CHARLES TOWN, W.Va.,
Nov. 9, 2020 /PRNewswire/
-- American Public Education, Inc. (Nasdaq: APEI) – parent
company of online learning provider American Public University
System (APUS) and on-ground pre-licensure Hondros College of Nursing (HCN) – announced
financial results for the third quarter ended September 30, 2020 that reflect continued
momentum in enrollment growth across both institutions.
Third Quarter Highlights:
- Net course registrations by new students at APUS increased 25%
year-over-year and total net course registrations increased 18%
year-over-year to 90,300.
- New student enrollment at HCN increased 88% year-over-year and
total student enrollment increased 38% year-over-year to
1,950.
- Consolidated revenue increased 16.6% to $79.1 million, compared to the prior year
period.
- Net income increased to $2.6
million, or $0.18 per share,
from a loss in the prior year period.
- Adjusted EBITDA increased 49% to $10.8
million, compared to the prior year period.
- On October 28, 2020, APEI
announced plans to acquire regionally accredited Rasmussen
University, the largest educator of ADN nurses. Post-acquisition,
APEI expects to have revenue of approximately $600 million on an annual pro forma
basis1 and to become #1 educator of pre-licensure nurses
(ADN/RN and PN/LPN) with over 10,000 nursing students. The pending
acquisition is expected to close by the middle of the third quarter
2021.
Angela Selden, APEI's Chief
Executive Officer said, "The continued strong enrollment growth at
both APUS and Hondros drove 11% growth
in revenue for the first three quarters of the year. Even
with increased investment in technology to improve the student
experience and additional marketing spend to support the APUS
brand, the strong enrollments at APUS combined with the turnaround
at Hondros resulted in year-over-year
margin expansion."
"Our results demonstrate that APEI's value proposition of Higher
Education Return on Investment or 'HEROI™' is resonating with
military professionals, veterans, and nurses," stated Selden. "We
are well positioned to extend that message with the forthcoming
acquisition of Rasmussen University, which shares a similar
philosophy. APEI is quickly evolving into a dynamic platform
for adult learners, particularly for those in professions with
significant job opportunities, such as nursing."
"We look forward to welcoming Rasmussen into the APEI family by
the middle of the third quarter next year. We intend to pay careful
attention to integration planning in order to unlock new revenue
and cost synergies, and accelerating shared growth initiatives. At
the same time, we remain focused on maintaining our organic
enrollment momentum and delivering on our various initiatives to
enhance our offerings and expand our operating margins," added
Selden.
1 Annual Pro forma revenue determined as if
the transaction were to close on January 1,
2021
Financial Results:
Total consolidated revenue for the third quarter of 2020
increased by 16.6% to $79.1
million, compared to total revenue of $67.9 million in the third quarter of 2019. The
increase was driven by an $8.4
million, or 13.7%, increase in APEI Segment revenue and a
$2.8 million, or 42.5%, increase in
HCN Segment revenue resulting from increases in student
enrollment.
Consolidated income from operations before interest income and
income taxes in the third quarter of 2020 increased to $3.3 million, compared to a $2.9 million loss in the prior year period. APEI
Segment income from operations before interest income and income
taxes increased to $2.8 million,
compared to $0.2 million in the prior
year period. APEI Segment income includes a $2.1 million increase in pretax advertising costs
as compared to the prior year period, as well as $1.9 million in professional fees associated with
strategic growth opportunities including the Rasmussen University
acquisition, and $1.5 million in
pretax costs related to APEI's information technology
transformation project. HCN Segment income from operations before
interest income and income taxes was $0.5
million during the three months ended September 30,
2020, compared to a loss of $3.2
million in the same period in 2019.
Operating results for the prior year period include $2.8 million in employee compensation costs for
post-employment benefits payable to the APUS President upon
retirement and a $1.5 million
non-cash impairment of goodwill.
Net income for the three months ended September 30, 2020 was $2.6 million, or
$0.18 per diluted share, compared to
net loss of $1.6 million, or
$0.10 per diluted share, in the same
period of 2019. Adjusted EBITDA for the three months ended
September 30, 2020 was $10.8 million, compared to $7.3 million in the prior year period. The
weighted average diluted shares outstanding for the third quarter
of 2020 and 2019 were approximately 15.0 million and 16.1 million,
respectively.
For the nine months ended September 30,
2020, total consolidated revenue increased by 11.3% to
$235.9 million, compared to total
revenue of $211.9 million in the
prior year period. The increase was driven by a $19.9 million, or 10.4%, increase in APEI Segment
revenue and a $4.1 million, or 19.0%,
increase in HCN Segment revenue, both resulting from increases in
student enrollment.
Consolidated income from operations before interest income and
income taxes for the nine months ended September 30, 2020 was $15.0 million, compared to $4.1 million in the prior year period. This
increase was primarily driven by a $9.8
million decrease in HCN Segment loss from operations before
interest income and income taxes. APEI Segment income from
operations before interest income and income taxes increased
$1.1 million, or 7.9%, compared to
the prior year.
Operating results for the prior year period include $2.8 million in employee compensation costs for
post-employment benefits related to the former APUS President's
retirement and a $7.3 million
non-cash impairment of goodwill.
Net income for the nine months ended September 30, 2020 was $11.8 million, or $0.78 per diluted share, compared to net income
of $4.3 million, or $0.26 per diluted share, in the prior year
period. Adjusted EBITDA for the nine months ended September 30, 2020 was $34.9 million, compared to $33.0 million in the prior year period. The
weighted average diluted shares outstanding for the nine months
ended September 30, 2020 and 2019
were approximately 15.0 million and 16.5 million, respectively.
Total cash and cash equivalents as of September 30, 2020 were approximately
$228.0 million, compared to
$202.7 million as of December 31, 2019. Capital expenditures were
approximately $4.2 million for the
nine months ended September 30, 2020
and 2019. Depreciation and amortization expense was $10.0 million for the nine months ended
September 30, 2020, compared to
$11.8 million in the prior year
period.
Registrations and Enrollment:
American Public
University System1
|
|
|
|
For the three months
ended September 30,
|
2020
|
2019
|
%
Change
|
Net Course
Registrations by New Students
|
13,500
|
10,800
|
25%
|
Net Course
Registrations
|
90,300
|
76,700
|
18%
|
|
|
|
|
For the nine months
ended September 30,
|
|
|
|
Net Course
Registrations by New Students
|
35,800
|
30,300
|
18%
|
Net Course
Registrations
|
264,700
|
236,900
|
12%
|
|
|
|
|
As of September
30,
|
|
|
|
APUS Student
Enrollment2
|
86,300
|
80,700
|
7%
|
|
|
|
|
Hondros College of
Nursing3
|
|
|
|
For the three months
ended September 30,
|
2020
|
2019
|
%
Change
|
New Student
Enrollment
|
649
|
345
|
88%
|
Total Student
Enrollment
|
1,950
|
1,410
|
38%
|
|
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.
|
2APUS
Student Enrollment represents the number of unique active
students, including those who are
currently on an approved leave of absence, who are currently in
class or have completed a course
within the past 12 months. Excludes students in doctoral
programs.
|
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.
|
Fourth Quarter 2020 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.
APEI anticipates fourth quarter 2020 consolidated revenue to
increase between 10% and 14%, compared to the prior year period.
APEI expects diluted earnings per share to be between $0.41 and $0.46 in
the fourth quarter of 2020.
American Public Education expects the following results from its
subsidiaries in the fourth quarter of 2020:
- At APUS, net course registrations by new students are expected
to increase between 11% and 15% year-over-year and net course
registrations are expected to increase between 6% and 10%
year-over-year.
- At HCN, new and total student enrollment increased
approximately 34% year-over-year for the three months ended
December 31, 2020.
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-cash expenses
such as stock compensation and non-recurring expenses). APEI
believes that the use of these measures is useful because it allows
investors to better evaluate APEI's cash generation
capabilities.
For the three and nine months ended September 30, 2019 and 2020, adjusted EBITDA
excludes non-cash compensation expense, loss on disposals of
long-lived assets, goodwill impairment, compensation expense
adjustment, and M&A-related professional fees.
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 adjusted EBITDA is that it excludes 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 caption "GAAP Net Income to Adjusted EBITDA")
and not to rely on any single financial measure to evaluate its
business.
Webcast:
A live webcast of the APEI's third quarter 2020 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 conference
call. The replay will be archived and available to listeners for
one year.
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 September
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.
Contacts:
Richard W. Sunderland, Jr.,
CPA
Executive Vice President and Chief Financial Officer
304.885.5371
Christopher L. Symanoskie,
IRC
Vice President, Investor Relations
703.334.3880
American Public
Education, Inc.
|
Consolidated
Statement of Income
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2020
|
|
|
2019
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
79,133
|
|
|
$
|
67,888
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
31,084
|
|
|
|
27,268
|
|
Selling
and promotional
|
|
18,523
|
|
|
|
15,873
|
|
General
and administrative
|
|
22,574
|
|
|
|
22,021
|
|
Loss on
disposals of long-lived assets
|
|
418
|
|
|
|
394
|
|
Impairment of goodwill
|
|
—
|
|
|
|
1,481
|
|
Depreciation and amortization
|
|
3,226
|
|
|
|
3,764
|
|
Total costs and
expenses
|
|
75,825
|
|
|
|
70,801
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes
|
|
3,308
|
|
|
|
(2,913)
|
|
Interest
income, net
|
|
121
|
|
|
|
1,019
|
|
Income (loss)
before income taxes
|
|
3,429
|
|
|
|
(1,894)
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit)
|
|
785
|
|
|
|
(239)
|
|
Equity
investment (loss) income
|
|
(2)
|
|
|
|
17
|
|
Net income
(loss)
|
$
|
2,642
|
|
|
$
|
(1,638)
|
|
|
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
|
|
Basic
|
$
|
0.18
|
|
|
$
|
(0.10)
|
|
Diluted
|
$
|
0.18
|
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
14,797
|
|
|
|
15,967
|
|
Diluted
|
|
15,011
|
|
|
|
16,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Segment
Information:
|
September
30,
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
69,610
|
|
|
$
|
61,217
|
|
Hondros
College of Nursing
|
$
|
9,541
|
|
|
$
|
6,696
|
|
Intersegment
Elimination1
|
$
|
(18)
|
|
|
$
|
(25)
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
2,840
|
|
|
$
|
247
|
|
Hondros
College of Nursing
|
$
|
466
|
|
|
$
|
(3,158)
|
|
Intersegment
Elimination1
|
$
|
2
|
|
|
$
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2020
|
|
|
2019
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
235,876
|
|
|
$
|
211,889
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Instructional costs and services
|
|
91,058
|
|
|
|
83,908
|
|
Selling
and promotional
|
|
53,765
|
|
|
|
45,007
|
|
General
and administrative
|
|
65,314
|
|
|
|
59,209
|
|
Loss on
disposals of long-lived assets
|
|
742
|
|
|
|
524
|
|
Impairment of Goodwill
|
|
—
|
|
|
|
7,336
|
|
Depreciation and amortization
|
|
9,955
|
|
|
|
11,758
|
|
Total costs and
expenses
|
|
220,834
|
|
|
|
207,742
|
|
|
|
|
|
|
|
|
|
Income from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes
|
|
15,042
|
|
|
|
4,147
|
|
Interest
income, net
|
|
1,002
|
|
|
|
3,207
|
|
Income before
income taxes
|
|
16,044
|
|
|
|
7,354
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
4,291
|
|
|
|
1,596
|
|
Equity
investment (loss)
|
|
(2)
|
|
|
|
(1,464)
|
|
Net
income
|
$
|
11,751
|
|
|
$
|
4,294
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
Basic
|
$
|
0.79
|
|
|
$
|
0.26
|
|
Diluted
|
$
|
0.78
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
Weighted average
number of
|
|
|
|
|
|
|
|
common
shares:
|
|
|
|
|
|
|
|
Basic
|
|
14,870
|
|
|
|
16,335
|
|
Diluted
|
|
15,021
|
|
|
|
16,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
Segment
Information:
|
September
30,
|
|
|
2020
|
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
210,251
|
|
|
$
|
190,386
|
|
Hondros
College of Nursing
|
$
|
25,682
|
|
|
$
|
21,584
|
|
Intersegment
Elimination1
|
$
|
(57)
|
|
|
$
|
(81)
|
|
Income (loss) from
operations before
|
|
|
|
|
|
|
|
interest income and
income taxes:
|
|
|
|
|
|
|
|
American
Public Education, Inc.
|
$
|
15,495
|
|
|
$
|
14,358
|
|
Hondros
College of Nursing
|
$
|
(455)
|
|
|
$
|
(10,214)
|
|
Intersegment
Elimination1
|
$
|
2
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
1. The APEI Segment
charges the HCN Segment for the value of courses taken by HCN
Segment employees
at APUS. The intersegment elimination represents the elimination of
this intersegment revenue in consolidation.
|
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 and nine months ended September
30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
(in thousands,
except per share data)
|
2020
|
|
|
2019
|
|
2020
|
|
|
2019
|
Net income
(loss)
|
$
|
2,642
|
|
|
$
|
(1,638)
|
|
$
|
11,751
|
|
|
$
|
4,294
|
Income tax
(benefit)
|
|
785
|
|
|
|
(239)
|
|
|
4,291
|
|
|
|
1,596
|
Interest
income
|
|
(121)
|
|
|
|
(1,019)
|
|
|
(1,002)
|
|
|
|
(3,207)
|
Equity investment
loss (income)
|
|
2
|
|
|
|
(17)
|
|
|
2
|
|
|
|
1,464
|
Depreciation and
amortization
|
|
3,226
|
|
|
|
3,764
|
|
|
9,955
|
|
|
|
11,758
|
EBITDA
|
|
6,534
|
|
|
|
851
|
|
|
24,997
|
|
|
|
15,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Compensation
|
|
1,942
|
|
|
|
1,712
|
|
|
5,265
|
|
|
|
5,031
|
Loss on disposals of
long-lived assets
|
|
418
|
|
|
|
394
|
|
|
742
|
|
|
|
524
|
Goodwill
impairment
|
|
-
|
|
|
|
1,481
|
|
|
-
|
|
|
|
7,336
|
Compensation expense
adjustment
|
|
-
|
|
|
|
2,814
|
|
|
-
|
|
|
|
2,814
|
M&A- related
professional fees
|
|
1,937
|
|
|
|
6
|
|
|
3,889
|
|
|
|
1,356
|
Adjusted
EBITDA
|
$
|
10,831
|
|
|
$
|
7,258
|
|
$
|
34,893
|
|
|
$
|
32,966
|
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SOURCE American Public Education, Inc.