Revenue Growth at APUS, Hondros, and GSUSA;
New President and
Leadership in Place at Rasmussen
CHARLES
TOWN, W.Va., May 9, 2023
/PRNewswire/ -- American Public Education, Inc. (Nasdaq: APEI)
announced financial results for the quarter ended March 31,
2023.
First Quarter
Highlights:
- APUS, Hondros, and Graduate School
all produced year-over-year enrollment growth
- Consolidated revenue decreased 3.3% year-over-year to
$149.7 million.
- Total cash and cash equivalents was approximately $136.2 million, compared to $129.5 million as of December 31, 2022, representing an increase of
$6.7 million or 5.2%.
- Net loss available to common stockholders was $7.2 million, compared to net income of
$5.3 million in the prior year
period, which included a non-cash gain on acquisition of
$4.5 million, representing a
year-over-year decrease in earnings of $12.5
million.
- Adjusted EBITDA decreased 59.7% year-over-year to $7.0 million.
"APEI delivered first quarter adjusted EBITDA above our
expectations. APUS achieved a seven year enrollment record and
Hondros an all-time high record
enrollment. In second quarter, we expect three of our four
education units -- APUS, Hondros, and
GSUSA to continue to deliver enrollment gains," said Angela Selden, President and Chief Executive
Officer of APEI, "Additionally, we recently appointed Paula Singer as the President at Rasmussen
University to lead the efforts in reinvigorating enrollments and
improving outcomes. Her 27 years of experience in higher education
have established her as a highly regarded education and business
leader with a track record of achieving significant enrollment
growth."
Financial Results:
Three months ended March 31, 2023 compared to three
months ended March 31, 2022:
- Total consolidated revenue for 2023 decreased 3.3% to
$149.7 million, compared to total
revenue of $154.7 million in 2022.
This was primarily due to a $9.6
million, or 14.4%, decrease in revenue in our Rasmussen
University ("RU") Segment, partially offset by a $2.0 million, or 63.9%, increase in Graduate
School USA ("GSUSA") revenue
included in Corporate and Other, a $1.6
million, or 13.9%, increase in revenue in our Hondros College of Nursing ("HCN") Segment and a
$0.9 million, or 1.2% increase in
revenue in our American Public University System ("APUS") Segment.
The RU Segment revenue decrease was primarily due to an 11.7%
decrease in total student enrollment as compared to the prior year
period. The APUS Segment revenue increase was primarily due to a
2.4% increase in net course registrations as compared to the prior
year period. The HCN Segment revenue increase was primarily due to
a 36.0% increase in new student enrollment, which contributed to a
10.1% increase in total student enrollment compared to the prior
year period.
- Total costs and expenses increased 3.7% to $155.1 million in 2023, compared to $149.5 million for the same period in 2022. Costs
and expenses for the three months ended March 31, 2023 included $2.4 million in non-recurring transition services
fees in our RU Segment related to the termination of the marketing
contract with Collegis, LLC ("Collegis"), effective January 31, 2023. Increases in costs and expenses
for the three months ended March 31,
2023 as compared to the prior year period also included
increases in bad debt expense and employee compensation and
technology costs, and were partially offset by a decrease in
advertising costs.
-
- Instructional costs and services increased $2.2 million in 2023 to $73.9 million, compared to $71.7 million in 2022, primarily due to an
increase in nursing faculty compensation costs, technology costs,
and classroom costs in our HCN Segment, increases in employee
compensation and related costs, travel costs, and technology costs
in Corporate and Other, and an increase in technology costs in our
RU Segment, partially offset by decreases in employee compensation
costs in our APUS and RU Segments.
- Selling and promotional expenses increased $0.6 million in 2023 to $39.9 million, compared to $39.3 million in 2022, primarily due to
$2.4 million in transition services
fees in our RU Segment related to the termination of the Collegis
marketing contract. This increase was partially offset by decreases
in advertising costs in our APUS and HCN Segments.
- General and administrative expenses increased $3.9 million in 2023 to $33.5 million, compared to $29.6 million in 2022, primarily due to increases
in technology costs in all segments and Corporate and Other, an
increase in bad debt expense in our RU and HCN Segments, and
increases in employee compensation costs in Corporate and
Other.
- Interest expense was $1.8 million
in 2023, compared to $3.4 million in
2022. The decrease in interest expense was primarily due to the
decrease in the outstanding balance in our senior secured term loan
facility. In December 2022, we made
$65.0 million in prepayments to
reduce our outstanding debt.
- During the three-month period ended March 31, 2023, $1.5
million of dividends were declared and paid on our Series A
Senior Preferred Stock that was originally issued in December 2022.
- Net loss available to common stockholders was $7.2 million in 2023, compared to net income
available to common stockholders of $5.3
million in 2022, driven by a decrease in revenue and
increases in costs as discussed above.
- Net loss per diluted common share was $0.38 in 2023, compared to net income per diluted
common share of $0.28 in the same
period of 2022.
- Adjusted EBITDA was $7.0 million
in 2023, compared to $17.4 million in
2022, with the decrease primarily driven by the same impacts as
those impacting net loss available to common stockholders.
Balance Sheet and Liquidity:
- Total cash and cash equivalents as of March 31, 2023 was approximately $136.2 million, compared to $129.5 million as of December 31, 2022, representing an increase of
$6.7 million, or 5.2%. The increase
in cash and cash equivalents was primarily due to cash provided by
operating activities, partially offset by increases in capital
expenditures and preferred dividend payments.
- As of March 31, 2023,
approximately $19.2 million was due
from the Army, of which $10.0 million
was older than 60 days from the course start date, as compared to
$26.0 million due from the Army as of
December 31, 2022, of which
$16.5 million was older than 60 days
from the course start date.
Registrations and Enrollment:
|
2023
|
2022
|
% Change
|
American Public
University System1
|
|
|
|
For the three months
ended March 31,
Net Course Registrations
|
96,300
|
94,000
|
2 %
|
|
|
|
|
Rasmussen
University2
|
|
|
|
For the three months
ended March 31,
Total Student Enrollment
|
14,300
|
16,200
|
(12) %
|
|
|
|
|
Hondros College of
Nursing3
|
|
|
|
For the three months
ended March 31,
Total Student Enrollment
|
2,700
|
2,500
|
10 %
|
|
1APUS Net
Course Registrations represents the approximate aggregate
number of courses for which students remain enrolled after the date
by which they may drop a course without financial
penalty.
|
Excludes students in
doctoral programs.
|
2Rasmussen Student
Enrollment represents students in an active status as of
the full-term census or billing date.
|
3HCN Student Enrollment
represents the approximate number of students enrolled in a course
after the date by which students may drop a course without
financial penalty.
|
Second Quarter 2023 Outlook:
The following statements are based on APEI's current
expectations. These statements are forward-looking and actual
results may differ materially. APEI undertakes no obligation to
update publicly any forward-looking statements for any reason
unless required by law. Refer to APEI's earnings conference call
and presentation for further details.
|
Second
Quarter 2023 Guidance
|
|
(Approximate)
|
(% Yr/Yr
Change)
|
APUS Net course
registrations
|
85,300 to
88,700
|
2% to
6%
|
|
|
|
HCN Student
enrollment
|
3,000
|
22 %
|
|
|
|
RU Student
enrollment
|
13,900
|
-12 %
|
-
Nursing
|
6,400
|
-22 %
|
-
Non-Nursing
|
7,500
|
-3 %
|
|
|
|
($ in millions
except EPS)
|
|
|
APEI Consolidated
revenue
|
$145.5 to
$147.5
|
-3% to
-1%
|
APEI Net loss available
to common stockholders
|
-$6.4 to
-$5.0
|
n.m.
|
APEI Adjusted
EBITDA
|
$4.4 to $6.4
|
-70% to
-56%
|
APEI Diluted
EPS
|
-$0.36 to
-$0.28
|
n.m
|
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-recurring
expenses and non-cash expenses such as stock compensation). 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 March 31, 2023 and 2022,
Adjusted EBITDA excludes non-cash compensation expense, loss on
disposals of long-lived assets, M&A-related professional fees,
and transition services fees related to the termination of the
Collegis marketing contract.
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 is that our non-GAAP measures
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 first quarter 2023 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), through its
institutions American Public University System
(APUS), Rasmussen University, Hondros
College of Nursing, and Graduate School USA, educate the service-minded student by
providing career-focused higher education and career learning.
APUS, which operates through American Military University and
American Public University, is the leading educator to active-duty
military and veteran students* and serves approximately 89,600
adult learners worldwide via accessible and affordable higher
education. Rasmussen University is a 120-year-old nursing and
health sciences-focused institution that serves approximately
13,900 students across its 22 campuses and student service centers
in six states and online. It also has schools of Business,
Technology, Design, Early Education and Justice Studies.
Hondros College of Nursing focuses
on educating pre-licensure nursing students at its six campuses in
Ohio, one in Indiana, and one campus in suburban
Detroit, Michigan that opened in
October 2022. It is the largest
educator of PN (LPN) nurses in the state of Ohio** with approximately 3,000
students. Graduate School USA is a leading training
provider to the federal workforce with an extensive portfolio of
government agency customers. It serves the federal workforce
through customized contract training (B2G) to federal agencies and
through open enrollment (B2C) to government professionals.
Both APUS and Rasmussen are institutionally accredited by
the Higher Learning Commission (HLC), an institutional
accreditation agency recognized by the U.S. Department of
Education. Hondros is accredited by the
Accrediting Bureau of Health Education Schools (ABHES). GSUSA is
accredited by the Accrediting Council for Continuing Education
& Training (ACCET). For additional information, visit
www.apei.com.
*Based on FY 2019 Department of Defense tuition assistance
and Veterans Administration student enrollment data, as reported by
Military Times, 2020.
**Based on information compiled by the National Council of
State Boards of Nursing and Ohio
Board of Nursing.
Forward Looking Statements
Statements made in this press release regarding APEI or its
subsidiaries that are not historical facts are forward-looking
statements based on current expectations, assumptions, estimates
and projections about APEI and the industry. In some
cases, forward-looking statements can be identified by words such
as "anticipate," "believe," "seek," "could," "estimate," "expect,"
"intend," "may," "plan," "should," "will," "would," "potentially,"
and similar words or their opposites. Forward-looking statements
include, without limitation, statements regarding expectations for
growth, registration, enrollments, revenues, net income, earnings
per share, EBITDA and Adjusted EBITDA, and plans with respect to
and future impacts of 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: APEI's
dependence on the effectiveness of its ability to attract students
who persist in its institutions' programs, the inability to
effectively market the Company's programs or expand into new
markets, the loss or disruption of the Company's ability to receive
funds under tuition assistance programs or the reduction,
elimination, or suspension of tuition assistance, the inability to
maintain enrollments from military students, effects of changes the
Company makes to improve the student experience and enhance the
ability to identify and enroll students who are likely to succeed,
the inability to adjust to future market demands, continued strong
competition in the education market, failure to comply with
regulatory and accrediting agency requirements or to maintain
institutional accreditation and the impacts of any actions the
Company may take to prevent or correct such failure, the impact of
recent regulatory rulemakings, the loss of eligibility to
participate in Title IV programs or ability to process Title IV
financial aid, economic and market conditions and changes in
interest rates, difficulties involving business combinations and
acquisitions, the Company's indebtedness and preferred stock,
dependence on and the need to continue to invest in the Company's
technology infrastructure, inability to attract, retain, and
develop skilled personnel, impacts of changes in management, and
the risk factors described in the risk factor section and elsewhere
in the Company's annual report on Form 10-K and in the Company's
other SEC filings. You should not place any undue reliance on any
forward-looking statements. The Company undertakes no obligation to
update publicly any forward-looking statements for any reason,
unless required by law, even if new information becomes available
or other events occur in the future.
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
|
|
|
March
31,
|
|
|
2023
|
|
|
2022
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
149,689
|
|
|
$
|
154,747
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
73,889
|
|
|
|
71,698
|
|
Selling
and promotional
|
|
39,924
|
|
|
|
39,319
|
|
General
and administrative
|
|
33,489
|
|
|
|
29,589
|
|
Loss on
disposals of long-lived assets
|
|
1
|
|
|
|
793
|
|
Depreciation and amortization
|
|
7,756
|
|
|
|
8,148
|
|
Total
costs and expenses
|
|
155,059
|
|
|
|
149,547
|
|
(Loss) Income from
operations before
|
|
|
|
|
|
|
|
interest and
income taxes
|
|
(5,370)
|
|
|
|
5,200
|
|
Gain on
acquisition
|
|
—
|
|
|
|
4,533
|
|
Interest (expense)
income
|
|
(1,779)
|
|
|
|
(3,355)
|
|
(Loss) Income before
income taxes
|
|
(7,149)
|
|
|
|
6,378
|
|
Income tax (benefit)
expense
|
|
(1,414)
|
|
|
|
1,040
|
|
Equity investment
loss
|
|
(5)
|
|
|
|
(5)
|
|
Net (loss)
income
|
$
|
(5,740)
|
|
|
$
|
5,333
|
|
Preferred stock
dividends
|
1,457
|
|
|
-
|
|
Net (loss) income
available to common stockholders
|
$
|
(7,197)
|
|
|
$
|
5,333
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.38)
|
|
|
$
|
0.28
|
|
Diluted
|
$
|
(0.38)
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
Weighted average number
of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
18,982
|
|
|
|
18,805
|
|
Diluted
|
|
19,072
|
|
|
|
18,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Segment
Information:
|
March
31,
|
|
|
2023
|
|
|
2022
|
|
Revenues:
|
|
|
|
|
|
|
|
APUS
Segment
|
$
|
73,978
|
|
|
$
|
73,090
|
|
RU
Segment
|
$
|
57,467
|
|
|
$
|
67,099
|
|
HCN
Segment
|
$
|
13,140
|
|
|
$
|
11,541
|
|
Corporate and
other1
|
$
|
5,104
|
|
|
$
|
3,017
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest and income
taxes:
|
|
|
|
|
|
|
|
APUS
Segment
|
$
|
17,074
|
|
|
$
|
13,182
|
|
RU
Segment
|
$
|
(12,864)
|
|
|
$
|
891
|
|
HCN
Segment
|
$
|
(1,303)
|
|
|
$
|
(995)
|
|
Corporate and
other
|
$
|
(8,277)
|
|
|
$
|
(7,878)
|
|
|
|
|
|
|
|
|
|
|
1. Corporate and Other
includes tuition and contract training revenue earned by GSUSA in
2023 and in 2022 and the
elimination of intersegment revenue for courses taken by employees
of one segment at other segments.
|
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
months ended
March 31, 2023 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
(in thousands,
except per share data)
|
2023
|
|
|
2022
|
Net (loss) income
available to common stockholders
|
$
|
(7,197)
|
|
|
$
|
5,333
|
Preferred
dividends
|
|
1,457
|
|
|
|
-
|
Net (loss)
income
|
$
|
(5,740)
|
|
|
$
|
5,333
|
Income tax (benefit)
expense
|
|
(1,414)
|
|
|
|
1,040
|
Interest
expense
|
|
1,779
|
|
|
|
3,355
|
Equity investment
loss
|
|
5
|
|
|
|
5
|
Depreciation and
amortization
|
|
7,756
|
|
|
|
8,148
|
EBITDA
|
|
2,386
|
|
|
|
17,881
|
|
|
|
|
|
|
|
Gain on
acquisition
|
|
-
|
|
|
|
(4,533)
|
Stock
compensation
|
|
2,224
|
|
|
|
2,356
|
Loss on disposals of
long-lived assets
|
|
1
|
|
|
|
793
|
M&A - related
professional and integration fees
|
|
-
|
|
|
|
908
|
Transition
services
|
|
2,403
|
|
|
|
-
|
Adjusted
EBITDA
|
$
|
7,014
|
|
|
$
|
17,405
|
GAAP Outlook Net
Income to Outlook Adjusted EBITDA:
|
|
|
|
|
The following table
sets forth the reconciliation of the Company's outlook GAAP
net income to the calculation of outlook adjusted EBITDA for the
three months ending
June 30, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ending
|
|
June 30,
2023
|
(in thousands,
except per share data)
|
Low
|
|
|
High
|
Net loss available to
common stockholders
|
$
|
(6,448)
|
|
|
$
|
(5,048)
|
Preferred
dividends
|
|
1,488
|
|
|
|
1,488
|
Net loss
|
|
(4,960)
|
|
|
|
(3,560)
|
Income tax
benefit
|
|
(2,126)
|
|
|
|
(1,526)
|
Interest
expense
|
|
2,555
|
|
|
|
2,555
|
Depreciation and
amortization
|
|
7,050
|
|
|
|
7,050
|
EBITDA
|
|
2,519
|
|
|
|
4,519
|
|
|
|
|
|
|
|
Stock
Compensation
|
|
1,855
|
|
|
|
1,855
|
Adjusted
EBITDA
|
$
|
4,374
|
|
|
$
|
6,374
|
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SOURCE American Public Education, Inc.