illustrative purposes on ly and pro forma 2021 adjusted EBITDA does not necessarily reflect what APEI's financial condition or results of operations woul d h ave been had the RU acquisition occurred on the date indicated. The pro forma information also may not be useful in predicting the future financi al condition and results. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the pro forma information and are subject to change as additional information becomes available and analyses are performed (2) Assumes RU was acquired on 1/1/21 (3) Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization less non - cash expenses such as stock compensati on and non - recurring expenses) is a non - GAAP financial measure. Refer to appendix for GAAP to non - GAAP reconciliation (4) Pro forma 2022 adjusted EBITDA = Adjusted EBITDA + cost savings run - rate & one - time items (annualized estimated cost savings for headcount reductions expected to occur in 4Q 2022 and one - time 2022 transition and integration items for GSUSA) + Non - recurring marketing costs (annualized estimated marketing cost savings from in - sourcing marketing - related execution services in 2022) (2) (4) (2) (3)
Appendix: Non - GAAP Reconciliation 7 American Public Education is presenting adjusted EBITDA and encourages investors to review the reconciliation of projected adjusted operating income to the comparable GAAP financial measure that is included in the table below (under the caption “GAAP Outlook Operating Income to Outlook Adjusted EBITDA”) and not to rely on any single financial measure to evaluate its business . (1) Assumes RU was acquired on 1/1/2021. Pro forma information is presented for illustrative purposes only and pro forma 2021 adj ust ed EBITDA does not necessarily reflect what APEI's financial condition or results of operations would have been had the RU acquisition occurred on 1/1/2021. The pro forma information also may not be use ful in predicting the future financial condition and results. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of the pro forma information an d are subject to change as additional information becomes available and analyses are performed. GAAP Net Income and Outlook Net Income to Adjusted EBITDA and Outlook Adjusted EBITDA: APEI Consolidated Historical Periods APEI Consolidated Outlook Periods Rasmussen Historical Period Rasmussen Outlook Period Twelve Months Ended Twelve Months Ended Six Months Ended December 31, 2021 December 31, 2021 June 30, 2022 (in thousands, except per share data) Actual Pro forma (1) Actual Net (loss) income $ 17,752 $ 21,613 $ (104,696) $ (2,654) $ (107,350) $ 14,327 $ (119,382) Income tax (benefit) expense 7,511 8,956 (34,292) (1,945) (36,237) 509 (35,815) Interest expense (income) 4,277 13,153 6,745 7,100 13,845 1,620 - Equity investment loss 831 831 11 - 11 - - Depreciation and amortization 17,832 32,481 16,267 16,573 32,840 21,820 24,665 EBITDA 48,203 77,034 (115,965) 19,074 (96,891) 38,276 (130,532) Impairment of goodwill and intangible assets - - 144,900 - 144,900 - 144,900 Adjustment to gain on acquisition - - (3,828) - (3,828) - - Stock compensation 7,654 7,654 4,706 4,943 9,649 80 611 (Gain) loss on disposals of long-lived assets 1,282 2,387 784 52 836 1,303 49 M&A - related professional fees 7,574 7,574 1,273 72 1,345 - - Accounting and other adjustments - (4,174) - - - (4,174) - Adjusted EBITDA $ 64,713 $ 90,475 $ 31,870 $ 24,141 $ 56,011 $ 35,485 $ 15,028 Midpoint Six Months Ending Twelve Months Ending December 31, 2022 December 31, 2022 Midpoint The following table sets forth the reconciliation of the Company's reported GAAP net income to the calculation of adjusted EBITDA for the twelve months ended December 31, 2021, the pro forma twelve month period ended December 31, 2021, and the six months ended June 30, 2022 in addition to the Company’s projected GAAP net income to the calculation of projected adjusted EBITDA for the six and twelve months ending December 31, 2022 and Rasmussen's pro forma historical and projected GAAP net income to the calculation of historical and projected adjusted EBITDA for the twelve months ended December 31, 2021 and 2022, respectively. Twelve Months Ending December 31, 2021 Pro forma (1) Twelve Months Ending December 31, 2022 Midpoint