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Item 1. Financial Statements

2024-11-12 compared with 2024-08-06 · 114 added, 89 removed, 634 unchanged (24% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

ASSETS (Unaudited)

44 unchanged sentences

(In thousands, except per share amounts)

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

8 unchanged sentences

Loss on leases (Note 4) — — 3,715 —

Loss on disposals of long-lived assets 184 32 212 33

Loss (gain) on disposals of long-lived assets 23 ( 16 ) 235 17

Total costs and expenses 148,993 144,438 448,918 511,979

2 unchanged sentences

Income (loss) before income taxes 3,498 5,608 9,989 ( 67,906 )

Income tax (benefit) expense ( 16 ) ( 15,137 ) 1,197 ( 16,551 )

Income tax expense (benefit) 1,236 3,712 2,433 ( 12,839 )

Equity investment loss — ( 5,224 ) ( 4,407 ) ( 5,233 )

1 unchanged sentence

Preferred stock dividends 1,531 1,525 4,597 4,469

Net loss available to common stockholders $ ( 1,160 ) $ ( 52,719 ) $ ( 2,179 ) $ ( 59,916 )

Loss per common share:

Net income (loss) available to common stockholders $ 731 $ ( 4,853 ) $ ( 1,448 ) $ ( 64,769 )

Income (loss) per common share:

Basic $ 0.04 $ ( 0.27 ) $ ( 0.08 ) $ ( 3.55 )

7 unchanged sentences

(In thousands)

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

Other comprehensive (loss) income, net of tax:

Unrealized gain on hedging derivatives 141 1,037 537 1,009

Unrealized (loss) gain on hedging derivatives ( 93 ) 274 444 1,283

Tax effect 23 ( 84 ) ( 110 ) ( 365 )

Unrealized gain on hedging derivatives, net of taxes 106 781 404 759

Unrealized (loss) gain on hedging derivatives, net of taxes ( 70 ) 190 334 918

Reclassification of gains to net income ( 807 ) ( 768 ) ( 2,378 ) ( 2,072 )

1 unchanged sentence

Reclassifications of gains to net income, net of taxes ( 607 ) ( 533 ) ( 1,788 ) ( 1,483 )

Total other comprehensive (loss) income ( 483 ) 253 ( 777 ) ( 222 )

Comprehensive (loss) income $ ( 112 ) $ ( 50,979 ) $ 110 $ ( 57,194 )

Total other comprehensive loss ( 677 ) ( 343 ) ( 1,454 ) ( 565 )

Comprehensive income (loss) $ 1,585 $ ( 3,671 ) $ 1,695 $ ( 60,865 )

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

23 unchanged sentences

Balance as of June 30, 2024 400 $ 39,691 17,670,026 $ 177 $ 302,001 $ 867 $ ( 54,041 ) $ 288,695

Preferred stock dividends — — — — — — ( 1,531 ) ( 1,531 )

Issuance of common stock under employee benefit plans — — 46,511 — — — — —

Deemed repurchased shares of common and restricted stock for tax withholding — — ( 5,650 ) — ( 92 ) — — ( 92 )

Stock-based compensation — — — — 1,761 — — 1,761

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

Other comprehensive loss — — — — — ( 677 ) ( 677 )

Net income — — — — — — 2,262 2,262

Balance as of September 30, 2024 400 $ 39,691 17,710,887 $ 177 $ 303,670 $ 190 $ ( 53,310 ) $ 290,418

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

22 unchanged sentences

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

Preferred stock dividends — — — — — — ( 1,525 ) ( 1,525 )

Issuance of common stock under employee benefit plans — — 18,140 1 ( 1 ) — — —

Deemed repurchased shares of common and restricted stock for tax withholding — — ( 4,914 ) ( 1 ) ( 26 ) — — ( 27 )

Stock-based compensation — — — — 1,733 — — 1,733

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

Other comprehensive gain — — — — — ( 343 ) — ( 343 )

Net loss — — — — — — ( 3,328 ) ( 3,328 )

Balance as of September 30, 2023 400 $ 39,691 17,783,615 $ 178 $ 297,848 $ 2,537 $ ( 58,864 ) $ 281,390

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

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

21 unchanged sentences

Capital expenditures ( 17,728 ) ( 9,505 )

Proceeds from the sale of real property — 123

Net cash used in investing activities ( 17,728 ) ( 9,382 )

16 unchanged sentences

American Public Education, Inc., or APEI, which together with its subsidiaries is referred to as the “Company,” is a provider of online and campus-based postsecondary education and career learning 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 Public University System, Inc., or APUS, provides online postsecondary education directed primarily at the needs of the military, veterans, extended military families, and other public service and service-minded communities, through American Military University, or AMU, and American Public University, or APU.

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

47 unchanged sentences

Restricted cash also includes a $ 25.1 million restricted certificate of deposit 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.

Restricted cash on the Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023, excluding the restricted certificate of deposit, was $ 1.5 million and $ 2.7 million, respectively.

Total restricted cash as of June 30, 2024, and December 31, 2023, was $ 26.4 million and $ 27.7 million, respectively.

Cash and cash equivalents and restricted cash as of June 30, 2024, and December 31, 2023, were as follows (in thousands):

As of June 30, 2024 As of December 31, 2023

Restricted cash on the Consolidated Balance Sheets as of September 30, 2024, and December 31, 2023, excluding the restricted certificate of deposit, was $ 1.7 million and $ 2.7 million, respectively.

Total restricted cash as of September 30, 2024, and December 31, 2023, was $ 26.8 million and $ 27.7 million, respectively.

Cash and cash equivalents and restricted cash as of September 30, 2024, and December 31, 2023, were as follows (in thousands):

As of September 30, 2024 As of December 31, 2023

Cash, cash equivalents, and restricted cash $ 162,249 $ 144,342

36 unchanged sentences

Management must exercise significant judgment in evaluating the potential impairment of its equity investments.

During the first quarter of 2024, the Company evaluated its equity investments for indicators of impairment and concluded the fair value of the cost method investment was less than its carrying amount.

During the first quarter of 2024, the Company evaluated its equity investments for indicators of impairment and concluded the fair value of a cost method investment was less than its carrying amount.

As a result, during the three months ended March 31, 2024, the Company recorded an investment loss of $ 3.3 million on a 2015 cost method investment, which is included in equity investment loss in the Consolidated Statements of Income and is due to the investee entering into a new convertible debt agreement that resulted in the conversion of the Company’s preferred stock holdings in the investee into common shares, and the dilution of the Company’s ownership percentage.

3 unchanged sentences

The investment loss recorded reduced the book value of the equity method investment to zero , and at June 30, 2024, the Company no longer has any investments accounted for under ASC 323 and ASC 321.

At December 31, 2023, the Company’s equity investments were included in Other assets, net on the accompanying Consolidated Balance Sheets.

During the third quarter of 2023, the Company evaluated its equity investments for indicators of impairment and concluded the fair value of a cost method investment was less than its carrying amount.

As a result, during the three months ended September 30, 2023, the Company recorded an investment loss of $ 5.2 million, on a 2012 cost method investment, which is included in equity investment loss in the Consolidated Statements of Income and is due to the sale of the investee with no sales proceeds to the Company.

The investment loss recorded reduced the book value of the cost method investment to zero.

The aggregate carrying amount of the Company’s equity investments was $ 4.4 million at December 31, 2023, and was included in Other assets, net on the accompanying Consolidated Balance Sheets.

At September 30, 2024, the recorded value of equity investments was zero .

Stock-based Compensation

1 unchanged sentence

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, or the Board.

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, or the Board.

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

8 unchanged sentences

If actual results differ significantly from these estimates, stock-based compensation expense could be higher or lower and have a material impact on the Company’s Consolidated Financial Statements.

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 June 30, 2024, and 2023 was as follows (in thousands):

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

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 and nine months ended September 30, 2024, and 2023 was as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

13 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.

During the three and six months ended June 30, 2024, the Company recognized an aggregate incentive-based compensation expense of $ 1.9 million and $ 3.8 million, respectively, compared to an aggregate expense of $ 1.8 million and $ 3.8 million for the three and six months ended June 30, 2023, respectively.

During the three and nine months ended September 30, 2024, the Company recognized an aggregate incentive-based compensation expense of $ 1.7 million and $ 5.4 million, respectively, compared to an aggregate benefit of $ 0.7 million for the three months ended September 30, 2023, and an aggregate expense of $ 3.2 million for the nine months ended September 30, 2023.

The Company accounts for income taxes in accordance with FASB ASC 740, Accounting for Income Taxes .

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.

For the three and six months ended June 30, 2023, the Company 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 believed that the actual effective tax rate for the three and six months ended June 30, 2023, was 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 income tax expense or benefit.

For the three and nine months ended September 30, 2023, the Company 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 nine months ended September 30, 2023, as if it was the annual period and determined the income tax expense or benefit on that basis.

The Company believed that the actual effective tax rate for the three and nine months ended September 30, 2023, was 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 income tax expense or benefit.

Recent Accounting Pronouncements

4 unchanged sentences

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

APUS RU HCN Corporate and Other Consolidated

4 unchanged sentences

Total Revenue $ 76,981 $ 52,604 $ 15,493 $ 8,044 $ 153,122

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

APUS RU HCN Corporate and Other Consolidated

4 unchanged sentences

Total Revenue $ 76,406 $ 52,073 $ 13,741 $ 8,618 $ 150,838

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

APUS RU HCN Corporate and Other Consolidated

4 unchanged sentences

Total Revenue $ 234,685 $ 158,773 $ 48,349 $ 18,642 $ 460,449

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

APUS RU HCN Corporate and Other Consolidated

6 unchanged sentences

Contract Balances and Performance Obligations

The Company had no contract assets or deferred contract costs as of June 30, 2024, and December 31, 2023.

The Company had no contract assets or deferred contract costs as of September 30, 2024, and December 31, 2023.

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 June 30, 2024, was $ 25.6 million and included $ 14.8 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 consideration received in advance for future courses or terms, or student deposits.

Deferred revenue at September 30, 2024, was $ 27.3 million and included $ 16.8 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 10.5 million in consideration received in advance for future courses or terms, or student deposits.

Deferred revenue at December 31, 2023, was $ 23.8 million and included $ 13.8 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 10.0 million in student deposits.

25 unchanged sentences

The Company leases corporate office space in Florida, under an operating lease that expires in January 2026, and previously leased corporate office space in Maryland under an operating lease that expired in July 2024.

The RU Segment leases administrative office space in suburban Chicago, Illinois, and Minneapolis, Minnesota, and leases 20 campuses located in six states under operating leases that expire through March 2034.

The RU Segment leases administrative office space in Minneapolis, Minnesota, and leases 20 campuses located in six states under operating leases that expire through March 2034.

The HCN Segment leases administrative office space in Columbus, Ohio, and leases eight campuses located in three states under operating leases that expire through December 2034.

3 unchanged sentences

Operating lease liabilities represent the obligation to make lease payments arising from the lease.

Operating leases are included in the Operating lease assets, net, and Lease liabilities, current and long-term, on the Consolidated Balance Sheets.

Operating leases

are included in the Operating lease assets, net, and Lease liabilities, current and long-term, on the Consolidated Balance Sheets.

These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate

based on information available at lease commencement to determine the present value of the lease payments.

When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments.

The ROU assets include all remaining lease payments and exclude lease incentives.

1 unchanged sentence

There are no variable lease payments.

Lease expense for the three and six months ended June 30, 2024 was $ 4.3 million and $ 9.5 million, respectively, compared to $ 5.1 million and $ 10.4 million for the three and six months ended June 30, 2023, respectively.

Lease expense for the three and nine months ended September 30, 2024, was $ 4.7 million and $ 14.2 million, respectively, compared to $ 5.3 million and $ 15.7 million for the three and nine months ended September 30, 2023, 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 and six months ended June 30, 2024 was $ 3.7 million and $ 8.2 million, respectively, compared to $ 5.1 million and $ 10.1 million for the three and six months ended June 30, 2023, 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 nine months ended September 30, 2024, was $ 4.5 million and $ 12.8 million, respectively, compared to $ 5.0 million and $ 15.2 million for the three and nine months ended September 30, 2023, respectively, and is included in operating cash flows.

Loss on leases

2 unchanged sentences

Additionally, during the three months ended June 30, 2024, the Company paid a lease termination fee of $ 1.2 million related to the consolidation of two RU campuses in Minnesota.

As a result of the lease termination, and the consolidation of the RU campuses, during the three and six months ended June 30, 2024, the Company recorded a loss on leases of $ 0.4 million and $ 1.2 million, respectively.

In May 2024, RU notified the Wisconsin Educational Approval Program that it intends to voluntarily close two Wisconsin campuses, effective December 31, 2025, and 2026, respectively.

As a result, the Company recorded a lease impairment of $ 0.4 million during the three months ended June 30, 2024.

During the three and six months ended June 30, 2024, the total loss on leases was $ 0.8 million and $ 3.7 million, respectively, and is included in Loss on leases in the Consolidated Statements of Income.

The total loss on leases during the nine months ended September 30, 2024, was $ 3.7 million and is included in Loss on leases in the Consolidated Statements of Income.

Finance Leases

1 unchanged sentence

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

As of June 30, 2024, the total finance lease liability was $ 0.6 million, with an average interest rate of 6.70 %.

As of September 30, 2024, the total finance lease liability was $ 0.5 million, with an average interest rate of 6.80 %.

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 $ 0.1 million for both the three and six months ended June 30, 2024, and $ 30,000 and $ 0.1 million for the three and six months ended June 30, 2023, respectively, and is recorded in Depreciation and amortization expense in 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, 2024 (dollars in thousands):

Lease amortization expense associated with the Company’s finance leases was $ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2024, respectively, compared to $ 0.1 million for both the three and nine months ended September 30, 2023, and is recorded in Depreciation and amortization expense in 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 September 30, 2024 (in thousands):

Maturity of Lease Liabilities (Unaudited) Operating Leases Finance Leases

35 unchanged sentences

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

The Company recorded amortization expense related to definite-lived intangible assets of $ 1.3 million and $ 2.5 million for the three and six months ended June 30, 2024, respectively, compared to $ 4.0 million and $ 7.9 million for the three and six months ended June 30, 2023, respectively.

The Company recorded amortization expense related to definite-lived intangible assets of $ 0.8 million and $ 3.3 million for the three and nine months ended September 30, 2024, respectively, compared to $ 3.0 million and $ 10.9 million for the three and nine months ended September 30, 2023, respectively.

The Company accounts for goodwill and intangible assets with an indefinite life 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.

During the three months ended June 30, 2024, in connection with the preparation of this Quarterly Report, the Company performed a qualitative assessment for potential impairment of the RU and HCN Segment goodwill and indefinite-lived intangible assets.

During the three months ended September 30, 2024, in connection with the preparation of this Quarterly Report, the Company performed a qualitative assessment for potential impairment of the RU and HCN Segment goodwill and indefinite-lived intangible assets.

As part of the assessment, the Company considered the events and circumstances expressly required by ASC 350, in addition to other entity-specific factors.

Factors considered included RU and HCN’s financial and enrollment performance against internal targets, economic factors, and the continued favorable growth outlook for nursing education.

After completing the qualitative review of goodwill and indefinite-lived intangible assets for the RU and HCN Segments, the Company concluded it was more likely than not that the fair value of each of the RU and HCN Segments was more than the respective carrying value, and therefore no quantitative impairment test and no impairment charge was necessary.

After completing the qualitative review of goodwill and indefinite-lived intangible assets for the RU and HCN Segments, the

Company concluded it was more likely than not that the fair value of each of the RU and HCN Segments was more than the respective carrying value, and therefore no quantitative impairment test and no impairment charge was necessary.

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

13 unchanged sentences

The Company’s 2023 annual quantitative assessment for impairment concluded that the fair value of RU and HCN Segments exceeded their carrying values by approximately $ 32.4 million, or 25 %, and $ 7.4 million, or 21 %, respectively.

The following table summarizes the changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2024 (in thousands):

The following table summarizes the changes in the carrying amount of goodwill by reportable segment for the nine months ended September 30, 2024 (in thousands):

APUS Segment RU Segment HCN Segment Total Goodwill

2 unchanged sentences

Impairment — — — $ —

Goodwill as of June 30, 2024 $ — $ 33,030 $ 26,563 $ 59,593

The following table represents the balance of the Company’s intangible assets as of June 30, 2024 (in thousands):

Goodwill as of September 30, 2024 $ — $ 33,030 $ 26,563 $ 59,593

The following table represents the balance of the Company’s intangible assets as of September 30, 2024 (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.

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 income (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,

Income (Loss) Per Common Share

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

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

Diluted income (loss) per common share is calculated by dividing net income (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 income (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 income (loss) per common share (in thousands, expect per share amounts).

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(Unaudited) (Unaudited)

Loss per common share

Income (loss) per common share

Net income (loss) $ 2,262 ( 3,328 ) $ 3,149 $ ( 60,300 )

Preferred Stock Dividend 1,531 1,525 4,597 4,469

Net loss available to common shareholders ( 1,160 ) ( 52,719 ) $ ( 2,179 ) $ ( 59,916 )

Net income (loss) available to common shareholders 731 ( 4,853 ) $ ( 1,448 ) $ ( 64,769 )

Basic weighted average shares outstanding 17,679 17,778 17,604 18,230

Loss per common share $ ( 0.07 ) $ ( 2.94 ) $ ( 0.12 ) $ ( 3.25 )

Diluted loss per common share

Net loss available to common shareholders $ ( 1,160 ) $ ( 52,719 ) $ ( 2,179 ) $ ( 59,916 )

Income (loss) per common share $ 0.04 $ ( 0.27 ) $ ( 0.08 ) $ ( 3.55 )

Diluted income (loss) per common share

Net income (loss) available to common shareholders $ 731 $ ( 4,853 ) $ ( 1,448 ) $ ( 64,769 )

Basic weighted average shares outstanding 17,679 17,778 17,604 18,230

1 unchanged sentence

Diluted weighted average shares outstanding 18,247 17,820 18,076 18,294

Diluted loss per common share $ ( 0.06 ) $ ( 2.93 ) $ ( 0.12 ) $ ( 3.23 )

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,

Diluted income (loss) per common share $ 0.04 $ ( 0.27 ) $ ( 0.08 ) $ ( 3.54 )

The table below reflects a summary of securities that could potentially dilute basic income (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 September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

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

The Term Loan is presented net of deferred financing fees on the Consolidated Balance Sheets.

Term Loan 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, 2024, and December 31, 2023, the

remaining unamortized deferred financing fees were $ 3.7 million and $ 4.4 million, respectively.

As of September 30, 2024, and December 31, 2023, the remaining unamortized deferred financing fees were $ 3.3 million and $ 4.4 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 June 30, 2024, and December 31, 2023.

There were no borrowings outstanding under the Revolving Credit Facility as of September 30, 2024, and December 31, 2023.

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, 2024, the Facilities’ borrowing rate was 10.94 %, excluding any offset from the interest rate cap agreement described below.

As of September 30, 2024, the Facilities’ borrowing rate was 10.86 %, 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.

Interest expense, including offsets from the interest rate cap agreement, was $ 1.9 million and $ 3.9 million for the three and six months ended June 30, 2024, respectively, compared to $ 1.9 million and $ 3.8 million for the three and six months ended June 30, 2023, respectively.

Interest expense, including offsets from the interest rate cap agreement, was $ 1.9 million and $ 5.8 million for the three and nine months ended September 30, 2024, respectively, compared to $ 2.2 million and $ 5.8 million for the three and nine months ended September 30, 2023, respectively.

In December 2022, APEI made prepayments totaling $ 65.0 million on the Term Loan.

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 2.00 to 1.00.

As of June 30, 2024, APEI was in compliance with all debt covenants.

As of September 30, 2024, 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 11.

Preferred Stock” in these Consolidated Financial Statements.

Long-term debt consists of the following as of June 30, 2024, and December 31, 2023 (in thousands):

As of June 30, 2024 As of December 31, 2023

Long-term debt consists of the following as of September 30, 2024, and December 31, 2023 (in thousands):

As of September 30, 2024 As of December 31, 2023

Credit agreement $ 96,425 $ 99,063

3 unchanged sentences

Long-Term Debt $ 93,092 $ 94,682

Scheduled maturities of long-term debt at June 30, 2024, are as follows (in thousands):

Scheduled maturities of long-term debt at September 30, 2024, are as follows (in thousands):

Maturities of Long-Term Debt (Unaudited) Loan Payments

11 unchanged sentences

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.

At June 30, 2024, and December 31, 2023, the fair value of the interest rate cap totaled $ 1.5 million and $ 2.6 million, respectively, and was recorded in Other assets, net on the Consolidated Balance Sheets.

The unrealized gains of $ 0.5 million and $ 0.9 million are included in accumulated other comprehensive income as of June 30, 2024, and December 31, 2023, respectively.

During the three and six months ended June 30, 2024, the Company reclassified $ 0.8 million and $ 1.6 million, respectively, from accumulated other comprehensive income to interest expense, compared to $ 0.7 million and $ 1.3 million for the three and six months ended June 30, 2023, respectively.

The Company estimates that approximately $ 1.5 million will be reclassified from accumulated other comprehensive income into interest expense during the next six months.

At September 30, 2024, and December 31, 2023, the fair value of the interest rate cap totaled $ 0.6 million and $ 2.6 million, respectively, and was recorded in Other assets, net on the Consolidated Balance Sheets.

The unrealized gains of $ 0.4 million and $ 0.9 million are included in accumulated other comprehensive income as of September 30, 2024, and December 31, 2023, respectively.

During the three and nine months ended September 30, 2024, the Company reclassified $ 0.8 million and $ 2.4 million, respectively, from accumulated other comprehensive income to interest expense, compared to $ 0.8 million and $ 2.1 million for the three and nine months ended September 30, 2023, respectively.

The Company estimates that approximately $ 0.6 million will be reclassified from accumulated other comprehensive income into interest expense during the next three months.

Segment Information

7 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

36 unchanged sentences

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

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

APUS Segment $ 101,767 $ 108,749

16 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(Unaudited) (Unaudited)

5 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(Unaudited) (Unaudited)

4 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

(Unaudited) (Unaudited)

9 unchanged sentences

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 June 30, 2024, the dividend rate was 15.33 % 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.

As of September 30, 2024, the dividend rate was 14.60 % based on a three-month dividend period.

Dividend periods are monthly, every three months or every six months , at the Company’s option, and the Company currently anticipates continuing to use a three-month period.

Dividends will be paid, after declaration by the Board, for each dividend period.

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 and six months ended June 30, 2024, dividends declared and paid on the Series A Senior Preferred Stock were $ 1.5 million and $ 3.0 million, respectively, compared to $ 1.5 million and $ 2.9 million for the three and six months ended June 30, 2023, respectively.

During the three and nine months ended September 30, 2024, dividends declared and paid on the Series A Senior Preferred Stock were $ 1.5 million and $ 4.6 million, respectively, compared to $ 1.5 million and $ 4.5 million for the three and nine months ended September 30, 2023, respectively.

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 Series A Senior 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 $ 51.2 million and $ 55.3 million as of June 30, 2024, and December 31, 2023, 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 of $ 49.0 million and $ 55.3 million as of September 30, 2024, and December 31, 2023, 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 June 30, 2024, and December 31, 2023, the make-whole payment included in the Liquidation Preference was $ 8.2 million and $ 12.3 million, respectively.

As of September 30, 2024, and December 31, 2023, the make-whole payment included in the Liquidation Preference was $ 6.0 million and $ 12.3 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.

1 unchanged sentence

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

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Series A Senior Preferred Stock (plus accrued and unpaid dividends) $ 40,069 $ 40,072

4 unchanged sentences

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 November 7, 2024, APUS entered into an agreement to sell excess real and personal property, currently in use and not held for sale, located in Charles Town, West Virginia, for $ 16.6 million.

The transaction is expected to result in a pre-tax loss on sale of approximately $ 1.6 million to $ 1.8 million, and is expected to close in early 2025.

APUS also expects to incur additional costs for professional fees and relocation costs associated with the sale.

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