American Public Education Q2 2025 Earnings Report

American Public Education EPS Results

• Actual EPS: -$0.02
• Consensus EPS: -$0.07
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

American Public Education Revenue Results

• Actual Revenue: $162.77 million
• Expected Revenue: $160.88 million
• Beat/Miss: Beat by +$1.89 million
• YoY Revenue Growth: N/A

American Public Education Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 5:00PM ET

American Public Education (NASDAQ:APEI), together with its subsidiaries, provides online and campus-based postsecondary education and career learning in the United States. It operates through three segments: American Public University System, Rasmussen University, and Hondros College of Nursing. The company offers 184 degree programs and 134 certificate programs in various fields of study, including nursing, national security, military studies, intelligence, homeland security, business, health science, information technology, justice studies, education, and liberal arts; and career learning opportunities in leadership, finance, human resources, and other fields of study critical to the federal government workforce. It also provides nursing-and health sciences-focused postsecondary education, pre-licensure nursing programs, diploma in practical nursing, and an associate degree in nursing. The company was incorporated in 1991 and is headquartered in Charles Town, West Virginia.

American Public Education Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: American Public Education outperformed Q2 2025 financial guidance, exceeding the top end of its revenue, net income, EPS and adjusted EBITDA targets.
• Positive Sentiment: Key balance sheet simplifications were completed, including selling two corporate buildings for $22 M, releasing a $24.5 M restricted letter of credit, and redeeming $43 M of preferred equity to save $6 M in annual dividends.
• Neutral Sentiment: The sale of Graduate School USA was finalized post-quarter to refocus on core healthcare and military education, with full-year revenue guidance maintained despite this divestiture.
• Positive Sentiment: Enrollment at Rasmussen grew by 10% in Q3 (7% in Q2) and Hondros by 18% in Q3 (13% in Q2), driving improved flow-through margins and profitability in campus-based nursing programs.
• Positive Sentiment: Following debt and divestiture actions, APEI maintained $650–660 M revenue guidance and raised full-year adjusted EBITDA guidance to $81–88 M.

Presentation

[Operator]

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's American Public Education Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

Thank you. I would now like to turn the call over to Brian Prinibault, Head of Investor Relations. Brian?

[Brian Prenoveau, Managing Director at MZ North America]

Thank you, Greg, and good afternoon, everyone. Welcome to American Public Education's conference call to discuss second quarter twenty twenty five results. Joining us on the call today are Angela Seldon, President and Chief Executive Officer Rick Sunderland, Executive Vice President and Chief Financial Officer and Gary Jansen, Senior Vice President of Strategy and Growth. Materials for the call today are available in the Events and Presentations section of APEI's website. Statements made during this conference call and any accompanying presentation regarding APEI and its subsidiaries that are not historical facts may be forward looking statements based on current expectations, assumptions, estimates and projections.

[Brian Prenoveau, Managing Director at MZ North America]

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 as those identified in our Form 10 ks under the heading Risk Factors, including those related to potential impacts from government shutdowns or changing federal or state government policies, practices and laws, including impacts on revenues or the timing of receivables. Forward looking statements may sometimes be identified by words like anticipate, believe, seek, could, estimate, expect, can, may, plan, potentially, project, should, will, would and similar or opposite words. Forward looking statements include, without limitation, statements regarding expectations for registrations and enrollments, revenue, earnings and adjusted EBITDA and other earnings guidance, our foundation for growth, combination of our institutions, campus and corporate center consolidation, the redemption of our preferred stock, future governmental or regulatory actions and a response to those actions, changing market demands and our ability to satisfy such demands and any other company initiatives. This presentation contains references to non GAAP financial information. A reconciliation between the non GAAP financial measures we use and the most directly comparable GAAP measures is located in the appendix of today's presentation and in the earnings release.

[Brian Prenoveau, Managing Director at MZ North America]

Management believes that the presentation of non GAAP financial information provides useful supplemental information to investors regarding its results of operations and should only be considered in addition to and not as a substitute for or superior to any measure of financial performance prepared in accordance with GAAP. Now I'd like to turn the call over to API's President and CEO, Angela Selden. Angie, please go ahead.

[Angela Selden, President, CEO & Director at American Public Education]

Thank you, Brian. Good afternoon, and thank you for joining American Public Education's second quarter twenty twenty five earnings call. We are very pleased with our outperformance in the 2025 and notably our accomplishments in simplifying the business and the balance sheet. We have several areas to highlight during today's call. First, APEI outperformed second quarter twenty twenty five financial guidance.

[Angela Selden, President, CEO & Director at American Public Education]

In the second quarter, we exceeded the top end of our guidance for revenue, net income, EPS and adjusted EBITDA. Disciplined operations at our education units along with continued enrollment growth have helped to drive improved financial performance. Next, several important simplification milestones were achieved that improve our balance sheet and overall financial position. We completed the sale of two corporate administrative buildings collecting over $22,000,000 The Department of Education removed restrictions on the 24,500,000 letter of credit from the 2021 acquisition of Rasmussen. That cash is now unrestricted on our balance sheet.

[Angela Selden, President, CEO & Director at American Public Education]

And finally, we redeemed our preferred equity for a total amount of approximately $43,000,000 which was fully funded by the proceeds from the building sale and the release of the restricted cash. Going forward, this will allow APEI annually to save $6,000,000 from the elimination of the cash dividend payments. We believe we are now positioned with an improved capital structure and more financial flexibility to invest in growth initiatives. Third, after quarter end, on 07/25/2025, we completed the sale of Graduate School USA. We believe this is a great outcome for APEI, for Graduate School, its employees, and its students.

[Angela Selden, President, CEO & Director at American Public Education]

As we determined that Graduate School was no longer a strategic fit for our future growth strategy, we are pleased to find the business a new home, which is more aligned with the graduate school mission and market position, allowing us to focus on growing our core healthcare and military businesses. Next, we are pleased with the double digit enrollment growth at both Rasmussen and Hondros of 1018% respectively, further driving expanding margins and greater profitability. Fifth, I'm pleased to announce the appointment of James Kenixberg as our Interim Chief Innovation and Technology Officer. APEI is investing in intelligent infrastructure, predictive analytics, and personalized digital tools to modernize every part of the learner journey. James will lead our transformation efforts aimed at improving access and student persistence and delivering more responsive, mission aligned educational experiences.

[Angela Selden, President, CEO & Director at American Public Education]

James has been an invaluable resource on our ATEI board of directors, and he will be stepping away from his board service to focus on this important assignment. James brings more than two decades of experience leading technology strategies in education and has served as a strategic adviser to a number of high growth startup and education focused companies. Next, we continue to move closer to overall simplification regarding the combination of APUS, Rasmussen, and Hondros into a single accredited institution. We have received HLC and state agency approvals. Discussions with the Department of Education and HLC are ongoing regarding the timing to complete the transaction.

[Angela Selden, President, CEO & Director at American Public Education]

Finally, in summary, the improvements to the business and finance position provide us an opportunity to strengthen our full year guidance. Our CFO, Rick Sunderland, will give a deeper dive into updated 2025 guidance, but at a high level. Even with the sale of graduate school, we are maintaining our full year revenue guidance, which now reflects the exclusion of five months of graduate school revenue for the remainder of 2025. And we are increasing adjusted EBITDA guidance expected now to be between $81,000,000 and $88,000,000 I'd now like to provide some additional details about the 2Q twenty twenty five results, starting first with APEI's nursing and healthcare institutions. Rasmussen continues to produce strong results.

[Angela Selden, President, CEO & Director at American Public Education]

Rasmussen's enrollment increased from 7% in 2Q twenty twenty five to 10% in 3Q twenty twenty five, representing the fifth consecutive quarter of year over year enrollment increases. Our three pronged strategy to improve outcomes, manage costs, and grow enrollments has continued to produce positive results. As previously discussed, Rasmussen's higher fixed cost structure allows positive enrollment trends to significantly enhance the flow through margin, leading to improved operating leverage and profitability. With our current campus footprint, we believe our strategy to fill the back row continues to effectively increase enrollments and improve EBITDA flow through on each incremental student. At Hondros, as previously reported, 2Q twenty five enrollment was strong with 13% growth as compared to 2Q twenty four.

[Angela Selden, President, CEO & Director at American Public Education]

3Q twenty five enrollment increased to 18% year over year to 3,700 students. We believe that the combination of Rasmussen and Hondros will provide us with a robust platform to further scale enrollments and increase margins. Turning now to APEI's online university educating our nation's military, veterans, and their families called APUS. Overall, net course registrations increased 7% year over year and revenue increased over 6%. We expect continued year over year registration growth in the low to mid single digits for the remainder of 2025.

[Angela Selden, President, CEO & Director at American Public Education]

In future years, we believe we can accelerate revenue and registration growth at APUS by offering our courses and degree programs to more veterans, more family members of the military, and expanding our penetration with the current active duty military students. Overall, given the consistent financial and operational performance we've delivered in the last eighteen months, we will host an Investor Day on 11/20/2025 to share our outlook for 2026 and beyond. We remain enthusiastic in our ability to continue delivering results and prioritizing growth drivers to deliver profitability while providing more students accessible and affordable educational opportunities. We look forward to welcoming you, our investors and analysts, to New York City. Invitations are forthcoming.

[Angela Selden, President, CEO & Director at American Public Education]

In closing, API enables students to experience a valuable lifelong return on their educational investment. Our mission remains to power purpose, potential, and prosperity for those in service of others. Each of our education units is purpose built to deliver accessible and affordable higher education across a diverse range of subjects. I'd like to thank each of our employees and our educators that work tirelessly to make our mission a reality. With that, I will now turn the call over to APEI's CFO, Rick Sunderland.

[Richard Sunderland, EVP & CFO at American Public Education]

Thank you, Angie. Total revenue in the second quarter was $162,800,000 an increase of 9,900,000 or 6.5% from the prior year period. Second quarter revenue growth was driven by increased revenue at Rasmussen, APUS and Hondros, partially offset by lower revenue at Graduate School. Total costs and expenses in the second quarter were $155,700,000 an increase of $5,100,000 or 3.4% as compared to the 2024 and include $1,700,000 in professional fees in general and administrative expenses related to the combination of AQS, Rasmus and Hondros and the sale of Graduate School. The increase is primarily driven by increases in employee compensation costs, professional fees and classroom and course materials costs, partially offset by decreases in information technology costs, depreciation and amortization expenses and occupancy costs.

[Richard Sunderland, EVP & CFO at American Public Education]

In the second quarter, net loss available to common shareholders was a net loss of $300,000 compared to a net loss of $1,200,000 in the prior year. As noted earlier, the second quarter loss included a $3,500,000 loss on the redemption of our preferred stock. Second quarter diluted net loss per common share was a loss of $02 compared to a loss per diluted share of $06 in the prior year period. Second quarter adjusted EBITDA was $15,100,000 a $4,200,000 or 38% increase over the prior year period. This is above the top end of the guidance range and represented an adjusted EBITDA margin of 9.3% as compared to 7.1% in the prior year.

[Richard Sunderland, EVP & CFO at American Public Education]

At APUS, second quarter revenue increased to $81,700,000 a 6.1% increase as compared to the prior year period. Second quarter net course registrations increased 7.3% as compared to the prior year. For the quarter, APUS EBITDA was $22,400,000 and EBITDA margin was 27.4% as compared to 25.3% in the prior year. At Ratswassen, second quarter revenue was $59,500,000 an increase of 12.2% as compared to the 2024. In the second quarter, online enrollment increased 12.2, on ground enrollment increased 3.2%, and total enrollment grew 7.4% to approximately 14,600 students as compared to the prior year period.

[Richard Sunderland, EVP & CFO at American Public Education]

In the second quarter, Rasmussen delivered positive EBITDA of $200,000 as compared to an EBITDA loss of $4,700,000 in the prior year. At Hondros, second quarter revenue was up 10.5% to $18,100,000 as compared to the prior year period due to continued enrollment growth. For the quarter, Hondros total enrollment increased 13.5 to approximately 3,700 students. At Hondros, the second quarter EBITDA was $100,000 as compared to an EBITDA loss of $400,000 in the prior year period. Revenue at graduate school included in corporate and other was $3,400,000 as compared to $6,400,000 in the prior year period.

[Richard Sunderland, EVP & CFO at American Public Education]

For the quarter, graduate school EBITDA was a loss of $2,500,000 compared to an EBITDA loss of $700,000 in the prior year period. As noted earlier, in July, we completed the sale of Graduate School. Cash flow from operations for the first six months of 2025 was $51,800,000 compared to $33,200,000 in the prior year. At 06/30/2025, total cash, cash equivalents and restricted cash was $176,600,000 an increase of $17,600,000 from year end 2024. Restricted cash included a $24,500,000 restricted certificate of deposit to secure a letter of credit related to Rasmussen's composite score prior to our acquisition.

[Richard Sunderland, EVP & CFO at American Public Education]

In May, the letter of credit was released by Ed, and therefore, the cash is no longer restricted. At 06/30/2025, total unrestricted cash and cash equivalents was $174,900,000 compared to 131,900,000 at 12/31/2024, an increase of $43,000,000 Additionally, as noted earlier, in the second quarter, we redeemed all our outstanding preferred stock for $43,100,000 and completed the sale of two corporate administrative office buildings in Charlestown, West Virginia for net proceeds of $22,500,000 Today, with these changes, including the sale of Graduate School, we believe we are well positioned to invest in the continued growth of our schools. CapEx totaled $7,600,000 in the 2025 compared to $11,400,000 in the prior year period. Principal and API's term loan at June 30 was unchanged at $96,400,000 and our $20,000,000 revolving credit facility remains fully available. With unrestricted cash of $174,900,000 APEI continues to be net cash positive.

[Richard Sunderland, EVP & CFO at American Public Education]

Turning now to our third quarter and full year outlook, which covers forward looking statements subject to the various risks noted earlier. For the third quarter twenty twenty five, AQS total net course registrations are expected to be between 97,000 to 99,000 registrations, representing a 5% to 7% increase when compared to last year. At Rasmussen and Hondros, third quarter student enrollments are actual because of the quarterly starts at these schools. At Rasmussen, quarter total on ground enrollment increased 11.7% to approximately 6,700 students and total online enrollment increased 10.8% to approximately 8,200 students for an aggregate enrollment of approximately 14,900 students. This represents a 10.4% increase when compared to the 2024.

[Richard Sunderland, EVP & CFO at American Public Education]

At Hondros, quarter student enrollment increased 17.6% year over year to approximately 3,700 students. In the 2025, consolidated revenue is expected to be between $159,000,000 and $161,000,000 The company expects third quarter net loss available to common shareholders to be between a loss of $2,900,000 and $800,000 or a loss or between a loss of $0.15 and $04 per diluted share. This includes an anticipated $7,000,000 to $8,500,000 loss related to the sale of Graduate School. Third quarter twenty twenty five adjusted EBITDA is expected to be between $15,000,000 and $17,000,000 For the full year 2025, there is no change to our anticipated consolidated revenue of between $650,000,000 and $660,000,000 Net income available to common shareholders for the year is expected to be between $18,000,000 and $24,000,000 This guidance takes into account the loss on the preferred equity redemption and losses associated with the sale of Graduate School. We're increasing our full year 2025 adjusted EBITDA guidance to be between $81,000,000 and $88,000,000 Full year CapEx is expected to be between $18,000,000 and $22,000,000 The updated full year adjusted EBITDA and CapEx guidance translates to free cash flow expectations for the year, defined as adjusted EBITDA less CapEx, to be between $59,000,000 and 70,000,000 I will now pass it back to Angie for closing remarks, after which we will begin our question and answer session.

[Angela Selden, President, CEO & Director at American Public Education]

Thank you, Rick. Prior to concluding our prepared remarks and opening the call to questions, I do want to take a moment to thank Steve Summers, who is leaving after five years with APEI. He has been instrumental in leading corporate strategy, driving investor relations, and leading graduate school to an outcome where it can thrive strategically with its new owners. Steve has been a great partner and advocate for me and for APEI. We wish him all the best in his next endeavors.

[Angela Selden, President, CEO & Director at American Public Education]

Today, we welcome Gary Jansen to our APEI earnings team. Gary has played a critical role at APEI for over eighteen years and now leads growth and strategy for APEI. We have spent much of the past year setting expectations for our investors and other stakeholders and then delivering on those results. Rasmussen is delivering consistent positive enrollment growth and profitability. APUS continues to deliver consistent growth and a high margin of profitability.

[Angela Selden, President, CEO & Director at American Public Education]

We set expectations for redeeming our preferred equity, selling corporate buildings, simplifying our business structure, and we continue to deliver on those promises. Our enterprise is purpose built to deliver affordable and accessible educational opportunities in fields which are in high demand. We believe that this platform and the sector tailwinds set APEI up to accelerate growth and bring more educational opportunities to a greater audience across the country. We are as optimistic today as we've ever been about the long term potential of our company. And with that, I would now like to hand the call back to Greg, the operator, to begin our question and answer session. Greg?

[Operator]

Thank you, Angie. Right. Looks like our first question today comes from the line of Raj Sharma with Texas Capital. Raj, please go ahead.

[Raj Sharma, MD - Equity Research at Texas Capital]

Yes. Thank you for taking my questions and congratulations on solid ongoing execution and solid results. Really very appreciated. On the I had a question on the military business. I know that you've commented in the past that there was military had a great enrollment in best in 10 and the prospects there seem good.

[Raj Sharma, MD - Equity Research at Texas Capital]

And you seem to have raised the guidance on APUS. Is that can you is there any more color on your what you're seeing out there in terms of potential enrollments? And also any more clarity on the tuition assistance that was supposed to be from the big beautiful bill, $100,000,000 from Department of Defense. Any clarity on how that flows through the system?

[Angela Selden, President, CEO & Director at American Public Education]

Yeah. Great question, Raj. Thanks. I'm gonna hand it to Rick for him to answer. Go ahead.

[Richard Sunderland, EVP & CFO at American Public Education]

You want me to talk about the big beautiful bill? Yeah. So Raj, it's in the bill. It's in the big beautiful bill. It's also in the National Defense Authorization Act. Right? One authorizes, I believe, the other appropriates. And so the funds are there available.

[Richard Sunderland, EVP & CFO at American Public Education]

I think that, Raj, combined with the military meeting its annual recruiting goals early this year. And by the way, I don't think they've actually met their recruiting goals in recent years. So not only did they meet them, but they met them early in the year, sets us up as the largest provider of active duty military education to benefit from those those funds. One thing to understand is the $100,000,000 is authorized through September 2029. So it's a four year authorization.

[Richard Sunderland, EVP & CFO at American Public Education]

And I think we've talked about, you know, how the the funds could be spent over a number of years with the increased funding levels then benefiting all education providers with us being the largest, you know, in any individual year. So we are seeing strength in military registrations, and you can comment on that. I think it has everything to do with the reputation and the quality and the outcomes of American Military University. But having the the funding there to support additional interest in and and registrations with AMU and APU.

[Angela Selden, President, CEO & Director at American Public Education]

Yeah. I'll just click down on the question around how can we benefit from the 100,000,000. As Rick mentioned, it's spread over four years. You know, we have the estimated 30% share of all active duty who take courses from anyone. So if you take a 100,000,000, 30,000,000, if it's all spread equally across providers, it would be 30,000,000 for us over four years.

[Angela Selden, President, CEO & Director at American Public Education]

But our team on the ground has not yet been able to determine how that $100,000,000 is going to be distributed, made accessible, or in in any other way added to, you know, the the the dollars available for education providers. So right now, it's our belief that it's really about allowing more active duty to enroll because they haven't demonstrated an increase in the reimbursement rate. They haven't demonstrated an increase in the total number of classes or the total dollar reimbursement on an annual basis yet. But there is talks that those things are under consideration. But no more information has been provided, Raj, since the last call we had, earnings call we had, to provide that information. So we're all, waiting for more information.

[Richard Sunderland, EVP & CFO at American Public Education]

I I just that's right. I'd like to add one point. So there have been times, Raj, when we've been asked whether that funding is at risk. And I think we have evidence now that the funding is not only at risk, but it's gonna be elevated. Right?

[Angela Selden, President, CEO & Director at American Public Education]

Not only not at risk.

[Richard Sunderland, EVP & CFO at American Public Education]

Not only not at risk, but it's gonna be elevated, right, demonstrating directly the Department of Defense's commitment to education in the military

[Angela Selden, President, CEO & Director at American Public Education]

That's right.

[Richard Sunderland, EVP & CFO at American Public Education]

Which we said, it's an all volunteer force. They recruit on, we'll give you a skill, and we'll give you an education, and they're putting money behind the second of the two.

[Raj Sharma, MD - Equity Research at Texas Capital]

Got it. That's super helpful. Thank you. And then just lastly, I noticed that Rasmussen's margins a great performance on the enrollment increases. Rasmussen's margins were down sequentially Q2 versus Q1 on flat revenues.

[Raj Sharma, MD - Equity Research at Texas Capital]

Anything in particular going on there? And then I have a follow on question on just overall it seems like Rasmussen and Hondros are at breakeven levels. And so you should be seeing as you've talked about in the past operating leverage kicking in, in a bigger way. Is a lot of the increase in the EBITDA coming from largely or projected to be coming from that? And or is G and A also kind of coming down or changing the G and A levels? So I'm sorry, long winded. Two questions.

[Richard Sunderland, EVP & CFO at American Public Education]

Yes. Let me start with the first one and then you may have to clarify the second one. So the first one sequentially, you're correct. The margin is lower in q two. In the first quarter, they implemented a new what would you call the provider? It's not the LMS, but it's a course delivery.

[Angela Selden, President, CEO & Director at American Public Education]

Yeah. It's it's course materials for the nursing program.

[Richard Sunderland, EVP & CFO at American Public Education]

So yeah. Raj, a new vendor, a new provider of course materials for the nursing program, and the management team at RAS, thank them, negotiated what I'll describe as a discount in the first quarter the first quarter of that new vendor relationship. And so when we get to the second quarter, the costs there are fully loaded. You should consider that to be kind of the run rate cost as it relates to course materials. The other, element sequentially would be, all the schools, and ATI have their annual salary increases, merit increases beginning April 1.

[Richard Sunderland, EVP & CFO at American Public Education]

So the second quarter load has of salaries that reflects the new compensation for all employees.

[Raj Sharma, MD - Equity Research at Texas Capital]

Got it. Thank you. And then so the second part was the breakeven. I mean, you've been talking about filling in seats, the extra seats and that would drive the margins up or drive profits down to the bottom line. Is that what's happening?

[Raj Sharma, MD - Equity Research at Texas Capital]

Rasmussen is almost is that breakeven? Hondros is that breakeven? And operating leverage here kicks in, in a bigger way, improving profitability moving forward? Is that what's happening? And or also is G and A do you expect G and A levels to stay here or come down?

[Angela Selden, President, CEO & Director at American Public Education]

Yes. Well, there's no question. So can we just do quarter to quarter, 2024 to 2025, right? There's almost a $4,800,000.05000000 dollars change in EBITDA there, and the EBITDA flow through was about 75%, 76%. The same is true in Q2 where we are at minus 4.7% to the second quarter and we're positive 0.2% in the second quarter and the flow through again is above 75%.

[Angela Selden, President, CEO & Director at American Public Education]

So there's such a dramatic flow through on that next dollar of revenue now that we will see we will expect continued acceleration as the enrollments continue to grow at Rasmussen. The other part of your question is about G and A. We pay very careful attention to our non student facing investments, we do not anticipate big step fix increases in those expenditures for the remainder of 2025. The only thing that will increase will be those things that are tied to, you know, volume increases in in the students, like faculty, for example, books and materials, etcetera.

[Richard Sunderland, EVP & CFO at American Public Education]

And I I would add, Raj, you were focused on g and a. We're focused on every part of the the p and l. Right? In s and p, we're seeing continued improvement, meaning reductions in our advertising costs at rash while seeing seeing improvements in lead flow. Right?

[Richard Sunderland, EVP & CFO at American Public Education]

And and you've got the enrollment growth. So I would I would wanna call out the efficiency we we continue to experience in in marketing across the enterprise and specifically at RASK.

[Raj Sharma, MD - Equity Research at Texas Capital]

Got it. Thank super helpful. Thank you again. I'll I'll take it offline. A great, great continued execution. Congratulations.

[Angela Selden, President, CEO & Director at American Public Education]

Thank you so much, Raj. Thank you very much.

[Raj Sharma, MD - Equity Research at Texas Capital]

Yes, absolutely.

[Operator]

Thanks, Raj. And our next question comes from the line of Max Michaels with Lake Street Capital Markets. Max, please go ahead.

[Max Michaelis, Equity Research Associate at Lake Street Capital Markets]

Hey, guys. Thanks for taking my question, and congratulations on the sale of GraduateUSA as well as cleaning up the balance sheet a little bit here. A quick question on Rasmussen real quick. Now with the Department of Ed unlocking basically that 24, and you guys talked about the restriction you had on from adding new programs and locations. Do you guys have internal expectations around new program ads and campus expansions at the company?

[Angela Selden, President, CEO & Director at American Public Education]

Yeah. It's a great question. We have locked in November November 20 for an investor meeting that we're hosting in New York City, and we're really excited to share a multiyear view of our campus opening strategy, our program position strategy. So we look forward to hosting Lake Street, to share that multiyear view with you.

[Max Michaelis, Equity Research Associate at Lake Street Capital Markets]

Okay. Thank you, guys. And then just maybe a quick question around the NCLEX scores here. I know you guys don't share the data anymore, but how would you say those trended in q two?

[Angela Selden, President, CEO & Director at American Public Education]

We are we do not have all q two results in, but they're pacing as we had expected. So we don't have any concerns at this point, but we're still awaiting a few oddly, a few campus state combinations to report their results. So we're paying careful attention to that. We know they're not posted publicly yet either. So there's a slowdown in posting results. We're not sure why. And

[Max Michaelis, Equity Research Associate at Lake Street Capital Markets]

then last one for me, guys. Just with the Department of Ed releasing that letter of credit, so 24 and a half million, that 22,000,000 coming in from the sale of the administrative buildings and then the $6,000,000 in savings you guys are getting from cleaning up the preferred. Maybe how would you rank maybe investment going forward in 2025 in terms of the company?

[Richard Sunderland, EVP & CFO at American Public Education]

Yeah. That's a thank you for that question. So let me let me rank them, Angie can correct my ranking if she doesn't agree. First of all, and I've been saying this, you know, we intend to invest in our growth initiatives. So that would be health care expansion, which we've talked about, and technology, and we we introduced a change in the technology structure at API.

[Richard Sunderland, EVP & CFO at American Public Education]

We're interested in tuck in acquisitions, and I would generally characterize that as campus single or small campus type acquisitions. You all know we have to keep a minimum amount of cash for regulatory compliance, and we do pay attention to our leverage ratio. And last on my list would be stock repurchases and or dividends.

[Max Michaelis, Equity Research Associate at Lake Street Capital Markets]

What were the stock repurchases in Q2?

[Richard Sunderland, EVP & CFO at American Public Education]

We didn't do any in q two. Not in q two.

[Angela Selden, President, CEO & Director at American Public Education]

We have a we have

[Richard Sunderland, EVP & CFO at American Public Education]

an open questions. Yeah. We have an open authorization, but we have not done that. Remember, it was just just in May that the LC was released, and we're looking at our strategy. We're doing that work now, and more of that will come, in November.

[Angela Selden, President, CEO & Director at American Public Education]

The priority was was the redemption of the preferred?

[Richard Sunderland, EVP & CFO at American Public Education]

Yeah. We we we got the preferred redemption done. Awesome, guys. Thanks for taking my questions.

[Angela Selden, President, CEO & Director at American Public Education]

Thank you very much.

[Operator]

Yes. Thanks, Max. And our next question comes from the line of Stephen Sheldon with William Blair. Stephen, please go ahead.

[Matthew Filek, Senior Equity Research Associate at William Blair]

Hey, team. You have Matt Filick on for Stephen Sheldon. Great work this quarter and thank you for taking my questions. When you're able to consolidate the educational units into one platform, can you talk about some of the revenue and cost synergies that provides for the business?

[Angela Selden, President, CEO & Director at American Public Education]

You bet. And, Matt, we'll be able to give you more precise numbers and expectations on that in the November investor meeting. But, directionally, when you think about the full ladder of nursing curriculum that Raphson offers, we'll be able to transfer access to that curriculum directly to all the Hondros the eight Hondros campuses and the, excuse me, 3,700 students and 6,000 alumni that can benefit from the advancement of post licensure nursing education that's available from Rasmussen. Additionally, the combination will allow our campus based students and and their friends and family to have access to the entire course catalog from APUS and the course catalog from Rasmussen. So today, as we've spoken in the past, Hondros has two programs it offers.

[Angela Selden, President, CEO & Director at American Public Education]

APUS offers 200 programs. Rasmussen offers over 60 programs. And so from any place, a student may find an APEI school. So the marketing dollar we spend, whether they land at APUS, they land at Hondros, or they land at Raphson, they'll now have access to over 250 different choices for educational opportunities for themselves. Certainly, the prelicensure nursing is much more geographically oriented, but for those people who are interested in online education, they're gonna have a very robust portfolio of of choices.

[Matthew Filek, Senior Equity Research Associate at William Blair]

Great. That's super helpful, Angie. And then I just had a quick follow-up for Rick. You guys have done a really nice job shoring up the balance sheet. And Rick, appreciate the additional detail on the capital deployment outlook from here, but was wondering if you could maybe just remind us how much cash do you feel you need on hand to run the business?

[Matthew Filek, Senior Equity Research Associate at William Blair]

And then what does pro form a cash look like after the sale of Graduate School USA?

[Richard Sunderland, EVP & CFO at American Public Education]

The answer to the question about how much cash do you run the business depends on how we're gonna use the cash. Right? And that's all part of the multiyear planning process that we're going through. When I say how we use the cash, we wanna maintain our composite score above the 1.5, and different uses have different impacts on that composite score. But we do feel confident that the amount of cash we have now will allow for the types of activities that I spoke about a few few minutes ago. The second I'm sorry. What was the second question?

[Matthew Filek, Senior Equity Research Associate at William Blair]

Just wondering Yes. On what It's a format question.

[Richard Sunderland, EVP & CFO at American Public Education]

Thank you for the question. It's really interesting. As we said, there's a loss associated with the sale. Some of that is actually cash is a cash loss in the sense of paying some closing costs. But what we really did and we when we focus on the balance sheet is we had a present value $28,000,000 lease liability associated with the facility in Washington, DC.

[Richard Sunderland, EVP & CFO at American Public Education]

And with the sale of graduate school, that liability conveyed to the buyer. And so we when we talk about cleaning up the balance sheet, there's an element to that, which is releasing our relieving ourselves of a very large lease liability for a facility in Washington, D. C.

[Matthew Filek, Senior Equity Research Associate at William Blair]

Got it. Yep. That makes sense. Thanks for the added color there. Thank you, team. And again, nice work this quarter.

[Angela Selden, President, CEO & Director at American Public Education]

Thank you, Matt.

[Operator]

Thanks, Matt. And our next question comes from the line of Luke Horton with Northland Securities. Luke, please go ahead.

[Luke Horton, VP & Senior Research Analyst at Northland Capital Markets]

Yes. Hey, guys. Thanks for taking the questions, and congrats on the great quarter. I just wanted to clarify on the GSUSA sale. So your revenue guidance for the year was reiterated, but that's excluding, if we call it kind of 7,000,000 of revs that they've done in the the GSUSA has done in the first half of the year and annualize that.

[Luke Horton, VP & Senior Research Analyst at Northland Capital Markets]

It's really like a kind of a revenue raise guidance. Just wanted to clarify that wasn't initially part of the range.

[Angela Selden, President, CEO & Director at American Public Education]

That that's correct. We had when we gave the original guidance, we had no buyer for graduate school. So we gave a full year guidance that included a full year of revenue for graduate school. So now we are reiterating guidance, and we are eliminating the five remaining months, August through December, of revenue that we would have otherwise collected from from graduate school if we had still owned them. So you're correct about what you said.

[Luke Horton, VP & Senior Research Analyst at Northland Capital Markets]

Okay. Awesome. And then just on the the institution consolidation, just wanna check timeline still remain intact here, kind of effective or, I guess, done by three q effective by year end. And then I guess specific to that on the marketing channel, I guess, how does that kind of streamline the marketing end user or student acquisition being under one umbrella and being able to offer those courses or the broad catalog of courses to all students?

[Angela Selden, President, CEO & Director at American Public Education]

Yeah. Great question. So timeline wise, we're really happy that we've got all the approvals lined up. Right? We've got our creditor approvals.

[Angela Selden, President, CEO & Director at American Public Education]

We've got our state approvals. We have been in active dialogue with our creditor, HLC, and the Department of Education on trying to finalize the timeline. Frankly, the department is very busy right now and have fewer people to do the work than they enjoyed in the past. And so they're trying to find a timeline that works for HLC, for APEI, and for the department. So we're waiting on a confirmation of a timeline from Ed.

[Angela Selden, President, CEO & Director at American Public Education]

And then to answer your question on the what what happens in the future system, what we're excited about is that we'll have a system landing page. We'll have a place where people who might be interested in knowing more about our university system can go. We'll have places for them to explore each of the different divisions, which will be APUS Global, our military business, and our health care business. And so you're right that they'll be able to see from that single that single landing page all the different choices that they can consider. Certainly, as it relates to our campus based nursing programs, we expect that they will not be coming in at the high level APUS landing page, but instead they'll be coming in at the local market nursing brands.

[Angela Selden, President, CEO & Director at American Public Education]

So they'll come in at the RAS nursing brand or the Hondros nursing brand. We're not changing those brands because that'll be much more of a local market kind of boots on the ground marketing approach. And so we're we're going to we're going to have the opportunity to to market to students either way, either at the top of our brand tree or at the bottom where, you know, where the campuses will be visible with the name brands that they'll see in the local markets.

[Richard Sunderland, EVP & CFO at American Public Education]

Yeah. I would add marketing is already a shared service. Right? And so we do experience the efficiency of of that cost across the enterprise. But everything Angie said is correct.

[Angela Selden, President, CEO & Director at American Public Education]

But we don't really share the leads today.

[Richard Sunderland, EVP & CFO at American Public Education]

We're Yeah. That's I'm saying is the shared leads We share

[Angela Selden, President, CEO & Director at American Public Education]

yeah.

[Richard Sunderland, EVP & CFO at American Public Education]

We we we share the expertise, but we don't share the leads as you were describing.

[Angela Selden, President, CEO & Director at American Public Education]

That's right.

[Luke Horton, VP & Senior Research Analyst at Northland Capital Markets]

Okay. Got it. Got it. Yeah. That's helpful.

[Luke Horton, VP & Senior Research Analyst at Northland Capital Markets]

Definitely appreciate the contact there, and and congratulations on another great quarter.

[Angela Selden, President, CEO & Director at American Public Education]

Thank you so much. Great to hear from you.

[Operator]

Great. Thanks, Luke. And our final question today comes from the line of Jasper Bibb with Truist Securities. Jasper, please go ahead.

[Jasper Bibb, VP - Equity Research at Truist Securities]

Hey. Good afternoon, everyone. Just one for me tonight. I I joined a a little late, so apologies if this is already covered in the prepared remarks. But, if not, just hoping you could comment on the big beautiful bill.

[Jasper Bibb, VP - Equity Research at Truist Securities]

Just curious if you see any exposure to new accountability standards there across any of your portfolio schools or any other potential implications you can build to highlight for us.

[Angela Selden, President, CEO & Director at American Public Education]

Yeah. Thanks, Jasper. We, are very pleased with the the minimal impact that the big beautiful bill has on our business. The positive, if you, didn't hear our commentary on the question from Raj. There was additional funding put into TA of $100,000,000 that came through the bill that we believe will flow through and widen the TAM, make a bigger TAM for our active duty military students.

[Angela Selden, President, CEO & Director at American Public Education]

So we believe that that is a benefit to us. And the other the other components of the big beautiful bill, we don't see as having a negative impact on our students or on our business. And I'll turn it over to Rick for anything else. Yeah.

[Richard Sunderland, EVP & CFO at American Public Education]

You mentioned the accountability standards. Right? They hear the sort of the prior the legacy gainful employment metrics, which we've always done very well with. When you build universities that deliver good outcomes, high quality at a very affordable price, in very, you know, relevant, degrees, and growing, you know, industries like nursing, you're gonna do well against gainful employment. So we don't see much impact there.

[Richard Sunderland, EVP & CFO at American Public Education]

The other impacts that get get some discussion have to do with the the lifetime caps on various loan categories. And when you run universities that are very affordable, your students aren't borrowing debt at the levels where they should be significantly impacted by that. I'm sure there are probably a few, but it's really not an important element to our business. Okay, great. Well, figured that was

[Jasper Bibb, VP - Equity Research at Truist Securities]

the case. Thanks for taking the questions and looking forward to the Investor Day.

[Angela Selden, President, CEO & Director at American Public Education]

Super. Looking forward to seeing you, Jasper. Thanks for the question.

[Operator]

Yes. Thank you, Jasper. And that does conclude our question and answer session. I'd now like to turn the call back to Angie for closing remarks. Angie?

[Angela Selden, President, CEO & Director at American Public Education]

You bet. Thank you very much, Greg, and thank you to all of you who have joined the call today. We really look forward to seeing all of you in New York City on November 20 for our first Investor Day, where we're going to share with you updates on our progress, focus on our growth, but certainly a multiyear view of how we intend to grow top line and bottom line results for our business. So we hope that you'll join us for that Investor Day in New York City. And if there are questions you have that we didn't answer for you today, always feel free to reach out to the MZ Group.

[Angela Selden, President, CEO & Director at American Public Education]

Brian Prenovo is on our call here today. They're our IR firm, and they'll be more than happy to get you connected with any of us, Gary, Rick or Angie, in order to be able to be sure that we can answer your questions. So thank you so much for the time today. We look forward to speaking with you very soon.

[Operator]

Great. Thanks, Angie. And ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines at this time. Have a wonderful day.

Participants

Executives

• Angela Selden, President, CEO & Director
• Richard Sunderland, EVP & CFO

Analysts

• Brian Prenoveau, Managing Director at MZ North America
• Raj Sharma, MD - Equity Research at Texas Capital
• Max Michaelis, Equity Research Associate at Lake Street Capital Markets
• Matthew Filek, Senior Equity Research Associate at William Blair
• Luke Horton, VP & Senior Research Analyst at Northland Capital Markets
• Jasper Bibb, VP - Equity Research at Truist Securities