What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-12 · 174 added, 291 removed, 457 unchanged (50% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

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

As of March 31, 2025 As of December 31, 2024

ASSETS (Unaudited)

20 unchanged sentences

Deferred revenue and student deposits 25,087 23,474

Income tax payable 177 —

Lease liabilities, current 13,489 13,553

14 unchanged sentences

Additional paid-in capital 304,533 305,823

Accumulated other comprehensive income 190 1,644

Accumulated other comprehensive loss ( 48 ) ( 7 )

Accumulated deficit ( 34,344 ) ( 41,805 )

5 unchanged sentences

(In thousands, except per share amounts)

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

2024 2023 2024 2023

(Unaudited) (Unaudited)

Three Months Ended March 31,

Revenue $ 164,551 $ 154,432

4 unchanged sentences

Depreciation and amortization 3,992 5,128

Impairment of goodwill and intangible assets (Note 5) — — — 64,000

Loss on assets held for sale (Note 4) 1,527 —

Loss on leases (Note 5) — 2,936

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

Loss on disposals of long-lived assets 230 28

Total costs and expenses 152,305 149,250

Income (loss) from operations before interest and income taxes 4,129 6,400 11,531 ( 64,238 )

Income from operations before interest and income taxes 12,246 5,182

Interest expense, net ( 887 ) ( 126 )

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

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

Income before income taxes 11,359 5,056

Income tax expense 2,466 1,213

Equity investment loss — ( 3,327 )

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

Net income $ 8,893 $ 516

Preferred stock dividends 1,432 1,535

10 unchanged sentences

(In thousands)

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

2024 2023 2024 2023

(Unaudited) (Unaudited)

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

Three Months Ended March 31,

Net income $ 8,893 $ 516

Other comprehensive (loss) income, net of tax:

2 unchanged sentences

Unrealized (loss) gain on hedging derivatives, net of taxes ( 46 ) 298

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

Reclassification of loss (gain) to net income 7 ( 787 )

Tax effect ( 2 ) 195

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

Reclassifications of loss (gain) to net income, net of taxes 5 ( 592 )

Total other comprehensive loss ( 41 ) ( 294 )

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

Comprehensive income $ 8,852 $ 222

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

7 unchanged sentences

Preferred stock dividends — — — — — — ( 1,432 ) ( 1,432 )

Issuance of common stock under employee benefit plans — — 331,781 3 ( 3 ) — — —

Deemed repurchased shares of common and restricted stock for tax withholding — — ( 113,911 ) ( 1 ) ( 1,339 ) — — ( 1,340 )

Stock-based compensation — — — — 1,918 — — 1,918

Repurchased and retired shares of common stock — — ( 251,146 ) ( 2 ) — — ( 2,766 ) ( 2,768 )

Other comprehensive loss — — — — — ( 294 ) — ( 294 )

Net income — — — — — — 516 516

Balance as of March 31, 2024 400 $ 39,691 17,571,095 $ 176 $ 300,137 $ 1,350 $ ( 52,881 ) $ 288,473

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

Exercise of stock options — — 14,431 — 143 — — 143

2 unchanged sentences

Stock-based compensation — — — — 2,263 — — 2,263

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

Other comprehensive loss — — — — — ( 41 ) — ( 41 )

Net income — — — — — — 8,893 8,893

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.

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

Balance as of March 31, 2025 400 $ 39,691 18,036,421 $ 180 $ 304,533 $ ( 48 ) $ ( 34,344 ) $ 310,012

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

Preferred Stock Common Stock

7 unchanged sentences

Other comprehensive loss — — — — — ( 294 ) — ( 294 )

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

Net income — — — — — — 516 516

Balance as of March 31, 2024 400 $ 39,691 17,571,095 $ 176 $ 300,137 $ 1,350 $ ( 52,881 ) $ 288,473

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 gain — — — — — 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

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)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

Net income (loss) $ 3,149 $ ( 60,300 )

Net income $ 8,893 $ 516

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

4 unchanged sentences

Deferred income taxes 1,245 343

Loss on assets held for sale 1,527 —

Loss on disposals of long-lived assets 230 28

Impairment of goodwill and intangible assets — 64,000

Changes in operating assets and liabilities:

55 unchanged sentences

Basis of Presentation and Accounting

The accompanying unaudited, interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP.

The accompanying unaudited, interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP.

Business Combinations

11 unchanged sentences

In preparing financial statements in conformity with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

The Company evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions and various other assumptions that the Company believes are reasonable under the circumstances.

The Company evaluates these estimates and assumptions on an ongoing basis and bases its estimates on experience, current and expected future conditions and various other assumptions that the Company believes are reasonable under the circumstances.

Actual results may differ from those estimates under different assumptions or conditions, and the impact of such differences may be material to the Consolidated Financial Statements.

8 unchanged sentences

Restricted cash also includes a $ 24.2 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 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

Restricted cash on the accompanying Consolidated Balance Sheets as of March 31, 2025, and December 31, 2024, excluding the restricted certificate of deposit, was $ 1.7 million and $ 1.5 million, respectively.

Total restricted cash as of March 31, 2025, and December 31, 2024, was $ 25.9 million and $ 27.0 million, respectively.

Cash and cash equivalents and restricted cash as of March 31, 2025, and December 31, 2024, were as follows (in thousands):

As of March 31, 2025 As of December 31, 2024

Cash, cash equivalents, and restricted cash $ 187,502 $ 158,941

4 unchanged sentences

Long-lived assets are classified as held for sale when the assets are expected to be sold within the next 12 months and meet the other relevant held for sale criteria.

As such, the property is recorded at the lower of the carrying value or fair value, less costs to sell, until such time the asset is sold.

As such, properties are recorded at the lower of the carrying value or fair value, less costs to sell, until such time the asset is sold.

Goodwill and Intangible Assets

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.

Goodwill is not amortized.

Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values.

Goodwill and indefinite-lived intangible assets are 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) :

1 unchanged sentence

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

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

Indefinite-lived and finite-lived intangible assets acquired in business combinations are recorded at fair value on the acquisition date.

Finite-lived intangible assets are amortized on a straight-line basis over the estimated useful life of the asset.

The Company annually assesses goodwill and intangible assets for impairment in the fourth quarter, or more frequently if events or circumstances indicate that goodwill might be impaired or the carrying amount of an asset may not be recoverable.

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

1 unchanged sentence

If the carrying value of the reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment.

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

Indefinite-lived and finite-lived intangible assets acquired in business combinations are recorded at fair value on the acquisition date.

Finite-lived intangible assets are amortized on a straight-line basis over the estimated useful life of the asset.

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, an impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets.

If the carrying value is greater than the fair value, and such assets are not recoverable, the difference between the two values is recorded as an impairment.

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

Goodwill and Intangible Assets” in these Consolidated Financial Statements.

The Company accounts for its investments in less than majority owned companies in accordance with FASB ASC 323, Investments – Equity Method and Joint Ventures and FASB ASC 321, Investments – Equity Securities .

The Company applies ASC 323 to investments when it can exercise significant influence but does not control the operating and financial policies of the company.

This is generally represented by equity ownership of at least 20 percent but not more than 50 percent.

Investments accounted for under the equity method are initially recorded at cost and subsequently adjusted by the Company’s share of equity in income or losses after the date of acquisition.

The pro rata share of the operating results of the investee is reported in the Consolidated Statements of Income as equity investment income or loss.

Investments that do not meet the equity method requirements are accounted for using the cost method under ASC 321 with changes in the fair value of the investment reported in the Consolidated Statements of Income as equity investment income or loss.

The Company periodically evaluates its equity method investment for indicators of an other-than-temporary impairment.

Factors the Company considers when evaluating for an other-than-temporary impairment include the duration and severity of the impairment, the reasons for the decline in value, and the potential recovery period.

For an investee with impairment indicators, the Company measures fair value based on discounted cash flows or other appropriate valuation methods.

If it is probable that the Company will not recover the carrying amount of the investment, the impairment is

considered other-than-temporary and recorded in equity investment income or loss, and the equity investment balance is reduced to its fair value accordingly.

In each reporting period, the Company evaluates its cost method investment for observable price changes.

Factors the Company may consider when evaluating an observable price change may include significant changes in the regulatory, economic or technological environment, changes in general market conditions, bona fide offers to purchase or sell similar investments, and other criteria.

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

Prior to December 31, 2024, the Company accounted for its investments in less than majority owned companies in accordance with FASB ASC 323, Investments – Equity Method and Joint Ventures and FASB ASC 321, Investments – Equity Securities.

The Company applied ASC 323 to investments w hen it has the ability to exercise significant influence but does not control the operating and financial policies of the company, this generally represented by equity ownership of at least 20 percent but not more than 50 percent.

Investments accounted for under the equity method were initially recorded at cost and subsequently adjusted by the Company’s share of equity in income or losses after the date of acquisition.

The pro rata share of the operating results of the investee was reported in the accompanying Consolidated Statements of Income as equity investment income or loss.

Investments that did not meet the equity method requirements were accounted for using the cost method under ASC 321 with changes in the fair value of the investment reported in the accompanying Consolidated Statements of Income as equity investment income or loss.

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.

As a result, the Company recorded an investment loss of $ 3.3 million during the first quarter of 2024 on a 2015 cost method investment.

This investment loss was 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.

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

During the second quarter of 2024, the Company sold its remaining equity method investment back to the investee, as it was no longer considered a strategic investment.

As a result, during the three months ended June 30, 2024, the Company recorded an investment loss of $ 1.1 million on a 2013 equity method investment, which is included in equity investment loss in the Consolidated Statements of Income.

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.

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 .

As a result, the Company no longer has any investments accounted for under ASC 323 and ASC 321 as of March 31, 2025, and December 31, 2024.

Stock-based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718, Stock Compensation , which requires companies to expense share-based compensation based on fair value.

The Company accounts for stock-based compensation in accordance with FASB ASC 718, Stock Compensation , which requires companies to expense share-based compensation based on fair value, and ASU 2016-09, Compensation-Stock Compensation (Topic 718):

Improvements to Employee Share-Based Payment Accounting .

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.

9 unchanged sentences

The forfeiture assumption is ultimately adjusted to the actual forfeiture rate.

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 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

(Unaudited) (Unaudited)

If actual results differ significantly from these estimates, stock-based compensation expense could be higher or lower and have a material impact on the 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 March 31, 2025, and 2024 was as follows (in thousands):

Three Months Ended March 31,

Instructional costs and services $ 239 $ 223

10 unchanged sentences

To the extent performance goals are not met, compensation cost is not ultimately recognized against the goals and, to the extent previously recognized, compensation cost is reversed.

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 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.

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 months ended March 31, 2025, and 2024, the Company recognized an aggregate incentive-based compensation expense of $ 1.8 million and $ 1.9 million, respectively.

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 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

3 unchanged sentences

In the following table, revenue, shown net of grants and scholarships, is disaggregated by type of service provided.

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

Three Months Ended September 30, 2024

APUS RU HCN Corporate and Other Consolidated

Instructional services, net of grants and scholarships $ 76,037 $ 44,263 $ 13,014 $ 8,044 $ 141,358

Graduation fees 794 — — — 794

Textbook and other course materials — 7,814 2,120 — 9,934

Other fees 150 527 359 — 1,036

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

Three Months Ended September 30, 2023

APUS RU HCN Corporate and Other Consolidated

Instructional services, net of grants and scholarships $ 75,879 $ 43,743 $ 11,761 $ 8,618 $ 140,001

Graduation fees 381 — — — 381

Textbook and other course materials — 7,707 1,796 — 9,503

Other fees 146 623 184 — 953

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

Nine Months Ended September 30, 2024

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

Three Months Ended March 31, 2025

APUS RU HCN Corporate and Other Consolidated

4 unchanged sentences

Total Revenue $ 83,946 $ 59,251 $ 17,676 $ 3,678 $ 164,551

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

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 September 30, 2024, and December 31, 2023.

The Company has no contract assets or deferred contract costs as of March 31, 2025, and December 31, 2024.

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 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 March 31, 2025, was $ 25.1 million and included $ 15.8 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 9.3 million in consideration received in advance for future courses or terms, or student deposits, and represents the Company’s performance obligation to transfer future instructional services to students.

Deferred revenue at December 31, 2024, was $ 23.5 million and included $ 14.1 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 9.4 million in student deposits.

Deferred revenue represents the Company’s performance obligation to transfer future instructional services to students.

The Company’s remaining performance obligations represent the transaction price allocated to future reporting periods.

The Company has elected, as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with students that have an expected duration of one year or less.

When the Company begins performing its obligations, a contract receivable is created, resulting in accounts receivable on the Consolidated Balance Sheets.

When the Company begins providing the performance obligations, a contract receivable is created, resulting in accounts receivable on the accompanying Consolidated Balance Sheets.

The Company accounts for receivables in accordance with FASB ASC 310, Receivables .

8 unchanged sentences

Interest charged by HCN on payment plans was immaterial for the periods presented.

The Company’s principal leasing activities include leases for facilities, which are classified as operating leases, and leases for copiers and printers, which are classified as finance leases.

Assets held for sale

Assets held for sale at March 31, 2025, and December 31, 2024, represents excess real properties located in Charles Town, West Virginia, for the Company’s APUS Segment.

In the first quarter of 2025, the Company entered into an agreement to sell a building classified in assets held for sale as of December 31, 2024, for $ 7.0 million, and recorded a loss of $ 1.5 million, based on the contract amount less estimated costs to sell of $ 0.4 million.

The loss is included in Loss on assets held for sale in the accompanying Consolidated Statements of Income for the three months ended March 31, 2025.

At March 31, 2025, the carrying value of the building included in Assets held for sale in the accompany Consolidated Balance Sheets is $ 6.6 million.

The sale is expected to close in the third quarter of 2025.

In the fourth quarter of 2024, APUS entered into an agreement to sell a building currently in use for $ 16.6 million.

As a result, the building was reclassified to held for sale as of December 31, 2024 at the contract amount less estimated costs to sell of $ 0.7 million, or $ 15.9 million.

The sale is expected to close in the third quarter of 2025.

In the fourth quarter of 2024, APUS entered into an agreement to sell the undeveloped parcel of land for $ 0.5 million which approximated its carrying value.

As a result, the land was classified as held for sale as of December 31, 2024.

The sale closed in the first quarter of 2025.

The Company has operating leases for office space and campus facilities and finance leases for certain copiers and printers.

Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease:

8 unchanged sentences

These options are included in the lease term when it is reasonably certain that the option will be exercised.

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 Company leases corporate office space in Florida, under an operating lease that expires in January 2026.

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.

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 2034.

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

and Honolulu, Hawaii, under operating leases that expire through September 2036.

Operating lease assets are right-of-use, or ROU, assets, which represent the right to use the underlying assets for the lease term.

Operating lease assets are right-of-use assets, or ROU assets, which represent the right to use an underlying asset for the lease term.

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 Operating lease liabilities, current and long-term, on the accompanying 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.

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

The ROU asset includes all lease payments and excludes lease incentives.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

There are no variable lease payments.

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.

Lease expense for the three months ended March 31, 2025, and 2024, was $ 4.9 million and $ 5.2 million, 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 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.

Cash paid for amounts included in the present value of operating lease liabilities during the three months ended March 31, 2025, and 2024, was $ 4.7 million and $ 4.8 million, respectively, and is included in operating cash flows.

Loss on leases

1 unchanged sentence

The Company paid a lease termination fee of $ 2.2 million and recorded a loss of $ 2.1 million as a result of this lease termination.

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.

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.

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.

Additionally, in the first quarter of 2024, the Company’s RU Segment began consolidating two Minnesota campuses and recorded a loss of $ 0.8 million on the Minnesota campus lease obligations.

Lease losses on lease termination and campus consolidation totaling $ 2.9 million for the three months ended March 31, 2024, are included in Loss on leases in the accompanying Consolidated Statements of Income.

In conjunction with the lease termination and campus consolidation, the Company reduced Operating lease assets, net, and Lease liabilities, current and long term by $ 5.0 million and $ 4.2 million, respectively, during the three months ended March 31, 2024.

There was no loss on leases during the three months ended March 31, 2025.

Finance Leases

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

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 $ 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):

As of March 31, 2025, the total finance lease liability was $ 0.4 million, with an average interest rate of 7.00 %.

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

Lease amortization expense associated with the Company’s finance leases was $ 46,000 and $ 27,000 for the three months ended March 31, 2025, and 2024, respectively, and is recorded in Depreciation and amortization expense in the accompanying 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, 2025 (in thousands):

Maturity of Lease Liabilities (Unaudited) Operating Leases Finance Leases

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Goodwill and Intangible Assets

In connection with its acquisitions of RU and HCN, the Company applied FASB ASC 805 and recorded goodwill of $ 217.4 million and $ 38.6 million, 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 for RU and HCN Segment goodwill reducing the carrying value to $ 33.0 million and $ 26.6 million, respectively.

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

There is no goodwill recorded in the APUS Segment.

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 later recorded non-cash impairment charges reducing the carrying value of RU Segment indefinite-lived intangible assets to $ 24.5 million.

There were no indefinite-lived intangible assets recorded in conjunction with the acquisition of GSUSA.

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

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):

Simplifying the Test for Goodwill Impairment .

The Company annually assesses goodwill and indefinite-lived intangible assets for impairment, or more frequently if events or changes in circumstances indicate that goodwill and indefinite-lived intangible assets might be impaired.

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

The quantitative test compares the fair value of the reporting unit to its carrying value.

If the carrying value of the reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment.

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 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.

During the three months ended March 31, 2025, 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.

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.

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 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 during the three months ended June 30, 2023.

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.

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 nine months ended September 30, 2024 (in thousands):

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.

The following table summarizes the carrying amount of goodwill by reportable segment (in thousands):

APUS Segment RU Segment HCN Segment Total Goodwill

Goodwill as of December 31, 2024 $ — $ 33,030 $ 26,563 $ 59,593

Goodwill acquired — — — —

Impairment — — — $ —

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):

Goodwill as of March 31, 2025 $ — $ 33,030 $ 26,563 $ 59,593

Goodwill and indefinite-lived intangible assets are reviewed for impairment annually and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist.

The Company’s annual assessment during the fourth quarter of 2024 concluded that the fair value of RU and HCN exceeded their carrying values by approximately $ 71.9 million, or 62 %, and $ 8.6 million, or 24 %, respectively.

The following table represents the balance of the Company’s intangible assets as of March 31, 2025, and December 31, 2024 (in thousands):

Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount

16 unchanged sentences

$ 95,547 $ 40,826 $ 26,500 $ 28,221

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

Gross Carrying Amount Accumulated Amortization Impairment Net Carrying Amount

Finite-lived intangible assets

Student roster $ 20,000 $ 20,000 $ — $ —

Curricula 14,563 11,400 — 3,163

Student and customer contracts and relationships 4,614 4,465 — 149

Lead conversions 1,500 1,500 — —

Non-compete agreements 86 86 — —

Tradename 35 35 — —

Accreditation and licenses 28 22 — 6

Total finite-lived intangible assets $ 40,826 $ 37,508 $ — $ 3,318

Indefinite-lived intangible assets

Trade name 28,498 — 8,000 20,498

Accreditation, licensing, and Title IV 26,186 — 18,500 7,686

Affiliation agreements 37 — — 37

Total indefinite-lived intangible assets

54,721 — 26,500 28,221

Total intangible assets $ 95,547 $ 37,508 $ 26,500 $ 31,539

All recorded identified intangible assets with a definite useful life related to the acquisitions of RU, HCN, and GSUSA, were fully amortized as of December 31, 2024.

Finite-lived intangible assets were amortized in a manner that reflected the estimated economic benefit of the intangible assets and were amortized on a straight-line basis.

For the three months ended March 31, 2024, the Company recorded amortization expense related to definite-lived intangible assets of approximately $ 1.3 million.

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

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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)

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 March 31,

Income (loss) per common share

11 unchanged sentences

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

(Unaudited) (Unaudited)

Three Months Ended March 31,

Antidilutive securities:

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

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

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

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

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

As of March 31, 2025, and December 31, 2024, the remaining unamortized deferred financing fees were $ 2.7 million and $ 3.0 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 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.

There were no borrowings outstanding under the Revolving Credit Facility as of March 31, 2025, and December 31, 2024.

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 September 30, 2024, the Facilities’ borrowing rate was 10.86 %, excluding any offset from the interest rate cap agreement described below.

As of March 31, 2025, the Facilities’ borrowing rate was 9.94 %.

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 $ 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.

Interest expense, including offsets from the interest rate cap agreement in 2024 was $ 2.4 million and $ 1.9 million for the three months ended March 31, 2025, and 2024, respectively.

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

With this prepayment, APEI is not required to make quarterly principal payments on the Term Loan until payment of the outstanding principal amount at maturity in September 2027, subject to certain exceptions, including with respect to annual excess cash flows, proceeds from the sale of certain assets, casualty and condemnation events, and prohibited debt issuances.

During the three months ended June 30, 2024, as a result of the annual 2023 excess cash flow calculation, APEI paid $ 2.6 million in principal on the Term Loan.

APEI had no mandatory prepayment obligation for the year ended December 31, 2024.

The Facilities are and will be guaranteed by APEI’s subsidiaries and certain of APEI’s future subsidiaries that are required to become a party thereto as guarantors, or Guarantors.

The obligations of APEI and the Guarantors are secured by a pledge of substantially all of their respective assets, pursuant to the terms of the Collateral Agreement dated as of the RU Closing Date, by and among APEI, the Agent and the Guarantors from time to time party thereto.

The Credit Agreement contains customary affirmative and negative covenants, including limitations on APEI’s and its subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions, and enter into affiliate transactions, in each case, subject to certain exceptions, as well as customary representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Facilities.

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 September 30, 2024, APEI was in compliance with all debt covenants.

As of March 31, 2025, the Company 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 September 30, 2024, and December 31, 2023 (in thousands):

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

Long-term debt consists of the following as of March 31, 2025, and December 31, 2024 (in thousands):

As of March 31, 2025 As of December 31, 2024

Credit agreement $ 96,425 $ 96,425

3 unchanged sentences

Long-Term Debt $ 93,747 $ 93,424

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

Scheduled maturities of long-term debt as of March 31, 2025, are as follows (in thousands):

Maturities of Long-Term Debt (Unaudited) Loan Payments

2 unchanged sentences

Derivatives and Hedging

The Company is subject to interest rate risk, including because all outstanding borrowings under the Credit Agreement are subject to a variable rate of interest.

The Company is subject to interest rate risk, as all outstanding borrowings under the Credit Agreement are subject to a variable rate of interest.

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, provided the Company with interest rate protection in the event LIBOR exceeded 2.0 %.

This interest rate cap agreement, designated as a cash flow hedge, provided the Company with interest rate protection in the event the LIBOR rate 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 was structured in a way that there was 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.

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

The interest rate cap agreement expired on December 31, 2024.

In January 2025, the Company entered into a new interest rate cap agreement, with a notional value of $ 50.0 million.

This new interest rate cap agreement, designated as a cash flow hedge, provides the Company with interest rate protection in the event that the Term SOFR rate exceeds 5.00 %, and is scheduled expire on June 30, 2026.

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.

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

The Company has three reportable segments:

the APUS Segment, the RU Segment, and the HCN Segment.

The Company’s Chief Executive Officer, as the chief operating decision maker, or CODM, organizes the company, manages resource allocations, and measures performance among three operating and reportable segments:

Corporate and Other includes GSUSA revenue and expenses, and unallocated corporate activity and eliminations to reconcile segment results to the Consolidated Financial Statements.

GSUSA does not meet the quantitative thresholds to qualify as a reportable segment.

therefore, its operational activities are presented below within Corporate and Other.

Adjustments to reconcile segment results to the Consolidated Financial Statements, including unallocated corporate activity and eliminations are also included in Corporate and Other.

In accordance with FASB ASC 280, Segment Reporting , the chief operating decision-maker has been identified as the Company’s Chief Executive Officer.

The Company’s Chief Executive Officer reviews operating results to make decisions about allocating resources and assessing performance for the APUS, RU, and HCN Segments.

The CODM reviews information about each reportable segment’s revenue and categorized expenses, and allocates resources to, and measures the performance of, each reportable segment using reportable segment operating income (loss).

The CODM does not evaluate reportable segment asset or liability information.

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

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

2024 2023 2024 2023

(Unaudited) (Unaudited)

APUS Segment $ 76,981 $ 76,406 $ 234,685 $ 223,941

RU Segment 52,604 52,073 158,773 161,511

HCN Segment 15,493 13,741 48,349 41,147

Three Months Ended March 31,

(In thousands)

Revenue 83,946 80,656

Instructional costs and services 27,311 25,788

Selling and promotional 15,701 15,184

General and administrative 14,234 15,354

Income from operations before interest and income taxes 24,126 23,087

Revenue 59,251 53,135

Instructional costs and services 33,144 33,097

Selling and promotional 16,452 15,122

General and administrative 7,390 7,637

Loss from operations before interest and income taxes ( 72 ) ( 8,966 )

Revenue 17,676 16,447

Instructional costs and services 11,310 10,552

Selling and promotional 1,947 1,105

General and administrative 4,660 4,773

Loss from operations before interest and income taxes ( 746 ) ( 304 )

Corporate and Other

Total Revenue $ 153,122 $ 150,838 $ 460,449 $ 447,741

Revenue 3,678 4,194

Instructional costs and services 3,179 2,988

Selling and promotional 1,105 1,045

General and administrative 10,123 8,513

Loss from operations before interest and income taxes ( 11,062 ) ( 8,635 )

Total reportable segment revenue 160,873 150,238

Corporate and other revenue 3,678 4,194

Total consolidated revenue 164,551 154,432

Total reportable segment income from operations before interest and income taxes 23,308 13,817

Corporate and other (loss) from operations before interest and income taxes ( 11,062 ) ( 8,635 )

Total consolidated income from operations before interest and income taxes 12,246 5,182

(1) Includes loss on assets held for sale, loss on disposal of long-lived assets, and depreciation and amortization expense.

(2) Includes loss on disposal of long-lived assets and depreciation and amortization expense.

(3) Includes depreciation and amortization expense.

Three Months Ended March 31,

(In thousands)

Depreciation and amortization

2 unchanged sentences

HCN Segment 505 322

Corporate and Other 283 167 886 450

Total Depreciation and amortization $ 5,080 $ 7,026 $ 15,440 $ 22,735

Income (loss) from operations before interest and income taxes:

APUS Segment $ 20,765 $ 21,948 $ 62,143 $ 57,963

RU Segment ( 7,609 ) ( 10,570 ) ( 25,401 ) ( 100,708 )

HCN Segment ( 771 ) ( 641 ) ( 1,819 ) ( 2,179 )

Total reportable segment depreciation and amortization 3,659 4,846

Corporate and Other 333 282

Total income (loss) from operations before interest and income taxes $ 4,129 $ 6,400 $ 11,531 $ ( 64,238 )

Interest income (expense):

Total consolidated depreciation and amortization 3,992 5,128

Interest expense, net

APUS Segment 319 412

1 unchanged sentence

HCN Segment 85 25

Total reportable segment interest expense, net 785 437

Corporate and Other ( 1,672 ) ( 563 )

Total Interest expense, net $ ( 631 ) $ ( 792 ) $ ( 1,542 ) $ ( 3,668 )

Total consolidated interest expense, net ( 887 ) ( 126 )

Income tax expense (benefit)

2 unchanged sentences

HCN Segment ( 259 ) ( 71 )

Corporate and Other ( 4,106 ) ( 1,351 ) ( 11,328 ) ( 5,259 )

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

Capital expenditures:

APUS Segment $ 1,670 $ 1,243 $ 3,100 $ 2,892

RU Segment 1,011 214 4,763 3,499

HCN Segment 2,618 331 7,274 1,363

Corporate and Other 1,013 1,164 2,591 1,751

Total Capital Expenditures $ 6,312 $ 2,952 $ 17,728 $ 9,505

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

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

APUS Segment $ 101,767 $ 108,749

RU Segment 214,749 220,901

HCN Segment 76,115 60,270

Total reportable segment income tax expense 7,313 4,679

Corporate and Other ( 4,847 ) ( 3,466 )

Total Assets $ 569,588 $ 557,386

Commitments and Contingencies

Total consolidated income tax expense 2,466 1,213

Contingencies

The Company accrues for costs associated with contingencies, including, but not limited to, regulatory compliance and legal matters, when such costs are probable and can be reasonably estimated.

10 unchanged sentences

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

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

(Unaudited) (Unaudited)

2024 2023 2024 2023

Three Months Ended March 31,

DoD tuition assistance programs 44 % 48 %

3 unchanged sentences

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

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

(Unaudited) (Unaudited)

2024 2023 2024 2023

Three Months Ended March 31,

Title IV programs 77 % 75 %

2 unchanged sentences

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

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

(Unaudited) (Unaudited)

2024 2023 2024 2023

Three Months Ended March 31,

Title IV programs 85 % 83 %

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 an annual rate that is equal to SOFR (selected by the Company for each divided period), plus 10.00 %.

The Series A Senior Preferred Stock has cumulative dividends that accrue daily at the annual rate which is equal to Term SOFR (selected by the Company for each divided period), plus 10.00 %.

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 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.

As of March 31, 2025, the dividend rate was 14.32 % 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.

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 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.

During the three months ended March 31, 2025, and 2024, dividends declared and paid on the Series A Senior Preferred Stock were $ 1.4 million and $ 1.5 million, 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 $ 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 of $ 45.0 million and $ 47.0 million as of March 31, 2025, and December 31, 2024, 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 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.

As of March 31, 2025, and December 31, 2024, the make-whole payment included in the Liquidation Preference was $ 2.0 million and $ 4.0 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.

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

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

As of March 31, 2025 As of December 31, 2024

Series A Senior Preferred Stock (plus accrued and unpaid dividends) $ 40,068 $ 40,068

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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