Company Overview - American Public Education, Inc. (Nasdaq: APEI) operates a portfolio of education companies that provide online and campus-based postsecondary education and career learning to over 125,000 students through four subsidiary institutions [1][2] - The institutions under APEI include American Public University System, Rasmussen University, Hondros College of Nursing, and Graduate School USA, focusing on transforming lives, advancing careers, and improving communities [2] Subsidiary Institutions - American Public University System (APUS) serves approximately 88,000 adult learners worldwide, primarily focusing on active-duty military and veteran students [3][8] - Rasmussen University, with a history of 125 years, serves around 14,600 students across 20 campuses in six states and online, offering programs in nursing, health sciences, business, technology, design, early childhood education, and justice studies [4] - Hondros College of Nursing is the largest educator of Practical Nursing (LPN) nurses in Ohio, serving approximately 3,700 students across eight campuses [5][8] - Graduate School USA provides training to the federal workforce, offering customized contract training to federal agencies and open enrollment programs for government professionals [6] Accreditation - APUS and Rasmussen University are accredited by the Higher Learning Commission (HLC), while Hondros College is accredited by the Accrediting Bureau of Health Education Schools (ABHES) and Graduate School USA is accredited by the Accrediting Council for Continuing Education & Training (ACCET) [7] Upcoming Events - The company will participate in the William Blair's 45th Annual Growth Stock Conference from June 3-5, 2025, in Chicago, IL, with CEO Angela Selden presenting on June 5th [9] - APEI will also attend the D.A. Davidson 1st Annual Technology + Consumer Conference from June 9-11, 2025, in Nashville, TN, where both CEO Angela Selden and CFO Rick Sunderland will be available for meetings with investors [9]

Core Viewpoint - American Public Education, Inc. (APEI) has shown strong stock performance and positive financial results, indicating robust growth potential in the education sector, particularly in online and nursing programs [1][2][10]. Financial Performance - APEI's shares increased by 12.6% since the release of its Q1 2025 results, outperforming the Zacks Schools industry and the S&P 500 Index [1]. - The company's adjusted earnings and total revenues exceeded Zacks Consensus Estimates and demonstrated year-over-year growth [2]. - For Q2 2025, APEI anticipates total revenues to rise by 4-5% year-over-year, reaching $160-$162 million, with specific growth expectations for its segments [10]. - The full-year 2025 revenue outlook is projected to grow by 4-6% year-over-year, totaling $650-$660 million, with adjusted EBITDA expected between $77 million and $87 million [11]. Enrollment Trends - APEI has experienced significant enrollment growth in its key segments, particularly in the American Public University System (APUS) and Hondros College of Nursing (HCN) [5]. - In Q1 2025, net course registrations for APUS grew by 3.5%, while HCN and Rasmussen University (RU) saw increases of 9.6% and 7.4%, respectively [6]. Strategic Initiatives - The company is focusing on diversifying its educational offerings and leveraging technology to enhance student learning, including the use of Artificial Intelligence [4]. - APEI announced a strategic consolidation of its degree-granting institutions (APUS, HCN, and RU) to streamline operations and improve revenue and cost synergies [8][9]. - This consolidation is expected to be completed by the end of 2025, aiming to address the growing demand in the healthcare sector [9]. Market Position and Valuation - APEI is currently trading at a premium compared to its industry peers based on a forward 12-month price-to-earnings (P/E) ratio, indicating strong market potential [15]. - Despite macroeconomic challenges, the company's strategic cost management efforts and favorable enrollment trends support its valuation and growth outlook [18].

Industry Overview - The Zacks Schools industry is experiencing a rebound driven by increased demand for career-focused programs in healthcare, skilled trades, cybersecurity, and IT, supported by a labor market that values job-ready skills and government initiatives promoting non-degree pathways [1][4] - The industry is addressing the critical shortage of healthcare workers through rigorous, workforce-aligned training programs [5] Trends Influencing the Industry - Digital innovation is a key driver of differentiation, with companies investing in adaptive learning tools and scalable online platforms to enhance engagement and support flexible learning for working adults [2][7] - There is a rising demand for workforce-oriented programs, particularly among adult learners and career switchers, as the labor market increasingly values job-ready skills over traditional degrees [4] - The sector is witnessing consolidation, with larger players acquiring niche or financially weaker institutions to expand offerings and improve scale [6] Financial Performance and Market Position - The Zacks Schools industry currently ranks 30 within the broader Zacks Consumer Discretionary sector, placing it in the top 12% of over 250 Zacks industries, indicating strong near-term prospects [10][11] - The industry's earnings estimates for 2025 have increased to $1.38 per share from $1.37 since April 2025, reflecting growing analyst confidence in the group's earnings growth potential [12] Enrollment and Revenue Growth - For-profit providers are expected to see enrollment and revenue growth in 2025, driven by demographic tailwinds, state and federal support for vocational education, and digital innovation [2] - Companies like Stride, Inc., Laureate Education, Inc., and American Public Education, Inc. are positioned to benefit from these trends, with significant enrollment growth reported [21][29][25] Valuation Metrics - The industry is currently trading at a forward 12-month price-to-earnings ratio of 16.86X, compared to the S&P 500's 21.81X and the sector's 19.73X, indicating potential undervaluation [17][20] Company Highlights - Stride, Inc. reported a 20% rise in total enrollment, with a 12.8% increase in General Education and a 32% increase in Career Learning [21] - American Public Education has seen a 60.2% stock increase over the past year, with earnings expected to grow 150.9% in 2025 [25] - Laureate Education's fully online programs account for about 20% of its student base, growing at three to four times the pace of face-to-face programs [28] - Perdoceo Education has benefited from a 10.6% enrollment increase at Colorado Technical University, driven by strong student engagement [32] - Lincoln Educational Services has achieved an 82.4% stock increase over the past year, supported by strong enrollment growth and operational efficiencies [36]

Core Insights - American Public Education, Inc. (APEI) reported strong first-quarter 2025 results, with adjusted earnings and total revenues exceeding expectations and showing year-over-year growth [1][2] - The performance was primarily driven by contributions from Rasmussen University (RU), American Public University System (APUS), and Hondros College of Nursing (HCN), while the Graduate School (GSUSA) segment experienced a revenue decline [1][2] Financial Performance - APEI's adjusted earnings per share (EPS) reached 41 cents, significantly surpassing the Zacks Consensus Estimate of 15 cents by 173.3%, compared to a loss of six cents per share in the same quarter last year [3] - Total revenues amounted to $164.6 million, exceeding the consensus mark of $162 million by 1.6% and growing 6.6% year over year, supported by net course registration growth and tuition increases [4] - Total costs and expenses rose 2% year over year to $152.3 million, driven by a 3.5% increase in instructional costs and an 8.5% rise in selling and promotional expenses [4] - Adjusted EBITDA increased by 24% year over year to $21.2 million, with an adjusted EBITDA margin of 13%, expanding 200 basis points from 11% [5] Segment Performance - APUS reported revenues of $83.9 million, a 4.1% increase from $80.7 million year over year, driven by net course registrations and tuition increases [6] - RU's revenues grew 11.5% year over year to $59.3 million, attributed to enrollment growth and tuition hikes, with total student enrollment increasing 7.4% to 14,500 [7][8] - HCN's revenues rose 7.5% year over year to $17.7 million, supported by student enrollment growth, although it reported a negative EBITDA margin of 1% [8][9] - GSUSA's revenues declined 11.9% year over year to $3.7 million, with a negative EBITDA margin of 57% [10] Cash and Debt Position - As of March 31, 2025, APEI had cash, cash equivalents, and restricted cash of $187.5 million, up from $158.9 million at the end of 2024 [11] - Net long-term debt slightly increased to $93.7 million from $93.4 million at the end of 2024 [11] Guidance and Outlook - For Q2 2025, APEI expects total revenues to increase by 4-5% year over year to $160-$162 million, with a projected loss per share between 13 cents and four cents [12] - Adjusted EBITDA for Q2 is anticipated to be between $11.5 million and $14 million, reflecting year-over-year growth of 6% to 28% [12] - The company revised its 2025 guidance, expecting total revenues to grow 4-6% year over year to $650-$660 million, with adjusted EBITDA projected between $77 million and $87 million [14]

Financial Performance - For the quarter ended March 2025, American Public Education (APEI) reported revenue of $164.55 million, up 6.6% year-over-year [1] - EPS for the quarter was $0.41, a significant improvement from -$0.06 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $161.94 million, resulting in a surprise of +1.61% [1] - The company delivered an EPS surprise of +173.33%, with the consensus EPS estimate being $0.15 [1] Key Metrics - Shares of American Public Education have returned +16.9% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3] Segment Performance - Rasmussen University (RU) reported revenues of $59.25 million, exceeding the average estimate of $57.19 million, representing a year-over-year change of +11.5% [4] - Hondros College, Nursing Programs (HCN) generated revenues of $17.68 million, slightly below the average estimate of $18.07 million, with a year-over-year change of +7.5% [4] - American Military & Public University (APUS) reported revenues of $83.95 million, surpassing the average estimate of $82.42 million, reflecting a year-over-year change of +4.1% [4]

Core Insights - American Public Education (APEI) reported quarterly earnings of $0.41 per share, significantly exceeding the Zacks Consensus Estimate of $0.15 per share, and compared to a loss of $0.06 per share a year ago, resulting in an earnings surprise of 173.33% [1] - The company achieved revenues of $164.55 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.61% and showing an increase from $154.43 million year-over-year [2] - APEI's stock has increased approximately 27.5% since the beginning of the year, contrasting with a decline of -3.8% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $160.36 million, and for the current fiscal year, it is $1.27 on revenues of $654.82 million [7] - The estimate revisions trend for APEI is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Schools industry, to which APEI belongs, is currently ranked in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% of industries [8]

Financial Data and Key Metrics Changes - The company reported total revenue of $164.6 million, an increase of 6.6% year-over-year [9][18] - Adjusted EBITDA increased by nearly 25% to $21.2 million, with an adjusted EBITDA margin expanding to 12.9% from 11% in the prior year [9][19] - Net income available to common shareholders was $7.5 million, compared to a net loss of $1 million in the prior year [9][19] Business Line Data and Key Metrics Changes - Rasmussen's revenue increased by 11.5% to $59.3 million, with online enrollment up 11.1% and on-ground enrollment up 3.2% [20][21] - APUS revenue rose to $83.9 million, a 4.1% increase, with net course registrations increasing by 3.5% [20] - Hondros reported a revenue increase of 7.5% to $17.7 million, with total enrollment up 10% [21] Market Data and Key Metrics Changes - Rasmussen's enrollment increased by 7% in Q1 and is expected to grow by 8% in Q2 [12][24] - APUS's second quarter registration guidance is projected to be between 93,500 to 96,100, representing a 4% to 7% increase compared to last year [25] Company Strategy and Development Direction - The company plans to consolidate its three degree-granting institutions into a single entity, which is expected to enhance operational efficiency and address the growing demand for nursing and clinical roles [10][26] - The company is focused on improving operating leverage through increased enrollment and disciplined cost management [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, citing strong enrollment trends and effective cost management strategies [16][26] - The company is maintaining its full-year revenue guidance of $650 million to $660 million, while increasing adjusted EBITDA guidance to between $77 million and $87 million [11][25] Other Important Information - The company intends to redeem its preferred shares, which is expected to save approximately $6 million in annual dividend expenses starting in 2026 [9][10] - Cash flow from operations was reported at $37 million, an increase from $20.7 million in the prior year [22] Q&A Session Summary Question: Impact of tuition assistance portal downtime on margins and enrollment - Management indicated that the impact was minimal, with registrations increasing by 3.5% in Q1 and guidance for Q2 showing improvement [29][31] Question: Guidance for graduate school EBITDA losses - Management stated that they are unable to provide specific guidance on graduate school losses but are confident in the overall adjusted EBITDA guidance [33][35] Question: Enrollment growth expectations for Rasmussen - Management noted that Rasmussen has seen four consecutive quarters of positive enrollment growth and does not foresee headwinds for the remainder of the year [41][42] Question: Revenue synergies from consolidation - Management has not provided specific revenue synergy numbers but highlighted the benefits of combining nursing programs across institutions [85][86] Question: Interest expense in Q2 - Management confirmed that the higher interest expense includes the preferred redemption premium [90] Question: Fixed versus variable costs at Rasmussen - Management indicated a 60% flow-through rate for revenue increases at Rasmussen, with potential for higher rates as optimization continues [100]

Financial Data and Key Metrics Changes - The company reported total revenue of $164.6 million, an increase of 6.6% year-over-year, driven by growth at Rasmussen, APUS, and Hondros [16][18] - Adjusted EBITDA for the first quarter was $21.2 million, a 25% increase from the prior year, with an adjusted EBITDA margin of 12.9%, up from 11% [17][18] - Net income available to common shareholders was $7.5 million, compared to a net loss of $1 million in the prior year [17][20] - The company raised its full-year adjusted EBITDA guidance by $2 million to a range of $77 million to $87 million [5][9] Business Line Data and Key Metrics Changes - Rasmussen experienced a positive adjusted EBITDA swing from a loss of $2.6 million in Q1 2024 to a profit of $2.4 million in Q1 2025, with revenue increasing by 11.5% to $59.3 million [6][18] - APUS reported revenue of $83.9 million, a 4.1% increase, with net course registrations up 3.5% year-over-year [18][20] - Hondros saw revenue growth of 7.5% to $17.7 million, with total enrollment increasing by 10% [19][20] Market Data and Key Metrics Changes - The company noted an 8% year-over-year enrollment improvement at Rasmussen for Q2 2025, continuing a trend of positive enrollment growth [6][10] - At Hondros, enrollment increased by 13.5% year-over-year for Q2 2025 [10][23] - APUS conferred over 13,500 associate's or bachelor's degrees, with 66% of graduates being active duty military or veterans [12] Company Strategy and Development Direction - The company is focused on simplifying operations and plans to consolidate its three degree-granting institutions into a single entity by the end of 2025 [8][25] - The strategy includes optimizing program offerings and expanding nursing programs to meet growing demand in healthcare [25] - The company aims to redeem its preferred shares, which will save approximately $6 million in annual dividend expenses starting in 2026 [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth prospects, citing strong enrollment trends and improved profitability [13][25] - The company acknowledged challenges in the Graduate School segment due to government budget uncertainties but maintained overall revenue guidance [9][24] - Management highlighted the effectiveness of marketing initiatives and the resilience of military and healthcare education sectors [52][53] Other Important Information - The company plans to sell two corporate buildings with anticipated net proceeds of over $20 million, expected to close in Q3 2025 [8][21] - Cash flow from operations was $37 million, significantly up from $20.7 million in the prior year [20] Q&A Session Summary Question: Impact of tuition assistance portal downtime on margins and enrollments - Management indicated that the impact was minimal, with registrations increasing by 3.5% in Q1 and guidance for 5.5% in Q2 [27][30] Question: Guidance for Graduate School EBITDA losses - Management stated that they cannot provide specific guidance on Graduate School losses but are confident in the overall adjusted EBITDA guidance [32][34] Question: Enrollment growth expectations for Rasmussen - Management noted that they do not provide individual institution guidance but are pleased with the momentum at Rasmussen [39][40] Question: Revenue synergies from consolidation - Management has not provided specific revenue synergy numbers but highlighted the benefits of combining nursing programs across institutions [82][83] Question: Interest expense in Q2 - Management confirmed that the higher interest expense includes the preferred redemption premium [88] Question: Fixed versus variable costs at Rasmussen - Management indicated a 60% flow-through of revenue increases to EBITDA, with potential for higher flow-through as optimization continues [96]

Financial Performance - Q1 2025 - Revenue reached $164.6 million, a 7% year-over-year increase[9] - Net income available to common stockholders was $7.5 million, compared to a loss of $1.0 million in 1Q24[9] - Adjusted EBITDA was $21.2 million, a 25% year-over-year increase[12] - Cash position as of March 31, 2025, was $187.5 million, a 22% year-over-year increase[13] - Diluted EPS was $0.41, compared to ($0.06) in 1Q24[9] Business Highlights - Q1 2025 - APUS increased net course registrations by 3.5% compared to 1Q24[13] - Rasmussen increased enrollment by 7% in 1Q25, marking the fourth consecutive quarter of year-over-year enrollment growth[13] - Hondros College of Nursing (HCN) increased enrollment by 9.6%[13] Financial Guidance - 2025 - Full year 2025 revenue is expected to be between $650 million and $660 million[16] - Full year 2025 net income available to common stockholders is projected to be between $23 million and $30 million[16] - Full year 2025 Adjusted EBITDA is guided to be between $77 million and $87 million[16]

Student Enrollment and Services - The company serves approximately 106,400 students and provides career learning to about 23,000 individuals through its four subsidiary institutions[110]. - As of March 31, 2025, approximately 64% of APUS students self-reported military service at the time of enrollment[116]. - Rasmussen University has approximately 14,500 students, with 90% of nursing students enrolled in pre-licensure programs[116]. - The planned combination of APUS, Rasmussen University, and Hondros College of Nursing is expected to be completed in Q3 2025, pending necessary approvals[112]. Financial Performance - Consolidated revenue for the three months ended March 31, 2025, increased to $164.6 million, a rise of 6.6% from $154.4 million in the prior year period[141]. - Net income for the same period was $8.9 million, compared to $0.5 million in the prior year, marking an increase of $8.4 million[141]. - Total revenue for the three months ended March 31, 2025, was $164.6 million, an increase of $10.1 million, or 6.5%, compared to $154.4 million in the prior year[155]. - Net income increased to $8.9 million for the three months ended March 31, 2025, compared to $0.5 million in the prior year, an increase of $8.4 million[153]. Enrollment Growth - APUS net course registrations rose to approximately 102,500, an increase of 3,500 or 3.5% compared to the prior year[124]. - RU total enrollment increased to approximately 14,500, up 1,000 or 7.4% year-over-year, with revenue rising to $59.3 million, an increase of 11.5%[125]. - HCN total enrollment grew to approximately 3,600, an increase of 300 or 9.6%, with revenue increasing to $17.7 million, up 7.5%[126]. Operating Margins and Expenses - Operating margin improved to 7.4% for the three months ended March 31, 2025, compared to 3.4% in the prior year[123]. - Costs and expenses for the three months ended March 31, 2025, were $152.3 million, an increase of 2.0% from $149.3 million in the prior year[142]. - Instructional costs and services expenses increased by $2.5 million, or 3.5%, to $74.9 million for the three months ended March 31, 2025, with a decrease in these expenses as a percentage of revenue to 45.5% from 46.9%[144]. - Selling and promotional expenses rose by $2.7 million, or 8.5%, to $35.2 million, with these expenses as a percentage of revenue increasing to 21.4% from 21.0%[145]. - General and administrative expenses were $36.4 million, a slight increase of $0.1 million, or 0.4%, with a decrease in these expenses as a percentage of revenue to 22.1% from 23.5%[146]. Cash Flow and Investments - Cash and cash equivalents increased by $28.6 million, or 18.0%, to $187.5 million as of March 31, 2025, primarily due to the collection of accounts receivable[159]. - For the three months ended March 31, 2025, net cash provided by operating activities was $37.0 million, an increase from $20.7 million in the same period of 2024, primarily due to improved collections[166]. - Net cash used in investing activities was $3.4 million for the three months ended March 31, 2025, down from $6.2 million in the same period of 2024, with capital expenditures of $3.9 million compared to $6.2 million in 2024[167]. - Net cash used in financing activities was $5.0 million for the three months ended March 31, 2025, a decrease from $5.7 million in 2024, primarily due to reduced stock repurchases[168]. Regulatory and Compliance Issues - New Florida legislation may impose additional regulatory scrutiny on Rasmussen University's nursing programs, potentially increasing compliance costs[114]. - The company must comply with the 90/10 Rule and maintain accreditation to continue participating in Title IV financial aid programs[111]. - The company anticipates that the HLC will vote to remove retention reporting requirements for affected HCN programs in July 2025[117]. - The company is exploring strategic alternatives for Graduate School USA due to uncertainties in federal government training priorities[118]. Financial Instruments and Risk Management - The company has entered into a new interest rate cap agreement with a notional value of $50.0 million, providing protection if the Term SOFR rate exceeds 5.00%, expiring in June 2026[173]. - The company has no material derivative financial instruments as of March 31, 2025, and maintains cash and cash equivalents in secure accounts, with no significant credit risk exposure[170]. - A 10% change in interest rates would not materially impact the fair value of the company's investment portfolio due to its low yield and risk profile[171]. - The company incurred approximately $1.0 million in professional fees related to the Combination announced on January 28, 2025, with an expected additional $2.0 million to $4.0 million in fees for the remainder of 2025[165].