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American Public Education(APEI) - 2025 Q1 - Quarterly Report
APEIAmerican Public Education(APEI)2025-05-12 20:03
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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 164.6million,ariseof6.6164.6 million, a rise of 6.6% from 154.4 million in the prior year period[141]. - Net income for the same period was 8.9million,comparedto8.9 million, compared to 0.5 million in the prior year, marking an increase of 8.4million[141].−TotalrevenueforthethreemonthsendedMarch31,2025,was8.4 million[141]. - Total revenue for the three months ended March 31, 2025, was 164.6 million, an increase of 10.1million,or6.510.1 million, or 6.5%, compared to 154.4 million in the prior year[155]. - Net income increased to 8.9millionforthethreemonthsendedMarch31,2025,comparedto8.9 million for the three months ended March 31, 2025, compared to 0.5 million in the prior year, an increase of 8.4million[153].EnrollmentGrowth−APUSnetcourseregistrationsrosetoapproximately102,500,anincreaseof3,500or3.58.4 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 17.7million,up7.517.7 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 149.3millionintheprioryear[142].−Instructionalcostsandservicesexpensesincreasedby149.3 million in the prior year[142]. - Instructional costs and services expenses increased by 2.5 million, or 3.5%, to 74.9millionforthethreemonthsendedMarch31,2025,withadecreaseintheseexpensesasapercentageofrevenueto45.574.9 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 35.2million,withtheseexpensesasapercentageofrevenueincreasingto21.435.2 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 0.1million,or0.40.1 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 187.5millionasofMarch31,2025,primarilyduetothecollectionofaccountsreceivable[159].−ForthethreemonthsendedMarch31,2025,netcashprovidedbyoperatingactivitieswas187.5 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 20.7millioninthesameperiodof2024,primarilyduetoimprovedcollections[166].−Netcashusedininvestingactivitieswas20.7 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 6.2millioninthesameperiodof2024,withcapitalexpendituresof6.2 million in the same period of 2024, with capital expenditures of 3.9 million compared to 6.2millionin2024[167].−Netcashusedinfinancingactivitieswas6.2 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 5.7millionin2024,primarilyduetoreducedstockrepurchases[168].RegulatoryandComplianceIssues−NewFloridalegislationmayimposeadditionalregulatoryscrutinyonRasmussenUniversity′snursingprograms,potentiallyincreasingcompliancecosts[114].−Thecompanymustcomplywiththe90/10RuleandmaintainaccreditationtocontinueparticipatinginTitleIVfinancialaidprograms[111].−ThecompanyanticipatesthattheHLCwillvotetoremoveretentionreportingrequirementsforaffectedHCNprogramsinJuly2025[117].−ThecompanyisexploringstrategicalternativesforGraduateSchoolUSAduetouncertaintiesinfederalgovernmenttrainingpriorities[118].FinancialInstrumentsandRiskManagement−Thecompanyhasenteredintoanewinterestratecapagreementwithanotionalvalueof5.7 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 1.0millioninprofessionalfeesrelatedtotheCombinationannouncedonJanuary28,2025,withanexpectedadditional1.0 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].