What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 223 added, 129 removed, 525 unchanged (40% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

ASSETS (Unaudited)

37 unchanged sentences

Accumulated other comprehensive income 2,880 3,102

Retained earnings 6,323 13,891

(Accumulated deficit) retained earnings ( 54,011 ) 13,891

Total stockholders’ equity 284,880 349,727

4 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Revenue $ 147,214 $ 149,608 $ 296,903 $ 304,355

3 unchanged sentences

General and administrative 32,533 29,923 66,022 59,512

Impairment of goodwill and intangible assets (Note 6) 64,000 144,900 64,000 144,900

Loss on disposals of long-lived assets 32 ( 9 ) 33 784

1 unchanged sentence

Total costs and expenses 212,482 290,868 367,541 440,415

(Loss) income from operations before interest and income taxes ( 5,370 ) 5,200

Loss from operations before interest and income taxes ( 65,268 ) ( 141,260 ) ( 70,638 ) ( 136,060 )

Gain on acquisition (Note 3) — ( 705 ) — 3,828

Interest expense ( 1,097 ) ( 3,390 ) ( 2,876 ) ( 6,745 )

(Loss) income before income taxes ( 7,149 ) 6,378

Income tax (benefit) expense ( 1,414 ) 1,040

Loss before income taxes ( 66,365 ) ( 145,355 ) ( 73,514 ) ( 138,977 )

Income tax benefit ( 15,137 ) ( 35,332 ) ( 16,551 ) ( 34,292 )

Equity investment loss ( 4 ) ( 6 ) ( 9 ) ( 11 )

Net (loss) income $ ( 5,740 ) $ 5,333

Net loss $ ( 51,232 ) $ ( 110,029 ) $ ( 56,972 ) $ ( 104,696 )

Preferred stock dividends 1,487 — 2,944 —

Net (loss) income available to common stockholders $ ( 7,197 ) $ 5,333

Earnings per common share:

Net loss available to common stockholders $ ( 52,719 ) $ ( 110,029 ) $ ( 59,916 ) $ ( 104,696 )

Loss per common share:

Basic $ ( 2.94 ) $ ( 5.83 ) $ ( 3.25 ) $ ( 5.56 )

7 unchanged sentences

(In thousands)

Three Months Ended March 31,

Net (loss) income $ ( 5,740 ) $ 5,333

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Net loss $ ( 51,232 ) $ ( 110,029 ) $ ( 56,972 ) $ ( 104,696 )

Other comprehensive (loss) income, net of tax:

Unrealized (loss) gain on hedging derivatives ( 28 ) 1,761

Unrealized gain on hedging derivatives 1,037 822 1,009 2,439

Tax effect ( 256 ) ( 204 ) ( 250 ) ( 605 )

Unrealized gains (losses) on hedging derivatives, net of taxes ( 22 ) 1,324

Reclassification of (gains) losses to net income ( 602 ) —

Unrealized gain on hedging derivatives, net of taxes 781 618 759 1,834

Reclassification of gains to net income ( 702 ) — ( 1,304 ) —

Tax effect 174 — 323 —

Reclassifications of (gains) losses to net income, net of taxes ( 453 ) —

Total other comprehensive (loss) income ( 475 ) 1,324

Comprehensive (loss) income $ ( 6,215 ) $ 6,657

Reclassifications of gains to net income, net of taxes ( 528 ) — ( 981 ) —

Total other comprehensive income (loss) 253 618 ( 222 ) 1,834

Comprehensive loss $ ( 50,979 ) $ ( 109,411 ) $ ( 57,194 ) $ ( 102,862 )

The accompanying notes are an integral part of these Consolidated Financial Statements.

2 unchanged sentences

(In thousands, except share amounts)

Additional Paid-in Capital Accumulated Other Comprehensive Income (loss) Retained Earnings Total Stockholders’ Equity

Additional Paid-in Capital Accumulated Other Comprehensive Income (loss) Retained Earnings (Accumulated Deficit) Total Stockholders’ Equity

Preferred Stock Common Stock

1 unchanged sentence

Balance as of December 31, 2022 400 $ 39,691 18,892,791 $ 189 $ 292,854 $ 3,102 $ 13,891 $ 349,727

Preferred Stock dividends — — — — — — ( 1,457 ) ( 1,457 )

Issuance of common stock under employee benefit plans — — 245,638 3 ( 3 ) — — —

1 unchanged sentence

Stock-based compensation — — — — 2,224 — — 2,224

Other comprehensive gain — — — — — 1,324 — 1,324

Net income — — — — — — 5,333 5,333

Repurchased and retired shares of common stock — — ( 75,000 ) ( 1 ) 1 — ( 371 ) ( 371 )

Other comprehensive loss — — — — — ( 475 ) — ( 475 )

Net loss — — — — — — ( 5,740 ) ( 5,740 )

Balance as of March 31, 2023 400 39,691 18,978,406 $ 190 $ 294,082 $ 2,627 $ 6,323 $ 342,913

Preferred Stock dividends — — — — — — ( 1,487 ) ( 1,487 )

Issuance of common stock under employee benefit plans — — 53,756 1 ( 1 ) — — —

Deemed repurchased shares of common and restricted stock for tax withholding — — ( 1,416 ) ( 7 ) — — ( 7 )

Stock-based compensation — — 2,068 — 2,068

Repurchased and retired shares of common stock — — ( 1,260,357 ) ( 13 ) — — ( 7,615 ) ( 7,628 )

Other comprehensive loss — — — 253 253

Net loss — — — — ( 51,232 ) ( 51,232 )

Balance as of June 30, 2023 400 $ 39,691 17,770,389 $ 178 $ 296,142 $ 2,880 $ ( 54,011 ) $ 284,880

The accompanying notes are an integral part of these Consolidated Financial Statements.

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands, except share amounts)

Additional Paid-in Capital Accumulated Other Comprehensive Income (loss) Retained Earnings Total Stockholders’ Equity

2 unchanged sentences

Balance as of December 31, 2021 — $ — 18,709,171 $ 187 $ 286,385 $ 108 $ 128,932 $ 415,612

Preferred Stock dividends — — — — — — ( 1,457 ) ( 1,457 )

Issuance of common stock under employee benefit plans — — 218,512 3 ( 3 ) — — —

2 unchanged sentences

Repurchased and retired shares of common stock — — — — — — — —

Other comprehensive loss — — — — — ( 475 ) — ( 475 )

Net loss — — — — — — ( 5,740 ) ( 5,740 )

Other comprehensive gain — — — — — 1,324 — 1,324

Net income — — — — — — 5,333 5,333

Balance as of March 31, 2022 — — 18,856,352 $ 189 $ 287,295 $ 1,432 $ 134,265 $ 423,181

Issuance of common stock under employee benefit plans — — 22,185 — — — — —

Deemed repurchased shares of common and restricted stock for tax withholding — — ( 782 ) — ( 10 ) — — ( 10 )

Stock-based compensation — — — — 2,350 — — 2,350

Repurchased and retired shares of common stock — — — — — — — —

Other comprehensive gain — — — — — 510 — 510

Net loss — — — — — — ( 110,029 ) ( 110,029 )

Balance as of June 30, 2022 — — 18,877,755 $ 189 $ 289,635 $ 1,942 $ 24,236 $ 316,002

The accompanying notes are an integral part of these Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

Net (loss) income $ ( 5,740 ) $ 5,333

Net loss $ ( 56,972 ) $ ( 104,696 )

Adjustments to reconcile net income to net cash provided by operating activities:

5 unchanged sentences

Loss on disposals of long-lived assets 33 784

Impairment of goodwill and intangible assets 64,000 144,900

Gain on acquisition — ( 3,828 )

31 unchanged sentences

American Public Education, Inc., or APEI, which together with its subsidiaries is referred to herein as the “Company,” is a provider of online and campus-based postsecondary education, and career learning through Graduate School USA, to students through the following subsidiary institutions:

• American Public University System, Inc., or APUS, provides online postsecondary education directed primarily at the needs of the military, military-affiliated, public service and service-minded communities through American Military University, or AMU, and American Public University, or APU.

American Military University, or AMU, and American Public University, or APU.

APUS is institutionally accredited by the Higher Learning Commission, or HLC.

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Under ASC 805, the assets and liabilities of an acquired company are reported at business fair value along with the fair value of acquired intangible assets at the date of acquisition.

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed, and the fair value assigned to identifiable intangible assets.

Principles of Consolidation

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Operating results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

This Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, or the Annual Report.

This Quarterly Report on Form 10-Q, or this Quarterly Report, should be read in conjunction with the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, or the Annual Report.

Use of Estimates

11 unchanged sentences

Restricted cash also includes amounts to secure letters of credit, including $ 24.2 million in a restricted certificate of deposit account to secure a letter of credit for the benefit of ED on behalf of RU in connection with RU’s 2020 composite score, which is used by ED for determining compliance with financial responsibility standards, being below the minimum required, and a $ 0.7 million restricted certificate of deposit to secure a letter of credit in lieu of a security deposit for a RU leased campus.

Restricted cash on the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, excluding the restricted certificates of deposit, was $ 2.2 million and $ 2.0 million, respectively.

Total restricted cash as of March 31, 2023 and December 31, 2022 was $ 27.2 million and $ 26.9 million, respectively.

Restricted cash on the Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, excluding the restricted certificates of deposit, was $ 1.6 million and $ 2.0 million, respectively.

Total restricted cash as of June 30, 2023 and December 31, 2022 was $ 26.6 million and $ 26.9 million, respectively.

Cash and cash equivalents and restricted cash as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

As of June 30, 2023 As of December 31, 2022

Cash, cash equivalents, and restricted cash $ 139,403 $ 129,458

restricted cash ( 26,599 ) ( 26,939 )

Total unrestricted cash $ 112,804 $ 102,519

Goodwill and Intangible Assets

1 unchanged sentence

Goodwill is not amortized.

The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles Goodwill and Other, and Accounting Standards Update, or ASU

2017-04, Intangibles - Goodwill and Other (Topic 350):

The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles Goodwill and Other, and Accounting Standards Update, or ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment .

The Company’s goodwill and intangible assets are deductible for tax purposes.

The Company annually assesses goodwill for impairment, or more frequently if events and circumstances indicate that goodwill might be impaired.

The Company annually assesses goodwill for impairment in the fourth quarter, or more frequently if events and circumstances indicate that goodwill might be impaired.

Impairment testing consists of an optional qualitative assessment as well as a quantitative test.

3 unchanged sentences

Finite-lived intangible assets acquired in business combinations are recorded at fair value on their acquisition date and are amortized on a straight-line basis over the estimated useful life of the asset.

The Company reviews its indefinite-lived intangible assets for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company reviews its intangible assets for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets.

For additional details regarding goodwill and indefinite-lived intangible assets, please refer to “Note 6.

For additional details regarding goodwill and intangible assets, please refer to “Note 6.

Goodwill and Intangible Assets” in these Consolidated Financial Statements.

3 unchanged sentences

Stock-based payments may include incentive stock options or non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance shares, performance units, cash-based awards, other stock-based awards, including unrestricted shares, or any combination of the foregoing.

Stock-based compensation cost is recognized as expense generally over a three-year vesting period using the straight-line method for employees and the graded-vesting method for members of the Company’s Board of Directors.

Stock-based compensation cost is recognized as an expense generally over a three-year vesting period using the straight-line method for employees and the graded-vesting method for members of the Company’s Board of Directors.

It is measured using the Company’s closing stock price on the date of the grant.

9 unchanged sentences

Estimates of fair value are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made under ASC 718.

Stock-based compensation expense for the three months ended March 31, 2023 and 2022 was as follows (in thousands):

Three Months Ended March 31,

Stock-based compensation expense for the three and six months ended June 30, 2023 and 2022 was as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Instructional costs and services $ 258 $ 408 $ 537 $ 867

11 unchanged sentences

Amounts accrued are subject to change in future interim periods if actual future financial results or operational performance are better or worse than expected.

The Company recognized an aggregate expense associated with the Company’s current year annual incentive-based compensation plans of approximately $ 2.0 million during the three months ended March 31, 2023, compared to an aggregate expense of approximately $ 1.8 million during the three months ended March 31, 2022.

The Company determines its interim tax provision by applying the estimated income tax rate expected for the full calendar year to income before income taxes for the period adjusted for discrete items.

The Company recognized an aggregate expense associated with the Company’s current year annual incentive-based compensation plans of approximately $ 1.8 million and $ 3.8 million during the three and six months ended June 30, 2023, compared to an aggregate expense of approximately $ 0.6 million and $ 2.4 million during the three and six months ended June 30, 2022.

The Company has historically calculated the provision for income taxes during the interim reporting periods by applying an estimate of the annual effective tax rate for the full calendar year to income before income taxes for the period, adjusted for discrete items.

For the three and six months ended June 30, 2023, the Company has elected to utilize the actual effective tax rate as allowed by FASB ASC 740, Accounting for Income Taxes.

The Company calculated the interim tax provision for the three and six months ended June 30, 2023 as if it was the annual period and determined the income tax expense or benefit on that basis.

The Company believes that the actual effective tax rate for the three and six months ended June 30, 2023 is a better estimate than the annual effective tax rate, as the annual effective tax rate method was highly sensitive to insignificant changes to estimated annual tax expense.

Recent Accounting Pronouncements

3 unchanged sentences

Acquisition of Graduate School USA

On January 1, 2022, or the GSUSA Closing Date, the Company completed the GSUSA Acquisition pursuant to an Asset Purchase Agreement dated August 10, 2021 by and between American Public Training LLC, and Graduate School USA, or the Seller, for an aggregate purchase price of $ 1.0 million, subject to working capital adjustments.

At closing, the Company received approximately $ 1.9 million from the Seller, which represents the estimated net working capital at closing net of the initial cash payment to the Seller of $ 0.5 million, which is the purchase price less $ 0.5 million retained by the Company to secure the indemnification obligations of the Seller.

On January 1, 2022, or the GSUSA Closing Date, the Company completed the acquisition of GSUSA, or the GSUSA Acquisition, pursuant to an Asset Purchase Agreement dated August 10, 2021 by and between American Public Training LLC, and Graduate School USA, or the Seller, for an aggregate purchase price of $ 1.0 million, subject to working capital adjustments.

At closing, the Company received approximately $ 1.9 million from the Seller, which represented the estimated net working capital at closing net of an initial cash payment to the Seller of $ 0.5 million, which was the purchase price less

$ 0.5 million retained by the Company to secure the indemnification obligations of the Seller.

The purchase price reflects the $ 0.5 million due to the Seller post-closing, and additional adjustments to the estimated net working capital at closing.

The Company applied the acquisition method of accounting to the GSUSA Acquisition, whereby the assets acquired and liabilities assumed were recognized at fair value on the GSUSA Closing Date.

There was no goodwill recorded as a result of the GSUSA Acquisition, but an approximate $ 4.5 million noncash, non-taxable gain on the acquisition was recorded and is included as a separate line item on the Consolidated Statements of Income for the three months ended March 31, 2022.

There was no goodwill recorded as a result of the GSUSA Acquisition, but an approximate $ 4.5 million non-cash, non-taxable gain on the acquisition was recorded and is included as a separate line item on the Consolidated Statements of Income .

The preliminary opening balance sheet was subject to adjustment based on a final assessment of the fair value of certain acquired assets and liabilities assumed.

The Company had up to one year from the GSUSA Closing Date, or the measurement period, to complete the allocation of the purchase price.

The Company completed its assessment of the fair values of certain acquired assets and liabilities assumed during the measurement period, and, as a result, during the second quarter of 2022, the Company recorded a $ 0.7 million decrease in the gain on acquisition for a net gain of $ 3.8 million in connection with the GSUSA Acquisition based on the final working capital adjustment.

The following table summarizes the components of the estimated consideration along with the purchase price allocation (in thousands):

34 unchanged sentences

The table also includes a reconciliation of the disaggregated revenue with the reportable segments (in thousands):

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

APUS RU HCN Corporate and Other Consolidated

4 unchanged sentences

Total Revenue $ 73,557 $ 51,971 $ 14,266 $ 7,420 $ 147,214

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

APUS RU HCN Corporate and Other Consolidated

4 unchanged sentences

Total Revenue $ 69,904 $ 63,891 $ 11,486 $ 4,327 $ 149,608

Six Months Ended June 30, 2023

APUS RU HCN Corporate and Other Consolidated

Instructional services, net of grants and scholarships $ 146,345 $ 91,709 $ 23,097 $ 12,524 $ 273,675

Graduation fees 757 — — — 757

Textbook and other course materials — 16,597 3,998 — 20,595

Other fees 433 1,132 311 — 1,876

Total Revenue $ 147,535 $ 109,438 $ 27,406 $ 12,524 $ 296,903

Six Months Ended June 30, 2022

APUS RU HCN Corporate and Other Consolidated

Instructional services, net of grants and scholarships $ 141,921 $ 109,240 $ 19,463 $ 7,344 $ 277,968

Graduation fees 715 — — — 715

Textbook and other course materials — 20,092 3,286 — 23,378

Other fees 358 1,658 278 — 2,294

Total Revenue $ 142,994 $ 130,990 $ 23,027 $ 7,344 $ 304,355

Corporate and Other includes tuition and contract training revenue earned by GSUSA and the elimination of intersegment revenue for courses taken by employees of one segment at other segments.

Contract Balances and Performance Obligations

The Company had no contract assets or deferred contract costs as of March 31, 2023 and December 31, 2022.

The Company had no contract assets or deferred contract costs as of June 30, 2023 and December 31, 2022.

The Company recognizes a contract liability, or deferred revenue, when a student begins a course, in the case of APUS and GSUSA, or starts a term, in the case of RU and HCN.

Deferred revenue at March 31, 2023 was $ 28.9 million and included $ 17.1 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 11.8 million in consideration received in advance for future courses or terms, or student deposits.

Deferred revenue at June 30, 2023 was $ 28.6 million and included $ 12.2 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 16.4 million in consideration received in advance for future courses or terms, or student deposits.

Deferred revenue at December 31, 2022 was $ 23.8 million and included $ 13.0 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 10.8 million in student deposits.

16 unchanged sentences

• the lease transfers ownership of the asset at the end of the lease;

• the lease grants an option to purchase the asset which the lessee is expected to exercise;

• the lease grants an option to purchase the asset that the lessee is expected to exercise;

• the lease term reflects a major part of the asset’s economic life;

7 unchanged sentences

The RU Segment leases administrative office space in suburban Chicago, Illinois, and Minneapolis, Minnesota, and leases 22 campuses located in six states under operating leases that expire through October 2033.

The HCN Segment leases administrative office space in suburban Columbus, Ohio, and leases eight campuses located in three states under operating leases that expire through June 2032.

The HCN Segment leases administrative office space in suburban Columbus, Ohio, and leases eight campuses located in three states under operating leases that expire through December 2032.

GSUSA leases classroom and administrative office space in Washington, D.C.

8 unchanged sentences

There are no variable lease payments.

Lease expense for the three months ended March 31, 2023 and 2022 was $ 5.3 million and $ 5.0 million, respectively.

Lease expense for the three and six months ended June 30, 2023 was $ 5.1 million and $ 10.4 million, respectively, compared to $ 5.1 million and $ 10.1 million for the three and six months ended June 30, 2022, respectively.

These costs are primarily related to long-term operating leases, but also include amounts for short-term leases with terms greater than 30 days that are not material.

Cash paid for amounts included in the present value of operating lease liabilities during the three month periods ended March 31, 2023 and 2022 was $ 4.9 million and $ 4.8 million, respectively, and is included in operating cash flows.

Cash paid for amounts included in the present value of operating lease liabilities during the three and six months ended June 30, 2023 was $ 5.1 million and $ 10.1 million, respectively, compared to $ 5.2 million and $ 10.0 million for the three and six months ended June 30, 2022, respectively, and is included in operating cash flows.

Finance Leases

1 unchanged sentence

The Company pledged the assets financed to secure the outstanding leases.

As of March 31, 2023, the total finance lease liability was $ 0.2 million, with an average interest rate of 3.75 %.

As of June 30, 2023, the total finance lease liability was $ 0.2 million, with an average interest rate of 3.75 %.

The ROU assets are recorded within Property and equipment, net on the Consolidated Balance Sheets.

Lease amortization expense associated with the Company’s finance leases was approximately $ 0.03 million for both the three months ended March 31, 2023 and 2022, respectively, and is recorded within Depreciation and amortization expense on the Consolidated Statements of Income.

The following tables present information about the amount and timing of cash flows arising from the Company’s operating and finance leases as of March 31, 2023 (dollars in thousands):

Lease amortization expense associated with the Company’s finance leases was approximately $ 30,000 and $ 0.1 million for both the three and six months ended June 30, 2023 and 2022, respectively, and is recorded within Depreciation and amortization expense on the Consolidated Statements of Income.

The following tables present information about the amount and timing of cash flows arising from the Company’s operating and finance leases as of June 30, 2023 (dollars in thousands):

Maturity of Lease Liabilities (Unaudited) Operating Leases Finance Leases

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Goodwill and Intangible Assets

In connection with its acquisitions, the Company has applied FASB ASC 805, Business Combinations , using the acquisition method of accounting.

In connection with its acquisitions, the Company has applied FASB ASC 805 using the acquisition method of accounting.

The Company recorded $ 217.4 million and $ 38.6 million of goodwill in connection with the RU and HCN acquisitions, respectively, representing the excess of the purchase price over the fair value of assets acquired and liabilities assumed, including identifiable intangible assets.

The Company later recorded non-cash impairment charges reducing the carrying value of RU and HCN goodwill to $ 86.0 million and $ 26.6 million, respectively.

The Company recorded non-cash impairment charges in 2022 for RU, and 2016 and 2019 for HCN, reducing the carrying value of RU and HCN goodwill to $ 86.0 million and $ 26.6 million, respectively.

There was no goodwill recorded in connection with the acquisition of GSUSA.

In addition to goodwill, in connection with the acquisitions of RU and HCN, the Company recorded identified intangible assets with an indefinite useful life in the aggregate amount of $ 51.0 million and $ 3.7 million, respectively, which include trade name, accreditation, licensing, and Title IV, and affiliate agreements.

The Company recorded non-cash impairment charges in 2022, reducing the carrying value of RU identified intangible assets with an indefinite useful life to $ 35.5 million.

There were no indefinite useful life intangible assets identified as a result of the GSUSA Acquisition.

There are no indefinite-lived intangible assets in our APUS Segment.

The Company recorded $ 35.5 million, $ 4.4 million and $ 1.0 million of identified intangible assets with a definite useful life in connection with the acquisitions of RU, HCN and GSUSA, respectively.

There are no definite-lived intangible

assets in our APUS Segment.

The Company recorded amortization expense related to definite lived intangibles assets of approximately $ 4.0 million and $ 7.9 million during both the three and six months ended June 30, 2023 and 2022, respectively.

The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles Goodwill and Other , and ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

5 unchanged sentences

If the carrying value is greater than the fair value, the difference between the two values is recorded as an impairment.

At March 31, 2023 the Company performed a qualitative analysis for our RU and HCN Segments’ goodwill and indefinite-lived intangible assets.

As part of the analysis, the Company considered all the events and circumstances listed in FASB ASC 350, Intangibles-Goodwill and Other, in addition to other entity-specific factors.

Factors considered include:

RU and HCN’s financial and enrollment performance against internal targets;

economic factors;

RU key leadership changes including the appointment of a new President and appointees to other significant leadership roles;

and the continued favorable growth outlook for nursing education.

In addition, the Company considered the 2022 annual quantitative analysis performed and concluded that the events in the first quarter of 2023 did not have a significant impact on the fair value of our RU Segment.

After completing the qualitative review of goodwill for the RU and HCN Segments for the three months ended March 31, 2023, the Company concluded it was more likely than not that the fair value of the RU and HCN Segments were more than the carrying value and therefore it was not necessary to perform a quantitative impairment test.

The Company determined that there was no impairment of RU or HCN Segment goodwill and indefinite-lived intangible assets during the three months ended March 31, 2023 and 2022.

The Company’s 2022 annual assessment concluded that the fair value of RU and HCN exceeded their carrying values by approximately $ 10.0 million, or 5 %, and $ 4.9 million, or 13 %, respectively.

Determining fair value requires judgment and the use of significant estimates and assumptions, including fluctuations in enrollments, revenue growth rates, operating margins, discount rates, and future market conditions, among others.

Given the current competitive and regulatory environment and the uncertainties regarding the related impact on the business, there can be no assurance that the estimates and assumptions made for purposes of the Company’s interim and annual goodwill impairment tests will prove to be accurate predictions of the future.

If the Company’s assumptions are not realized, the Company may record additional goodwill impairment charges in future periods.

It is not possible at this time to determine if any such future impairment charge would result or whether such charge would be material.

The following table summarizes the changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2023 (in thousands):

During the three months ended June 30, 2023, in connection with preparation of this Quarterly Report, the Company completed a qualitative assessment of RU and HCN Segment goodwill to determine if an interim goodwill impairment testing was necessary.

This evaluation included consideration of enrollment trends and financial performance, as well as industry and market conditions.

The Company concluded it was more likely than not the fair value of the Company’s RU Segment was less than its carrying amount resulting from RU’s underperformance when compared to 2023 internal targets, projected enrollment trends, the decline in financial performance projected for the remainder of 2023 as compared to prior projections, and the Company’s market value.

There were no indicators of impairment at HCN.

As a result, the Company completed a quantitative impairment test related to the valuation of its RU Segment goodwill during the second quarter of 2023.

The implied fair value of RU Segment goodwill was calculated and compared to the recorded value.

As a result, the Company recorded a non-cash impairment charge of $ 53.0 million, and the corresponding tax impact of $ 15.8 million to reduce the carrying value of RU Segment goodwill to $ 33.0 million.

The impairment charge recorded eliminated the difference between the fair value and book value of RU Segment goodwill.

The Company also evaluated events and circumstances related to the valuation of its intangible assets recorded within the RU and HCN Segments to determine if there were indicators of impairment.

The Company concluded there were indicators of impairment during the three months ended June 30, 2023 of the RU Segment intangible assets.

There were no indicators of impairment at HCN.

As a result, the Company recorded a non-cash impairment charge of $ 11.0 million to reduce the carrying values of the RU Segment trade name and RU Segment accreditation, licensing and Title IV indefinite-lived intangible assets during the second quarter of 2023 to $ 18.5 million and $ 6.0 million, respectively.

The impairment charge recorded eliminated the difference between the fair value of the trade name and accreditation, licensing, and Title IV indefinite lived intangible assets, and their book values.

In total, the Company recorded non-cash impairment charges of $ 64.0 million during the three months ended June 30, 2023 related to RU Segment goodwill and intangible assets, and the corresponding tax impact of $ 15.8 million.

During the three months ended June 30, 2022, the Company completed a qualitative assessment to determine if an interim goodwill impairment test was necessary.

The Company concluded it was more likely than not the fair value of the Company’s RU Segment was less than its carrying amount as a result of circumstances that included RU’s performance to date against 2022 internal targets and overall 2022 financial performance to date.

There were no indicators of impairment at HCN.

Therefore, the Company proceeded with a quantitative impairment test related to the valuation of its RU Segment goodwill during the second quarter of 2022.

The implied fair value of goodwill was calculated and compared to the recorded goodwill.

As a result, the Company recorded a non-cash impairment charge of $ 131.4 million, and the corresponding tax impact of $ 36.0 million, to reduce the carrying value of RU Segment goodwill.

The impairment charge recorded eliminated the difference between the fair value and book value of RU Segment goodwill.

Further, during the three months ended June 30, 2022, the Company also evaluated events and circumstances related to the valuation of its intangible assets recorded within the RU and HCN Segments to determine if there were indicators of impairment.

These evaluations concluded there were indicators of impairment during the three months ended June 30, 2022 of RU Segment intangible assets.

There were no indicators of impairment at HCN.

As a result, the Company recorded a non-cash impairment charge of $ 13.5 million to reduce the carrying value of RU Segment accreditation, licensing, and Title IV indefinite-lived intangible assets.

The impairment charge recorded eliminated the difference between the fair value of the accreditation, licensing, and Title IV indefinite lived intangible assets, and its book value.

In total, the Company recorded non-cash impairment charges of $ 144.9 million during the three months ended June 30, 2022 related to RU Segment goodwill and intangible assets, and the corresponding tax impact.

The following table summarizes the changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2023 (in thousands):

APUS Segment RU Segment HCN Segment Total Goodwill

3 unchanged sentences

Adjustments — 507 — 507

Goodwill as of March 31, 2023 $ — $ 86,030 $ 26,563 $ 112,593

The Company later recorded non-cash

impairment charges reducing the carrying value of RU identified intangible assets with an indefinite useful life to $ 35.5 million.

There were no indefinite useful life intangible assets identified as a result of the GSUSA Acquisition.

There are no indefinite-lived intangible assets in our APUS Segment.

The Company recorded $ 35.5 million, $ 4.4 million and $ 1.0 million, of identified intangible assets with a definite useful life in connection with the acquisitions of RU, HCN and GSUSA, respectively.

There are no definite-lived intangible assets in our APUS Segment.

During the three months ended March 31, 2023 and 2022, the Company recorded amortization expense related to definite lived intangibles assets of $ 3.9 million and $ 4.0 million, respectively.

The following table represents the balance of the Company’s intangible assets as of March 31, 2023 (in thousands):

Goodwill as of December 31, 2022 $ — $ 86,030 $ 26,563 $ 112,593

Goodwill acquired — — — —

Impairment — ( 53,000 ) — ( 53,000 )

Adjustments — — — —

Goodwill as of June 30, 2023 $ — $ 33,030 $ 26,563 $ 59,593

The following table represents the balance of the Company’s intangible assets as of June 30, 2023 (in thousands):

Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount

35 unchanged sentences

For additional information on goodwill and intangible assets, see the Consolidated Financial Statements and accompanying notes in the Annual Report.

Earnings Per Common Share

Earnings per common share is calculated by dividing net (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Net (loss) income available to common stockholders is net (loss) income adjusted for preferred stock dividends declared.

Diluted earnings per common share is calculated by dividing net (loss) income available to common stockholders by the weighted average number of shares of common stock outstanding, increased by the shares used in the per share calculation by the dilutive effects of restricted stock and option awards.

The table below reflects the calculation of earnings per common share and the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share (in thousands, expect per share amounts).

Three Months Ended March 31,

Earnings per common share

Net (loss) income $ ( 5,740 ) $ 5,333

Loss Per Common Share

Loss per common share is calculated by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period.

Net loss available to common stockholders is net loss adjusted for preferred stock dividends declared.

Diluted loss per common share is calculated by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding, increased by the shares used in the per share calculation by the dilutive effects of restricted stock and option awards.

The table below reflects the calculation of loss per common share and the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted loss per common share (in thousands, expect per share amounts).

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Loss per common share

Net loss $ ( 51,232 ) $ ( 110,029 ) $ ( 56,972 ) $ ( 104,696 )

Preferred Stock Dividend 1,487 — 2,944 —

Net (loss) income available to common shareholders $ ( 7,197 ) $ 5,333

Net loss available to common shareholders $ ( 52,719 ) $ ( 110,029 ) $ ( 59,916 ) $ ( 104,696 )

Basic weighted average shares outstanding 17,932 18,865 18,457 18,835

(Loss) earnings per common share $ ( 0.38 ) $ 0.28

Diluted earnings per common share

Net (loss) income available to common shareholders $ ( 7,197 ) $ 5,333

Loss per common share $ ( 2.94 ) $ ( 5.83 ) $ ( 3.25 ) $ ( 5.56 )

Diluted loss per common share

Net loss available to common shareholders $ ( 52,719 ) $ ( 110,029 ) $ ( 59,916 ) $ ( 104,696 )

Basic weighted average shares outstanding 17,932 18,865 18,457 18,835

1 unchanged sentence

Diluted weighted average shares outstanding 17,991 18,907 18,531 18,893

Diluted (loss) earnings per common share $ ( 0.38 ) $ 0.28

The table below reflects a summary of securities that could potentially dilute basic earnings per common share in future periods that were not included in the computation of diluted earnings per share because the effect would have been antidilutive (in thousands).

Three Months Ended March 31,

Diluted loss per common share $ ( 2.93 ) $ ( 5.82 ) $ ( 3.23 ) $ ( 5.54 )

The table below reflects a summary of securities that could potentially dilute basic loss per common share in future periods that were not included in the computation of diluted loss per share because the effect would have been antidilutive (in thousands).

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

Antidilutive securities:

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Long-Term Debt

In connection with the Rasmussen Acquisition, APEI, as borrower, entered into a Credit Agreement with Macquarie Capital Funding LLC, or the Credit Agreement, as administrative agent and collateral agent, or the Agent, Macquarie Capital USA Inc.

In connection with the acquisition of RU, APEI, as borrower, entered into a Credit Agreement with Macquarie Capital Funding LLC, or the Credit Agreement, as administrative agent and collateral agent, or the Agent, Macquarie Capital USA Inc.

and Truist Securities, Inc., as lead arrangers and joint bookrunners, and certain lenders party thereto, or the Lenders.

1 unchanged sentence

The Revolving Credit Facility also includes a $ 5.0 million sub-facility for swing line loans.

The Term Loan, the proceeds of which were used as part of the cash consideration for the Rasmussen Acquisition, was fully funded

on the Closing Date and is presented net of deferred financing fees on the Consolidated Balance Sheets.

Deferred financing fees are being amortized using the effective interest method over the term of the Term Loan.

As of March 31, 2023 and December 31, 2022, the remaining unamortized deferred financing fees were $ 5.5 million and $ 5.9 million, respectively.

The Term Loan, the proceeds of which were used as part of the cash consideration for the acquisition of RU, was fully funded on September 1, 2021, the closing date of the acquisition of RU, and is presented net of deferred financing fees on the Consolidated Balance Sheets.

Deferred financing fees are being amortized using the effective interest method over the term of

the Term Loan.

As of June 30, 2023 and December 31, 2022, the remaining unamortized deferred financing fees were $ 5.1 million and $ 5.9 million, respectively.

Deferred financing fees of $ 0.5 million related to the Revolving Credit Facility were recorded as an asset and are being amortized to interest expense over the term of the Revolving Credit Facility.

There were no borrowings outstanding under the Revolving Credit Facility as of March 31, 2023 and December 31, 2022.

Outstanding borrowings under the Facilities bear interest at a per annum rate equal to LIBOR (subject to a 0.75 % floor) plus 5.50 %, which shall increase by an additional 2.00 % on all past due obligations if APEI fails to pay any amount when due.

As of March 31, 2023, the Facilities borrowing rate was 10.13 %, excluding any offset from the interest rate cap agreement described below.

There were no borrowings outstanding under the Revolving Credit Facility as of June 30, 2023 and December 31, 2022.

In June 2023, in connection with the cessation of publication of the London Interbank Offered Rate, or LIBOR, the Credit Agreement was amended to change the applicable floating index rate at which interest on borrowings under the Facilities would accrue from LIBOR to Term Secured Overnight Financing Rate, or Term SOFR (as defined in the Credit Agreement, as amended), a forward-looking term rate.

Outstanding borrowings under the Facilities bear interest at a per annum rate equal to Term SOFR (plus a credit spread adjustment ranging from 0.11448 % to 0.42826 % depending on the interest period selected by APEI and subject to a 0.75 % floor after giving effect to such adjustment) plus 5.50 %, which shall increase by an additional 2.00 % on all past due obligations if APEI fails to pay any amount when due.

As of June 30, 2023, the Facilities borrowing rate was 10.65 %, excluding any offset from the interest rate cap agreement described below.

An unused commitment fee in the amount of 0.50 % is payable quarterly in arrears based on the average daily unused amount of the commitments under the Revolving Credit Facility.

3 unchanged sentences

In addition, the Credit Agreement contains a financial covenant that requires APEI to maintain a Total Net Leverage Ratio of no greater than 2.0 to 1.0.

As of March 31, 2023, APEI was in compliance with all debt covenants.

As of June 30, 2023, APEI was in compliance with all debt covenants.

For additional information on certain restrictions placed on the Company’s indebtedness pursuant to the terms of the Company’s Series A Senior Preferred stock, please refer to “Note 12.

Preferred Stock” in these Consolidated Financial Statements.

Long-term debt consists of the following as of March 31, 2023 and December 31, 2022 (in thousands):

As of March 31, 2023 As of December 31, 2022

Long-term debt consists of the following as of June 30, 2023 and December 31, 2022 (in thousands):

As of June 30, 2023 As of December 31, 2022

Credit agreement $ 99,063 $ 99,063

3 unchanged sentences

Long-Term Debt $ 93,941 $ 93,151

Scheduled maturities of long-term debt at March 31, 2023 are as follows (in thousands):

Scheduled maturities of long-term debt at June 30, 2023 are as follows (in thousands):

Maturities of Long-Term Debt (Unaudited) Loan Payments

2027 $ 99,063

Total $ 99,063

Derivatives and Hedging

1 unchanged sentence

On September 30, 2021, the Company entered into an interest rate cap agreement to manage its exposure to the variable rate of interest with a total notional value of $ 87.5 million.

This interest rate cap agreement, designated as a cash flow hedge, provides the Company with interest rate protection in the event the LIBOR rate exceeds 2.0 %.

The interest rate cap was effective October 1, 2021 and will expire on January 1, 2025.

This interest rate cap agreement, designated as a cash flow hedge, provided the Company with interest rate protection in the event LIBOR exceeded 2.0 %.

The interest rate cap was effective October 1, 2021 and was scheduled to expire on January 1, 2025.

In connection with cessation of publication of LIBOR, the Company terminated its existing interest rate cap agreement and entered into a new interest rate cap agreement that transitioned the benchmark rate to Term SOFR effective June 30, 2023.

The new interest rate cap agreement is structured in a way that there is no change in the value to the Company and provides the Company with interest rate protection in the event that the Term SOFR rate exceeds 1.78 %.

The new interest rate cap agreement will expire on December 31, 2024.

Changes in the fair value of the interest rate cap designated as a hedging instrument that effectively offset the variability of cash flows associated with the Company’s variable-rate long-term debt obligations are reported in accumulated other comprehensive income.

These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings.

As of March 31, 2023 and December 31, 2022, the fair value of the interest rate cap totaled $ 3.9 million and $ 4.5 million, respectively, and was recorded in Other assets on the Consolidated Balance Sheets.

The unrealized loss of $ 22,000 , net of taxes, is included in accumulated other comprehensive income.

During the three months ended March 31, 2023, the Company reclassified approximately $ 0.6 million from other comprehensive income to interest expense.

As of June 30, 2023 and December 31, 2022, the fair value of the interest rate cap totaled $ 4.2 million and $ 4.5 million, respectively, and was recorded in Other assets on the Consolidated Balance Sheets.

The unrealized gain of $ 1.0 million, net of taxes, is included in accumulated other comprehensive income.

During the three and six months ended June 30, 2023, the Company reclassified approximately $ 0.7 million and $ 1.3 million, respectively, from other comprehensive income to interest expense.

The Company estimates that approximately $ 1.0 million will be reclassified from accumulated other comprehensive income into interest expense during the next twelve months.

7 unchanged sentences

A summary of financial information by reportable segment is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(Unaudited) (Unaudited)

APUS Segment $ 73,557 $ 69,904 $ 147,535 $ 142,994

11 unchanged sentences

APUS Segment $ 18,941 $ 13,624 $ 36,015 $ 26,806

RU Segment ( 12,864 ) 891

RU Segment (Note 6) ( 77,274 ) ( 146,553 ) ( 90,138 ) ( 145,662 )

HCN Segment ( 235 ) ( 630 ) ( 1,538 ) ( 1,625 )

Corporate and Other ( 6,700 ) ( 7,701 ) ( 14,977 ) $ ( 15,579 )

Total (loss) income from operations before interest and income taxes $ ( 5,370 ) $ 5,200

Total loss from operations before interest and income taxes $ ( 65,268 ) $ ( 141,260 ) $ ( 70,638 ) $ ( 136,060 )

Interest income (expense):

9 unchanged sentences

Corporate and Other ( 1,280 ) ( 8,590 ) ( 3,908 ) ( 12,214 )

Total Income tax (benefit) expense $ ( 1,414 ) $ 1,040

Total Income tax benefit $ ( 15,137 ) $ ( 35,332 ) $ ( 16,551 ) $ ( 34,292 )

Capital expenditures:

5 unchanged sentences

A summary of the Company’s consolidated assets by reportable segment is as follows (in thousands):

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

APUS Segment $ 124,429 $ 113,551

16 unchanged sentences

A summary of APUS Segment revenue derived from students by primary funding source is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Unaudited) (Unaudited)

2023 2022 2023 2022

DoD tuition assistance programs 47 % 46 % 48 % 47 %

3 unchanged sentences

A summary of RU Segment revenue derived from students by primary funding source is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Unaudited) (Unaudited)

2023 2022 2023 2022

Title IV programs 75 % 74 % 74 % 74 %

2 unchanged sentences

A summary of HCN Segment revenue derived from students by primary funding source is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Unaudited) (Unaudited)

2023 2022 2023 2022

Title IV programs 79 % 82 % 79 % 80 %

3 unchanged sentences

On December 28, 2022, APEI issued $ 40 million of the Series A Senior Preferred Stock, $ 0.01 par value per share, to affiliates of existing common stockholders of the Company.

The Series A Senior Preferred Stock has cumulative dividends that accrue daily at the initial annual rate, which is equal to the Secured Overnight Financing Rate, or SOFR (selected by the Company for each divided period), plus 10.00 %, or an initial rate of 14.55 % for the first dividend period, a quarterly dividend period.

The Series A Senior Preferred Stock has cumulative dividends that accrue daily at the initial annual rate, which is equal to SOFR (selected by the Company for each divided period), plus 10.00 %, or an initial rate of 14.55 % for the first dividend period, a three-month dividend period.

On the 30-month anniversary of issuance, the dividend rate spread shall increase by 2.00 % per annum and shall increase by 0.50 % per annum at the beginning of each full fiscal quarter thereafter.

1 unchanged sentence

Other than an increase in the dividend rate spread relating to default, in no event will the dividend rate spread exceed SOFR plus 25.00 %.

As of March 31, 2023, the dividend rate was 14.88 % based on a three-month dividend period.

As of June 30, 2023, the dividend rate was 15.23 % based on a three-month dividend period.

Dividend periods will be monthly, every three months or every six months, at the Company’s option, and the Company currently anticipates using a three-month period.

1 unchanged sentence

If the Company selects a six-month dividend period, an interim dividend payment will be required for each three-month period therein.

During the three-month period ended March 31, 2023, $ 1.5 million of dividends were declared and paid on preferred stock.

During the three and six months ended June 30, 2023, $ 1.5 million and $ 2.9 million, respectively, of dividends were declared and paid on Series A Senior Preferred Stock.

The Series A Senior Preferred Stock has no stated maturity, is not convertible, is not subject to any mandatory redemption, sinking fund or other similar provisions, and will remain outstanding unless redeemed at the Company’s option.

The Company has the right to redeem the preferred stock pro rata in whole or in part at the price per share equal to the liquidation preference, or the Liquidation Preference, plus any applicable early premium amount noted in the Certificate of Designation and Purchase Agreement.

The Liquidation Preference of $ 60.8 million and $ 62.2 million as of March 31, 2023 and December 31, 2022.

respectively, is based on the occurrence of a liquidation event, which is also considered an event of default as defined in the Certificate of Designation, as of March 31, 2023 and December 31, 2022, respectively.

The Liquidation Preference of $ 59.0 million and $ 62.2 million as of June 30, 2023 and December 31, 2022, respectively, is based on the occurrence of a liquidation event, which is also considered an event of default as defined in the Certificate of Designation.

The Liquidation Preference includes an early redemption premium amount and a make-whole payment for any redemption of the securities prior to June 30, 2025.

As of March 31, 2023, and December 31, 2022, the make-whole payment included in the Liquidation Preference was $ 17.8 million and $ 19.3 million, respectively.

As of June 30, 2023 and December 31, 2022, the make-whole payment included in the Liquidation Preference was $ 16.0 million and $ 19.3 million, respectively.

The make-whole payment included in the Liquidation Preference will be reduced quarterly until June 30, 2025 at which time it will be eliminated.

Events of default include an increase of the dividend rate spread of 6.00 % and an early premium amount, as defined in the Certificate of Designation.

The following table lists the components of the liquidation preference for the periods presented below (in thousands):

As of June 30, 2023 As of December 31, 2022

Series A Senior Preferred Stock (plus accrued and unpaid dividends) $ 40,071 $ 40,069

Make whole payment 16,002 19,251

Early redemption premium 2,915 2,915

Liquidation Preference $ 58,988 $ 62,235

The Series A Senior Preferred Stock has no voting rights for directors or otherwise, except as required by law or with respect to certain protective provisions.

Without the consent of at least 60 % of the then outstanding shares of Series A Senior Preferred Stock, with certain exceptions, the Company may not, among other things, (i) incur any indebtedness if such incurrence would cause the Company’s Total Net Leverage Ratio (as defined in the Purchase Agreement) to exceed 0.75 :1, (ii) issue any capital stock senior to or pari passu with the Series A Senior Preferred Stock, (iii) declare or pay any cash dividends on the Company’s common stock, or (iv) repurchase more than an aggregate of $ 30 million of the Company’s common stock.

Subsequent Event

On August 1, 2023, we completed a reduction in force that resulted in the termination of 35 employees and the elimination of 46 open positions across a variety of roles and departments at APEI, RU, HCN and GSUSA.

The headcount reductions reflect our ongoing efforts focused on realigning our organizational structure, eliminating redundancies, and optimizing certain functions.

We incurred an aggregate of approximately $ 1.7 million of pre-tax cash expenses associated with employee severance costs as a result of this reduction in force.

The reduction in force is expected to result in pre-tax labor and benefit savings in 2023 of approximately $ 3.8 million, excluding severance costs, and approximately $ 8.1 million in savings on an annualized basis.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements