American Public Education, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Third Quarter Performance: Exceeded guidance ranges for all metrics including revenue, net income, EPS, and adjusted EBITDA due to registration and enrollment momentum. APUS net course registrations increased 8% year over year, Rasmussen enrollments increased 10% versus 3Q 2024, and Hondros College of Nursing enrollments increased 18%.
• Sale of Graduate School USA: Completed the sale of Graduate School USA on 07/25/2025 as it was not a strategic fit, allowing focus on core degree-granting businesses.
• Institution Combination: Received HLC approval and submitted a new combination request to the Department of Education after a change in process. The new application will be reviewed at HLC's board meeting in February 2026 with expected completion in early 2026 for the 2026 student financial aid award year.
• Balance Sheet Strengthening: Simplification actions strengthened the balance sheet, including removal of restrictions on a letter of credit, redemption of preferred equity saving $6,000,000 annually, and sale of graduate school eliminating a $28,000,000 lease liability

Segment Performance

• APUS: Third quarter revenue was $83,100,000, an 8% increase from the prior year period. Third quarter EBITDA was $26,200,000, a 19% increase over the prior year period.
• Rasmussen: Third quarter revenue was $60,800,000, an increase of 16% compared to the third quarter of last year. Total Rasmussen student enrollment reached 14,900 students, and EBITDA was $825,000, a significant improvement from the prior year period loss of $4,500,000.
• Hondros College of Nursing: Third quarter revenue was up 19% to $18,400,000 due to continued enrollment growth. Total enrollment increased 18% to approximately 3,700 students, but third quarter EBITDA was a loss of $336,000 compared to a loss of $259,000 in the prior year period

Guidance

• Full-year 2025 consolidated revenue revised to a range of $640,000,000 to $644,000,000 due to government shutdown impact. Excluding Graduate School USA, revenue would have been 5% higher or aggregate growth of 12%.
• Fourth quarter 2025 consolidated revenue expected to be between $150,000,000 and $153,500,000. Net income available to common stockholders expected to be between a profit of $5,900,000 and $8,300,000 or between $0.32 and $0.45 per diluted share. Adjusted EBITDA expected to be between $18,500,000 and $22,000,000.
• Full-year 2025 net income available to common shareholders expected to be between $17,200,000 and $19,600,000. Adjusted EBITDA guidance between $75,000,000 and $79,000,000. CapEx expected to be between $15,000,000 and $17,000,000. Free cash flow expected to be between $58,000,000 and $64,000,000

Risks

• Potential impacts from government shutdowns or changing federal or state government policies, practices, and laws, including impacts on revenues or the timing of receivables

Question and Answer Q: First off, nice results on the quarter, guys. Congrats to you, Ed, on the new role, and good luck to Rick going forward. I guess just on the tuition assistance disruption at APUS.

A: Even though the CR has not yet been approved, the three largest branches are using the $100,000,000 of tuition assistance funds to allow service members to register. We have electronic marketing campaigns to students dropped for nonpayment and expect those folks to continue their education as seen in past similar situations Q: Just on the plan to integrate the three institutions. It sounds like maybe there's been a minor speed bump there. Can you just maybe explain whether the new process does it change at all kind of how you're thinking about the ultimate benefits of integrating the three institutions either from sort of an expense or revenue synergy standpoint?

A: We remain committed to the combination. It's a procedural matter with a different form needed. We submitted a new application to HLC and are still on track for implementation in early 2026 for the 2026 financial aid award year with no change in our conviction on the benefits of integration Q: Hey. Good afternoon, everyone. Just on the filling the back row strategy, I'm not sure if maybe utilization is the perfect measure here, but is there any way for you to frame for us how much more room you have to drive enrollment into those existing programs and campuses at Rasmussen?

A: We'll share more detail on capacity opportunities in upcoming Investor Day, clustering campuses into segments with significant opportunity in single market campuses Q: Hi. Good afternoon. So thank you for taking my questions. Again, solid performance and resilience in the face of tough testing conditions. Had a question on the it was great that the $100,000,000 tuition assistance fund was you're able to use that. Any delays in payments from this to you?

A: It is impacted by staffing at branches not processing invoices, but we have a cash reserve to weather the short-term shutdown Q: Hi, guys. Thanks for taking my questions. Appreciate all the color you've given so far. Just one for me. Curious if you could dig in, to kind of where we should expect to see some of these cost-saving initiatives implemented in the fourth quarter. Obviously, looks like you pushed out some CapEx spend, maybe to 2026 or beyond that guidance came down a little bit. But in terms of the OpEx, just curious, I mean, are we going to see kind of a little bit more initiative on like the selling and promotion, you know, marketing expenses? Or where should we see, you know, kind of a relative uptick as a percentage of revenue in some of these areas that maybe you were not able to implement cost-saving initiatives?

A: There will be some savings in S and P, with temporary and sometimes more permanent staff reductions in non-student facing functions and variable comp tied to performance also being a lever Q: Hi, guys. Thanks for taking my call and quick welcome to Ed. Look forward to working with you and a so long to Rick. I've enjoyed working with you. Just a few follow-ups. First question, on the fourth quarter guidance, just overall revenue and then APUS registrations, what are the assumptions at the low end and the high end? And related question, just to be clear, in October, even though you had to stop out some students, you still kept 1,700 students under TA. Then students that had been previously approved. And then in November, you said you're able to bring in $5,000 under the $100,000,000 OBBB?

A: Modeling on the low end assumes similar performance to November where about 30% of prior year's registrations made it through on TA, with high end assuming improvement upon normal pacing once CR or OBB funding continues Q: Yeah. Hey, guys. Congrats on the nice quarter. I know we've kind of answered most of the questions here, but just wanted to kind of touch back on the strong enrollment trends at Rasmussen, specifically on-ground. Are you seeing a change in student demographic at all? With the students that you're gaining here? And is this simply just a function of more efficient marketing and macro demand, or is there just anything else you could provide there would be great.

A: We are expanding marketing reach to enroll BSN students in addition to ADN students, seeing acceleration in BSN students which have longer revenue tail and stronger NCLEX results Q: Hey, guys. Congrats on the nice quarter. I know we've kind of answered most of the questions here, but just wanted to kind of touch back on the strong enrollment trends at Rasmussen, specifically on-ground. Are you seeing a change in student demographic at all? With the students that you're gaining here? And is this simply just a function of more efficient marketing and macro demand, or is there just anything else you could provide there would be great.

A: It's broad-based enrollment growth across various campuses and regions, with particular strength in certain areas like Minnesota where BSN enrollment has been a lift