UNITED STATES
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FORM
CURRENT REPORT
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Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
On November 8, 2021, American Public Education, Inc. issued a press release reporting financial results for the three and nine months ended September 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 November 8, 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 November 8, 2021, reporting financial results for the three and nine months ended September 30, 2021. | |
99.2 | American Public Education, Inc. slides for November 8, 2021 conference call and Webcast for the three and nine months ended September 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: | November 8, 2021 | By: | /s/ Richard W. Sunderland, Jr. | |
Richard W. Sunderland, Jr., | ||||
Executive Vice President and Chief Financial Officer |
Exhibit 99.1
American Public Education Reports Third Quarter 2021 Results
CHARLES TOWN, WV (November 08, 2021) – American Public Education, Inc. (Nasdaq: APEI) announced financial results for the quarter ended September 30, 2021.
Third Quarter Highlights:
· | APEI completed the acquisition of Rasmussen University on September 1, 2021 |
· | Consolidated revenue increased 24% year-over-year to $98.2 million, as a result of the acquisition of RU |
· | Net loss for the period was $0.3 million, compared to net income of $2.6 million for the three months ended September 30, 2021, a decrease of $2.9 million |
· | Adjusted EBITDA decreased 16% year-over-year to $9.1 million |
· | APEI agreed to acquire Graduate School USA, a federal workforce training provider |
Results of operations for the three and nine months ended September 30, 2021 include the results of Rasmussen University (“RU”) from September 1 through September 30, 2021. APEI did not consolidate the financial results of RU prior to September 1, 2021. Accordingly, the financial results of each period presented are not directly comparable.
Financial Results:
Three months ended September 30, 2021 compared to three months ended September 30, 2020:
· | Total consolidated revenue for 2021 increased 24% to $98.2 million, compared to total revenue of $79.1 million in 2020, due to: |
o | the inclusion of RU revenue from September 1 through September 30, 2021 of $21.1 million (note: the third month of each quarter for RU is historically the lowest due to the timing of revenue recognition); |
o | an increase of $1.7 million, or 18%, in revenue from Hondros College of Nursing (HCN), reflecting an increase in enrollment of 19% to 2,320 students; |
o | a decrease of $3.8 million, or -5%, in revenue from American Public University System (APUS), primarily due to a decline in net course registrations of 8% in 2021 compared to 2020 |
· | Total costs and expenses increased to $97.0 million for 2021 compared to $75.8 million in 2020, primarily due to the inclusion of RU in the current quarter results. RU’s costs as a percentage of revenue were negatively impacted in the current quarter due to the timing of the close of the transaction. |
o | Instructional costs and services increased to 43% of revenue in 2021, or $42.5 million, compared to 39% in 2020, due to the inclusion of RU in the current quarter results. Excluding RU, instructional costs and services as a percent of revenue were 39%. |
o | Selling and promotional expenses increased to 24% of revenue in 2021, or $23.5 million, compared to 23% in 2020 due to the inclusion of RU in the current quarter results. Excluding RU, selling and promotional expenses as a percent of revenue were 23%. |
o | General and administrative (“G&A”) expenses decreased to 27% of revenue in 2021, or $26.6 million, compared to 28% in 2020 due to the inclusion of RU at a lower cost as a percent of revenue. G&A includes $1.6 million of M&A-related professional fees. |
o | Depreciation and amortization expenses increased to $4.4 million in 2021, or 36%, primarily due to the addition of the RU segment in the 2021 period and the amortization of the associated acquired intangible assets. |
· | Interest expense increased to $1.3 million in 2021, as compared to $0.1 million in interest income in 2020, due to the $175 million term loan issued in connection with the RU acquisition. |
· | Net loss was $0.3 million in 2021 compared to net income of $2.6 million in 2020 |
· | Loss per diluted share was $0.01 compared to earnings of $0.18 per diluted share in the same period of 2020, driven primarily by the same factors impacting the change in net income (loss). |
· | Adjusted EBITDA was $9.1 million in 2021 compared to $10.8 million in 2020, driven primarily by factors impacting the change in net income (loss), excluding depreciation and amortization expense and interest expense. Additionally, the 2021 period included $1.6 million of M&A related professional fees and $1.8 million of stock-based compensation expense, a decrease of 16% and 7%, respectively compared to 2020. |
Acquisition of Rasmussen University
On September 1, 2021, APEI completed the acquisition of Rasmussen University. The final purchase price was $325.5 million, subject to post-closing working capital adjustments, and net of cash acquired, and was funded by $170.5 million of cash and cash equivalents and the net proceeds from the $175 million senior secured term loan issued in connection with the acquisition (the “Term Loan”).
Balance Sheet and Liquidity:
· | Total cash and cash equivalents as of September 30, 2021 were approximately $141.5 million, compared to $227.7 million as of December 31, 2020, a 38% decrease. The decrease in cash was due to the acquisition of Rasmussen University on September 1, 2021, partially offset by net proceeds of approximately $86.2 million from the underwritten public offering of 3,680,000 shares of our common stock completed on March 1, 2021. | |
· | In conjunction with the issuance of the Term Loan, APEI also entered into a revolving credit facility (the “Credit Facility”) at time of the RU closing. The Credit Facility has an aggregate commitment amount of $20 million, all of which remained undrawn at the end of the third quarter of 2021. |
Registrations and Enrollment:
2021 | 2020 | % Change | ||||||||||
American Public University System1 | ||||||||||||
For the three months ended September 30, | ||||||||||||
Net Course Registrations | 83,100 | 90,300 | -8 | % | ||||||||
For the nine months ended September 30, | ||||||||||||
Net Course Registrations | 258,700 | 264,700 | -2 | % | ||||||||
Rasmussen University2 | ||||||||||||
For the three months ended September 30, | ||||||||||||
Total Student Enrollment | 16,900 | 17,200 | -2 | % | ||||||||
Hondros College of Nursing3 | ||||||||||||
For the three months ended September 30, | ||||||||||||
Total Student Enrollment | 2,320 | 1,950 | 19 | % |
1APUS Net 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.
Excludes students in doctoral programs.
2Rasmussen Student Enrollment represents students in an active status as of the full-term census or billing date.
3HCN 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.
Acquisition of Graduate School USA:
On August 11, 2021, we announced that we had entered into an agreement to acquire substantially all of the assets of Graduate School USA, or Graduate School, one of the largest providers of training to the federal government workforce, for approximately $1.0 million. The purchase price is subject to working capital adjustments, and the acquisition is expected to close in the first quarter of 2022, subject to the satisfaction or waiver of closing conditions.
Fourth Quarter 2021 Outlook:
The following statements are based on APEI’s current expectations. These statements are forward-looking and actual results may differ materially. APEI undertakes no obligation to update publicly any forward-looking statements for any reason unless required by law.
Fourth Quarter 2021 Guidance | Full Year 2021 Guidance | |||||||||||||||
(Approximate) | (% Yr/Yr Change) | (Approximate) | (% Yr/Yr Change) | |||||||||||||
APUS Net course registrations | 84,000 to 86,600 | -2% to -5% | 342,600 to 345,200 | -3% to -4% | ||||||||||||
HCN Student enrollment | 2,510 | 17 | % | 2,510 | 17 | % | ||||||||||
RU Student enrollment | 17,500 | -3.5 | % | 17,500 | -3.5 | % | ||||||||||
- Nursing | 8,800 | 8 | % | 8,800 | 8 | % | ||||||||||
- Non-Nursing | 8,700 | -13 | % | 8,700 | -13 | % | ||||||||||
($ in millions except EPS) | ||||||||||||||||
APEI Consolidated revenue | $150 to $155 | 75% to 80% | $415 to $419 | 29% to 30% | ||||||||||||
APEI Consolidated net income | $5.7 to $7.1 | 0% to -19% | $14.1 to $15.5 | -18% to -25% | ||||||||||||
APEI Adjusted EBITDA | $23.8 to $26.3 | 50% to 66% | $59.0 to $61.5 | 17% to 21% | ||||||||||||
APEI Diluted EPS | $0.31 to $0.38 | -19% to -34% | $0.77 to $0.85 | -32% to -38% |
Non-GAAP Financial Measures:
This press release contains the non-GAAP financial measures of EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA (EBITDA less non-cash expenses such as stock compensation and non-recurring expenses). APEI believes that the use of these measures is useful because they allow investors to better evaluate APEI’s operating profit and cash generation capabilities.
For the three months ended September 30, 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 third 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
American Public Education, Inc. (Nasdaq: APEI) is a leading provider of career-focused higher education and training that provides pathways to employment and career advancement. APEI operates through three wholly owned subsidiaries and delivers corporate businesses services to each. American Public University System, 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. APUS is regularly cited as one of the most affordable universities in the United States. Rasmussen University is a 120 year-old institution that serves approximately 17,000 students across its 23 campuses and student service centers in six states and online. It is a Nursing and Health Sciences-focused institution, also with schools of Business, Technology, Design, Early Education and Justice Studies. Hondros College of Nursing "creates new nurses" by educating pre-licensure nursing students at its six campuses in Ohio and one in Indiana, and is the largest educator of ADN (RN) and PN (LPN) Nurses in the state of Ohio with approximately 2,300 students. Both APUS and Rasmussen are institutionally accredited by the Higher Learning Commission with Open Pathway designation. Hondros is accredited by the Accrediting Bureau of Health Education Schools. For additional information, visit www.apei.com.
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 EBITDA, benefits of the acquisition of Rasmussen University (the “Acquisition”) 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; 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 September 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:
Ryan Koren
AVP, Investor Relations & Corporate Development
(610) 428-7376
###
American Public Education, Inc.
Consolidated Statement of Income
(In thousands, except per share data)
Three Months Ended | ||||||||
September 30, | ||||||||
2021 | 2020 | |||||||
(unaudited) | ||||||||
Revenues | $ | 98,248 | $ | 79,133 | ||||
Costs and expenses: | ||||||||
Instructional costs and services | 42,544 | 31,084 | ||||||
Selling and promotional | 23,458 | 18,523 | ||||||
General and administrative | 26,598 | 22,574 | ||||||
Loss on disposals of long-lived assets | — | 418 | ||||||
Depreciation and amortization | 4,386 | 3,226 | ||||||
Total costs and expenses | 96,986 | 75,825 | ||||||
Income from operations before interest and income taxes | 1,262 | 3,308 | ||||||
Interest (expense) income | (1,305 | ) | 121 | |||||
(Loss) income before income taxes | (43 | ) | 3,429 | |||||
Income tax expense | 224 | 785 | ||||||
Equity investment loss | - | (2 | ) | |||||
Net (loss) income | $ | (267 | ) | $ | 2,642 | |||
Net (loss) income per common share: | ||||||||
Basic | $ | (0.01 | ) | $ | 0.18 | |||
Diluted | $ | (0.01 | ) | $ | 0.18 | |||
Weighted average number of common shares: | ||||||||
Basic | 18,670 | 14,797 | ||||||
Diluted | 18,855 | 15,011 |
Three Months Ended | ||||||||
Segment Information: | September 30, | |||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
APUS Segment | $ | 65,906 | $ | 69,659 | ||||
RU Segment | $ | 21,132 | $ | — | ||||
HCN Segment | $ | 11,240 | $ | 9,541 | ||||
Corporate and other1 | $ | (30 | ) | $ | (67 | ) | ||
Income (loss) from operations before | ||||||||
interest and income taxes: | ||||||||
APUS Segment | $ | 7,825 | $ | 7,392 | ||||
RU Segment | $ | (999 | ) | $ | — | |||
HCN Segment | $ | 448 | $ | 466 | ||||
Corporate and other | $ | (6,012 | ) | $ | (4550 | ) |
Nine Months Ended | ||||||||
September 30, | ||||||||
2021 | 2020 | |||||||
(unaudited) | ||||||||
Revenues | $ | 264,803 | $ | 235,876 | ||||
Costs and expenses: | ||||||||
Instructional costs and services | 105,257 | 91,058 | ||||||
Selling and promotional | 60,350 | 53,765 | ||||||
General and administrative | 75,579 | 65,314 | ||||||
Loss on disposals of long-lived assets | 182 | 742 | ||||||
Depreciation and amortization | 9,561 | 9,955 | ||||||
Total costs and expenses | 250,929 | 220,834 | ||||||
Income from operations before interest income and income taxes | 13,874 | 15,042 | ||||||
Interest (expense) income | (1,167 | ) | 1,002 | |||||
Income before income taxes | 12,707 | 16,044 | ||||||
Income tax expense | 3,509 | 4,291 | ||||||
Equity investment income (loss) | (827 | ) | (2 | ) | ||||
Net income | $ | 8,371 | $ | 11,751 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.47 | $ | 0.79 | ||||
Diluted | $ | 0.46 | $ | 0.78 | ||||
Weighted average number of common shares: | ||||||||
Basic | 17,874 | 14,870 | ||||||
Diluted | 18,048 | 15,021 |
Nine Months Ended | ||||||||
Segment Information: | September 30, | |||||||
2021 | 2020 | |||||||
Revenues: | ||||||||
APUS Segment | $ | 210,321 | $ | 210,376 | ||||
RU Segment | $ | 21,132 | $ | — | ||||
HCN Segment | $ | 33,506 | $ | 25,682 | ||||
Corporate and other1 | $ | (156 | ) | $ | (182 | ) | ||
Income (loss) from operations before interest and income taxes: | ||||||||
APUS Segment | $ | 30,969 | $ | 29,785 | ||||
RU Segment | $ | (999 | ) | $ | — | |||
HCN Segment | $ | 1,348 | $ | (455 | ) | |||
Corporate and other | $ | (17,444 | ) | $ | (14,288 | ) |
The RU Segment reflects the operations of RU, which was acquired on the Closing Date, through September 30, 2021. The Company did not consolidate the financial results of the RU Segment prior to the Closing Date.
1. The APUS Segment charges the HCN Segment and corporate employees for the value of courses taken by HCN Segment employees at APUS. The intersegment elimination represents the elimination of this intersegment revenue in consolidation.
GAAP Net Income to Adjusted EBITDA:
The following table sets forth the reconciliation of the Company’s reported GAAP net income to the calculation of adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020:
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net (loss) income | $ | (267 | ) | $ | 2,642 | 8,371 | 11,751 | |||||||||
Income tax expense | 224 | 785 | 3,509 | 4,291 | ||||||||||||
Interest expense (income) | 1,305 | (121 | ) | 1,167 | (1,002 | ) | ||||||||||
Equity investment loss | - | 2 | 827 | 2 | ||||||||||||
Depreciation and amortization | 4,386 | 3,226 | 9,561 | 9,955 | ||||||||||||
EBITDA | 5,648 | 6,534 | 23,435 | 24,997 | ||||||||||||
Stock Compensation | 1,804 | 1,942 | 5,969 | 5,265 | ||||||||||||
Loss on disposals of long-lived assets | - | 418 | 182 | 742 | ||||||||||||
M&A - related professional fees | 1,629 | 1,937 | 5,596 | 3,803 | ||||||||||||
Adjusted EBITDA | $ | 9,081 | $ | 10,831 | 35,182 | 34,807 |
GAAP Outlook Net Income to Outlook Adjusted EBITDA:
The following table sets forth the reconciliation of the Company’s GAAP outlook net income to the calculation of outlook adjusted EBITDA for the three and twelve months ended December 31, 2021:
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, 2021 | December 31, 2021 | |||||||||||||||
(in thousands, except per share data) | Low | High | Low | High | ||||||||||||
Net income | $ | 5,700 | $ | 7,125 | $ | 14,071 | $ | 15,496 | ||||||||
Income tax expense | 2,300 | 2,875 | 5,809 | 6,384 | ||||||||||||
Interest expense (income) | 3,420 | 3,420 | 4,587 | 4,587 | ||||||||||||
Equity investment loss | - | - | 827 | 827 | ||||||||||||
Depreciation and amortization | 8,560 | 8,560 | 18,121 | 18,121 | ||||||||||||
EBITDA | 19,980 | 21,980 | 43,415 | 45,415 | ||||||||||||
Stock Compensation | 2,050 | 2,050 | 8,019 | 8,019 | ||||||||||||
Loss on disposals of long-lived assets | - | - | 182 | 182 | ||||||||||||
M&A - related professional fees | 1,750 | 2,250 | 7,346 | 7,846 | ||||||||||||
Adjusted EBITDA | $ | 23,780 | $ | 26,280 | $ | 58,962 | $ | 61,462 |
Exhibit 99.2
PRESENTED BY Angela Selden President and CEO Richard Sunderland, CPA Executive VP and CFO American Public Education, Inc. Third Quarter 2021 Results November 8, 2021
Safe Harbor Statement Please note that statements made in this presentation regarding American Public Education 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, 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 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 for the quarterly period ended September 30 , 2021 , in the Company’s most recent 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
3 Table of Contents 1. The “New” APEI: Same Mission, More Ways to Serve 2. Education Unit Enrollment Updates 3. 3Q 2021 Financial Results & 4Q 2021 Outlook
4 The “New” APEI: Educating Service - Minded Students Student Focus • Military • Veterans • Public Service • Service - minded Offerings • Mobile / one - course - at - a - time • Specific bundles (e.g. officer requirements) • Practical training + Specialized degrees: • Space • Intelligence • Security • Fire • Police Demographics • Non - traditional • Avg age: ~32 • Working adult • 1 st Generation • Some college Student Focus • Nurses • Clinical & Health Sciences • Career - oriented Demographics • Non - traditional • Working adult • 1 st Generation Student Focus • Federal Employees • Public Service • Government • Service - minded Offerings • Short - form courses • Training • Career Advancement & Mobility • Continuing Education Offerings • Purpose - built curriculum and pacing • Direct path to career • Career Placements Flexible learning solutions for military and veterans to utilize their earned education benefit Helping to solve US nursing shortage by creating new nurses and health science professionals Modernizing government and professional training Fully Online Blended Online / On - Ground HEROIC TM : Higher Education Return on Investment for Customers
Market Leading Positions with Service - Minded Students HEROIC TM Affordable High - Quality Outcomes - focused #1 Educator of Active - Duty Military and Veterans #1 Educator in Pre - licensure Nursing HEROIC TM : Higher Education Return on Investment for Customers 5 Leading provider of Federal workforce training
APEI: Committed to Building a National Nursing Platform Footprint Provides Geographic Reach, Laddered Curriculum, Scale Advantages x Largest Footprint of Nursing Campuses: 30 at closing of Rasmussen acquisition x 8 State Footprint from OH to ND plus FL and KS − High concentration of campuses in large and dense markets x Most comprehensive ladder of nursing curriculum in the country x Scale advantages − Programmatic − Regulatory knowledge x Opportunity for brand leverage Campuses 7 23 30 TTM Nursing Revenue 1 $44MM $156MM $200MM = APEI’s Nursing Platform + Industry + Company Growth Dynamics = Building Powerhouse Nursing Platform Hondros Rasmussen Future Campuses Industry Tailwinds Likely to Enhance APEI’s Leadership in Nursing Education 11,000+ Number of pre - licensure nurses APEI educates through Rasmussen + HCN APEI is the #1 Educator in pre - licensure nursing education (ADN/RN and PN/LPN) in the country, with expertise in RN (RU) and PN (HCN) Scale platform allows for operating leverage Pro Forma Nursing Revenue: $200MM 1. Pro forma trailing twelve months 9/30/21 Current Campuses 6
Graduate School USA Overview Company Overview • Leading training provider to federal workforce • Founded in 1921 inside US Dept. of Agriculture then spun out as not - for - profit in 2010 • GSUSA is accredited by the Accrediting Counsel for Continuing Education & Training (ACCET) • $1MM purchase price, $20MM+ of average annual revenue • Non - Title IV funding • Anticipated closing at beginning of 2022 • Shared culture and heritage of “Educating those who Serve” • Military, Veterans, and Public service Key Statistics & Course Offerings 350+ Government subject matter expert instructors 300+ Open Enrollment Courses 125+ Agencies Served Federal Human Resources Management Leadership & Management Federal Financial Management Government Audit Training Federal Acquisition & Contracting Communications & Professional Skills Illustrative Customer Base and Federal Agencies Contract Training (B2G) for Federal Agencies Direct Sale to Federal Agencies and Open Enrollment • Contract Training solutions are customized for specific government agencies seeking to train, upskill, or re - skill groups of employees Open Enrollment (B2C) for Government Employees • 300 pre - scheduled, short - term programs offered that build foundation for professional certifications 10k+ FY’20 Open Enrollments 7
Table of Contents 1. The “New” APEI: Same Mission, More Ways to Serve 2. Education Unit Enrollment Updates 3. 3Q 2021 Financial Results & 4Q 2021 Outlook 8
• 3Q21 Registrations sharply impacted by Army tuition assistance (TA) portal outage • Portal brought back online July 19, 2021. August + September 2021 YoY net course registrations down just 3%. Slow rebound persists due to continued portal issues. • 4Q21 Registrations in October and November continue to be impacted by the ArmyIgnitED portal outage • October registrations decreased by 2% • November registrations decrease by estimated 3% • 4Q21 Army registrations expected to have positive growth APUS Enrollment Update Army Portal Update • System up and running since July 19, 2021 • Soldiers able to register through Exception to Policy vs fully operational • Remaining issues: • System latency • Manual processes • Continued defects 3Q 2021 4Q 2021 9 84,800 89,600 90,300 264,700 92,900 82,600 83,100 258,700 1Q 2Q 3Q YTD APUS Net Course Registrations 2020 2021 + 10% - 8% - 8% - 2% Army IgniteED Portal Issue
• 3Q21 nursing enrollment reached record number • 13% growth in nursing, offset by non - nursing - 13% growth translated to total growth of - 2% compared to prior year • 4Q21 Total student enrollment of 17,500+ • - 3% year - over - year growth • 1% 2 - year CAGR Rasmussen Enrollment Update 3Q 2021 4Q 2021 10 6,400 9,600 16,000 7,600 9,600 17,200 8,500 8,400 16,900 Nursing Non-Nursing Total Rasmussen Rasmussen Enrollment 3Q 2019 3Q 2020 3Q 2021 + 13% - 2% - 13%
• 3Q21 enrollment reached record number • Growth in ADN (RN) programs of 20% • PN program quarterly growth of 17% • HCN opened its 7 th campus in Akron, OH • 4Q21 Total student enrollment of 2,500+ • Highest PN starts all - time • Highest total PN & RN enrollment all - time • Some ongoing impact of enrollment deferral due to COVID fatigue HCN Enrollment Update New Campus Growth Update • Obtaining approvals for a new campus in the Detroit, MI area • Enrollment caps raised at Indianapolis campus 3Q 2021 4Q 2021 11 1,570 1,750 1,950 2,270 2,380 2,300 1Q 2Q 3Q HCN Enrollment 2020 2021 +45% +36% +19%
Table of Contents 1. The “New” APEI: Same Mission, More Ways to Serve 2. Education Unit Enrollment Updates 3. 3Q 2021 Financial Results & 4Q 2021 Outlook 12
Strong Regulatory Metrics Institutional Accreditation Update APUS: Reaccreditation granted by The Higher Learning Commission (HLC) in September for an additional 10 years Education Unit Institutional Accreditor Next Reaffirmation Open Pathway APUS Higher Learning Commission 2030 - 2031 x Rasmussen Higher Learning Commission 2025 - 2026 x HCN Accrediting Bureau of Health Education Schools 2027 N/A 13 (1) As a result of the CARES Act and subsequent administrative actions, ED implemented a temporary freeze on payments and interest accruals for federal student loans beginning in March 2020 until at least January 2022 . (2) Estimated proforma calculation using the current 90/10 cash - based calculation including TA/VA payment sources. Cohort Default Rate 90/10
Third Quarter and YTD 2021 Financial Highlights Financial Summary Capitalization and Liquidity 1) During the third quarter of 2021, we revised our reportable segments and updated the results for the prior period to conform to the current period presentation. 2) EBITDA plus stock comp, loss on disposal of long - lived assets, and M&A - related professional and integration fees 14 Solid liquidity position: • $115 million of unrestricted cash • $20 million undrawn revolver 3Q21 3Q20 % 3Q21 3Q20 % Quarter Quarter Change YTD YTD Change Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 % Change 2021 2020 % Change ($ in millions) APUS Revenue (1) 65.9 69.7 -5% 210.3 210.4 0% HCN Revenue 11.2 9.5 18% 33.5 25.7 30% Rasmussen Revenue 21.1 - N/A 21.1 - N/A Corporate, other, and Eliminations (1) (0.0) (0.1) NM (0.2) (0.2) NM Total revenue 98.2 79.1 24% 264.8 235.9 12% Net income (loss) (0.3) 2.6 -110% 8.4 11.8 -29% Adjusted EBITDA (2) 9.1 10.8 -16% 35.2 34.8 1% EPS (diluted) (0.01) 0.18 -106% 0.46 0.78 -41%
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 students may drop a course without financial penalty. 3. Please refer to appendix for GAAP to Non - GAAP reconciliation APEI’s 4Q 2021 Financial & Operational Outlook 15 $6 million annual cash tax benefit from Rasmussen acquisition during year 1 Fourth Quarter 2021 Guidance Full Year 2021 Guidance (Approximate) (% Yr/Yr Change) (Approximate) (% Yr/Yr Change) APUS Net course registrations 1 84,000 to 86,600 -2% to -5% 342,600 to -3% to -4% HCN Student enrollment 2 2,510 17% 2,510 17% RU Student enrollment 2 17,500 -3.5% 17,500 -3.5% - Nursing 8,800 8% 8,800 8% - Non-Nursing 8,700 -13% 8,700 -13% ($ in millions except EPS) APEI Consolidated revenue $150 to $155 75% to 80% $415 to $419 29% to 30% APEI Consolidated net income $5.7 to $7.1 0% to -19% $14.1 to $15.5 -18% to -25% APEI Adjusted EBITDA 3 $23.8 to $26.28 50% to 66% $59.0 to $61.5 17% to 21% APEI Diluted EPS $0.31 to $0.38 -19% to -34% $0.77 to $0.85 -32% to -38%
Thank You
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 Net Income to Adjusted EBITDA”) and not to rely on any single financial measure to evaluate its business . Appendix: Disclosures 17 GAAP Net Income to Adjusted EBITDA: (in thousands, except per share data) Net (loss) income $ (267) $ 2,642 8,371 11,751 Income tax expense 224 785 3,509 4,291 Interest expense (income) 1,305 (121) 1,167 (1,002) Equity investment loss - 2 827 2 Depreciation and amortization 4,386 3,226 9,561 9,955 EBITDA 5,648 6,534 23,435 24,997 Stock Compensation 1,804 1,942 5,969 5,265 Loss on disposals of long-lived assets - 418 182 742 M&A - related professional fees 1,629 1,937 5,596 3,803 Adjusted EBITDA $ 9,081 $ 10,831 35,182 34,807 Nine Months Ended September 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 and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, 2021 2020
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 . Appendix: Disclosures (continued) 18 GAAP Outlook Net Income to Outlook Adjusted EBITDA: (in thousands, except per share data) Net income $ 5,700 $ 7,125 $ 14,071 $ 15,496 Income tax expense 2,300 2,875 5,809 6,384 Interest expense (income) 3,420 3,420 4,587 4,587 Equity investment loss - - 827 827 Depreciation and amortization 8,560 8,560 18,121 18,121 EBITDA 19,980 21,980 43,415 45,415 Stock Compensation 2,050 2,050 8,019 8,019 Loss on disposals of long-lived assets - - 182 182 M&A - related professional fees 1,750 2,250 7,346 7,846 Adjusted EBITDA $ 23,780 $ 26,280 $ 58,962 $ 61,462 The following table sets forth the reconciliation of the Company’s GAAP outlook net income to the calculation of outlook adjusted EBITDA for the three and twelve months ended December 31, 2021: Three Months Ended Twelve Months Ended December 31, 2021 Low High December 31, 2021 Low High
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