CHARLES TOWN, W.Va.,
Oct. 28, 2020 /PRNewswire/ --
American Public Education, Inc. (Nasdaq: APEI) ("APEI") – parent
company of online learning provider American Public University
System ("APUS") and on-ground, pre-licensure Hondros College of Nursing ("Hondros") – announced that it has entered into a
definitive agreement to acquire Rasmussen University ("Rasmussen"),
a nursing- and health sciences-focused institution serving over
18,000 students at its 24 campuses across six states and
online.
Angela Selden, chief executive
officer of APEI, stated, "We are very enthusiastic about the
acquisition of Rasmussen, as it will add another #1 market position
-- pre-licensure nursing (ADN/RN and PN/LPN) --
to our current #1 market position with APUS in serving military and
veteran students. Collectively, Rasmussen and Hondros will be a nursing education powerhouse
serving over 10,000 students. The transaction creates scale and
diversifies APEI's revenue with a mix that will consist of
approximately one-third military and veterans, one-third nursing,
and one-third online adult learners. From cultural alignment on
affordable, inclusive, and high-quality education to strong
regulatory track records, we believe the combination will be
unparalleled in the industry. This acquisition amplifies our brand
promise to provide our students with a Higher Education Return on
Investment or 'HEROITM'."
The acquisition of Rasmussen represents a significant step in
positioning APEI that began a year ago and has included a return to
growth at APUS and a turnaround at Hondros. This transaction provides important scale
benefits and helps establish APEI as a platform for additional
transactions that can create meaningful synergy opportunities over
time.
Rasmussen is regionally accredited by the Higher Learning
Commission (HLC) and offers a full complement of degree programs in
Nursing, Health Sciences, Business, Technology, Design, Education
and Justice Studies. Rasmussen offers both traditional and
competency-based programs online and through its 24 on-ground
campuses in six states. With over 8,200 nursing students,
Rasmussen is one of the largest providers of pre-licensure nursing
programs in the United States.
Rasmussen's pre-licensure nursing programs have grown at a 16%
five-year compound annual growth rate.
"Rasmussen University has a 120-year heritage of educating adult
learners, and a comprehensive laddered nursing curriculum. Our
emphasis on affordability and student outcomes with a strong
connectedness to the employment market are attributes that strongly
align with APEI's overall mission, service to its students and its
value creation strategy," said Tom
Slagle, CEO of Rasmussen University.
Ms. Selden added, "The entire leadership team, led by
Tom Slagle for the last 10 years,
has developed Rasmussen into a dynamic and growing institution
through its student-centric approach and focus on delivering a
high-quality education that meets the needs of students and
employers. We at APEI look forward to working with Rasmussen to
further the mission of the University and deliver value for all of
its stakeholders."
"This transaction represents a unique opportunity for Rasmussen
to combine forces with a respected leader in higher education
creating a platform to meaningfully increase the number of licensed
and highly-qualified nursing professionals in our communities and
create more academic programs at scale," said Atif Gilani, founding partner of Renovus Capital
Partners, which acquired Rasmussen in 2019. "We are pleased to have
assisted in growing Rasmussen University's best-in-class nursing
and high-end healthcare programs and improving Rasmussen's
operating results." Renovus Capital Partners is a
Philadelphia-area based private
equity firm specializing in the Knowledge & Talent sectors.
Transaction Details:
- APEI will acquire 100% ownership of Rasmussen University for
$329 million, consisting of
$300 million in cash and $29 million of non-voting preferred stock, which
represents the estimated value of tax step-up benefits. APEI may
substitute cash for the preferred shares at the time of closing, at
its election.
- APEI expects to fund the transaction with a combination of cash
on hand of approximately $125
million, not including transaction costs, and up to
$175 million of fully committed debt
financing from Macquarie Capital.
- Rasmussen generated $256 million
of net revenue, $19 million of net
income and $40 million of Adjusted
EBITDA3 for its fiscal year ended September 30, 2020.
- Rasmussen is expected to generate approximately $7 million of net income and approximately
$44 million of EBITDA3 on
an Annual Pro Forma Basis in 2021. 1
- On an Annual Pro Forma Basis, the acquisition is expected to be
accretive to earnings per share for the full-year
2021.1
- APEI expects annual synergies to be approximately $5 million in the first year after closing and
more than $10 million in each of the
following two years.
- The transaction is expected to close by the middle of the third
quarter of 2021, subject to closing conditions that include review
by the Department of Education, approval by the Higher Learning
Commission and approval of or notices to other regulatory and
accrediting bodies.
- Rasmussen will continue to operate as a separately accredited
institution after closing. In addition, APEI and Rasmussen will
enter into a shared services arrangement for certain corporate,
administrative and support activities upon closing.
Macquarie Capital provided committed debt financing to APEI.
Hogan Lovells is providing legal counsel to APEI.
Lincoln International acted as exclusive advisor to Rasmussen
University.
APEI Provides Preliminary Third Quarter 2020 Results:
APEI is sharing certain preliminary results of its operations
for the three months ended September
30, 2020. Although complete details are not yet
available, APEI is able to provide the following financial
update:
- Consolidated revenue was $79.1
million, an increase of 16.6% compared to the third
quarter of 2019.
- Net course registrations by new students at APUS increased
25% and total net course registrations increased 18% as
compared to the third quarter of 2019.
- New student enrollment at Hondros
College of Nursing increased 88% and total student
enrollment increased 38% as compared to the third quarter of
2019.
- Consolidated net income was $2.6
million, or $0.18 per
share, compared to a net loss of $1.6
million in the third quarter of 2019.
Complete third quarter 2020 financial results will be announced
on Monday, November 9, 2020, as
previously disclosed.
Conference Call/Webcast:
APEI will hold a conference call to discuss this announcement on
Thursday, October 29, 2020 at
8:30 a.m. To participate in the
live conference call, use the following link to register:
http://www.directeventreg.com/registration/event/7265915. After
registering, a confirmation will be sent via email, including
dial-in details and a unique conference call access code required
for call entry.
A live webcast of the call will be open to listeners who
log in through APEI's investor relations website, www.apei.com. A
replay of the webcast will also be available starting approximately
one hour after the conclusion of the live conference call. The
replay will be available to listeners for one year.
Preliminary Financial Information
APEI reports its financial results in accordance with U.S.
generally accepted accounting principles ("GAAP"). All projected
financial data in this press release is preliminary, as the
financial period presented or the financial close procedures for
the periods presented are not yet complete. These estimates are not
a comprehensive statement of APEI's financial position and results
of operations as of and for the periods presented. Actual results
may differ materially from these estimates as a result of the
completion of normal quarter-end accounting procedures and
adjustments, including the execution of APEI's internal control
over financial reporting, the completion of the preparation and
management's review of APEI's financial statements for the relevant
periods, and the subsequent occurrence or identification of events
prior to the filing of financial results for the relevant periods
with the Securities and Exchange Commission.
Non-GAAP Financial Measure ("Adjusted EBITDA"):
This press release contains the non-GAAP financial measures of
EBITDA (earnings before interest, taxes, depreciation and
amortization) and Adjusted EBITDA (EBITDA less non-cash expenses
such as stock compensation and non-recurring expenses such as
restructuring charges and transaction costs). APEI believes that
the use of these measures is useful because it allows investors to
better evaluate APEI's cash generation capabilities.
The non-GAAP measures should not be considered in isolation or
as alternatives to measures determined in accordance with GAAP. The
principal limitation of these measures is that they exclude
expenses that are required to be recorded by GAAP. 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 Net Income to EBITDA and Adjusted EBITDA that is included in the
tables following this press release (under the caption " GAAP Net
Income to EBITDA/Adjusted EBITDA") and not to rely on any single
financial measure to evaluate its business.
About Rasmussen University
Rasmussen University is regionally accredited by the Higher
Learning Commission and is dedicated to meeting the evolving
needs of diverse communities through in-demand, flexible,
accessible and affordable educational programs. A pioneer in
career-focused education since 1900, Rasmussen leads advancements
in innovations such as employer-led and expert designed curriculum
and comprehensive student support services to help working adults
advance their educations. Additionally, Rasmussen University is a
national leader in competency-based education. Rasmussen University
offers undergraduate and graduate programs online and across its 24
Midwest and Florida campuses.
Rasmussen encourages its students, faculty and staff to strive for
academic excellence, community enrichment and service to the public
good. For more information about Rasmussen University, please visit
www.rasmussen.edu.
About American Public Education
American Public Education, Inc. (Nasdaq:
APEI) is a leading provider of higher learning dedicated to
preparing students all over the world for excellence in service,
leadership and achievement. APEI offers respected, innovative and
affordable academic programs and services to students, universities
and partner organizations through wholly owned subsidiaries:
American Public University System and National Education
Seminars Inc., which we refer to in this press release as
Hondros College of Nursing.
Together, these institutions serve more than 88,000 adult learners
worldwide and offer more than 220 degree and certificate programs
in fields ranging from homeland security, military studies,
intelligence, and criminal justice to technology, business
administration, public health, nursing and liberal arts. For
additional information, please visit www.apei.com.
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.
Forward-looking statements can be identified by words such as
"anticipate," "believe," "seek," "could," "estimate," "expect,"
"intend," "may," "plan," "should," "will" and "would." These
forward-looking statements include, without limitation, statements
regarding benefits of the acquisition of Rasmussen University, the
timing of the closing of the transaction, expected growth, expected
registration and enrollments, expected revenues, earnings and
expenses, expected financial results for Rasmussen University, the
ability to deliver a return on learners' educational investment,
and plans with respect to 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: the
satisfaction of closing conditions, including the failure or delay
in obtaining required regulatory and accreditor approvals; APEI's
ability to obtain financing to fund the transaction; the
significant transaction and integration costs APEI has incurred and
expects to incur in connection with the acquisition;
the integration of Rasmussen's business and APEI's ability to
realize the expected benefits of the acquisition; that Rasmussen
may have liabilities that are not known to APEI; other events that
could impact the transaction and its closing; APEI's dependence on
the effectiveness of its ability to attract students who persist in
its institutions' programs; impacts of the COVID-19 pandemic;
APEI's ability to effectively market its institutions' programs;
adverse effects of changes APEI makes to improve the student
experience and enhance the ability to identify and enroll students
who are likely to succeed; APEI's ability to maintain strong
relationships with the military and maintain enrollments from
military students; APEI's ability to comply with regulatory and
accrediting agency requirements and to maintain institutional
accreditation; APEI's reliance on Department of Defense tuition
assistance, Title IV programs, and other sources of financial aid;
APEI's dependence on its technology infrastructure; strong
competition in the postsecondary education market and from
non-traditional offerings; and the various risks described in the
"Risk Factors" section and elsewhere in APEI's Annual Report on
Form 10-K for the year ended December 31,
2019, Quarterly Report on Form 10-Q for the period ended
June 30, 2020, and other filings with
the SEC. You should not place undue reliance on any forward-looking
statements. APEI 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.
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1 On an
annual pro forma basis, assuming that the transaction had closed as
of January 1, 2021.
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2 IPEDS
and APEI Analysis
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3 See
GAAP Net Income to EBITDA/Adjusted EBITDA in the tables that
follow.
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Contacts
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Public Relations
Contacts:
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Investor Relations
Contact:
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Frank
Tutalo
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Christopher L.
Symanoskie, IRC
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Director, Public
Relations
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VP, Investor
Relations
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American Public
Education, Inc.
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American Public
Education, Inc.
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571.358.3042
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703.334.3880
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FTutalo@apei.com
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CSymanoskie@apei.com
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GAAP Net Income to
EBITDA/Adjusted EBITDA
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(in millions,
unaudited)
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2021
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2021 Annual Pro
Forma Basis(1)
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Pro
Forma
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Rasmussen
University
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Reconciliation
from Net Income to Adjusted EBITDA:
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Net Income
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$
7
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Income
taxes
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2
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Interest
expense
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15
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Depreciation and
amortization
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20
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EBITDA
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44
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(1) This represents
the pro forma financial results of the Rasmussen University
assuming that the transaction was completed on January 1, 2021.
There are many assumptions embedded in this calculation with
respect to the underlying financial performance, the purchase
accounting, the appropriate depreciation and amortization methods,
the effective tax rate, future interest rates, etc.
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(in millions,
unaudited)
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2021
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2021 Annual Pro
Forma Basis(1)
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Pro
Forma
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APEI Consolidated
with Rasmussen University
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Reconciliation
from Net Income to Adjusted
EBITDA (Annual Prof Forma Basis)1
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Net Income
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$
31
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Income
taxes
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12
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Income
expense
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15
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Depreciation and
amortization
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33
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EBITDA
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91
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Stock
Compensation
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9
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Adjusted
EBITDA
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$ 100
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(1) This represents
the pro forma financial results of the new entity formed by APEI's
acquisition of Rasmussen assuming that the transaction was
completed on January 1, 2021. There are many assumptions embedded
in this calculation with respect to the underlying financial
performance of the entitles, the purchase accounting, the
appropriate depreciation and amortization methods, the effective
tax rate, future interest rates, etc.
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GAAP Net Income to
EBITDA/Adjusted EBITDA
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(in millions,
unaudited)
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Rasmussen
University (1)
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For Twelve Months
Ending
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Reconciliation
from Net Income to Adjusted EBITDA:
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9/30/2017
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9/30/2018
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9/30/2019
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9/30/2020
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Net Income
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$
10
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$
18
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$
12
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$
19
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Interest
expense
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-
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-
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3
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4
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Depreciation and
amortization
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6
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6
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13
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20
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EBITDA
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16
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24
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28
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43
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Pro Forma
Adjustments
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1
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4
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-
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(3)
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Adjusted
EBITDA
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$
17
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$
28
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$
28
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$
40
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(1) The attached
table provides a reconciliation from Net income to Adjusted EBITDA
for Rasmussen University. The Pro-Forma adjustments are a
combination of non-cash expenses, transaction expenses and expenses
that will not continue after the change in ownership.
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SOURCE American Public University System