AMERICAN PUBLIC EDUCATION INC 10-Q

Item 1. Financial Statements AMERICAN PUBLIC EDUCATION, INC. Consolidated Balance Sheets (In thousands, except share and per share amounts) As of March 31, 2026 As of December 31, 2025 ASSETS (Unaudited) Current assets: Cash, cash equivalents, and restricted cash (Note 2) $ 220,998 $ 176,499 Accounts receivable, net of allowance of $ 21,820 in 2026 and $ 21,113 in 2025 38,710 65,662 Prepaid expenses 19,152 14,197 Income tax receivable 3,267 3,458 Total current assets 282,127 259,816 Property and equipment, net 68,800 70,598 Operating lease assets, net 54,925 57,686 Deferred income taxes 38,247 39,176 Intangible assets, net 28,221 28,221 Goodwill 59,593 59,593 Other assets, net 6,001 6,328 Total assets $ 537,914 $ 521,418 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 8,138 $ 4,822 Accrued compensation and benefits 22,317 22,463 Accrued liabilities 22,643 13,375 Deferred revenue and student deposits 25,193 23,016 Lease liabilities, current 11,182 11,374 Long-term debt, current 5,063 — Total current liabilities 94,536 75,050 Lease liabilities, long-term 54,010 56,921 Long-term debt, net 83,203 94,665 Total liabilities 231,749 226,636 Commitments and contingencies (Note 9) Stockholders’ equity: Common stock, $ .01 par value; 100,000,000 shares authorized; 18,411,154 issued and outstanding in 2026; 18,125,860 issued and outstanding in 2025 184 181 Additional paid-in capital 305,750 311,119 Accumulated other comprehensive gain — ( 18 ) Accumulated earnings (deficit) 231 ( 16,500 ) Total stockholders’ equity 306,165 294,782 Total liabilities and stockholders’ equity $ 537,914 $ 521,418 The accompanying notes are an integral part of these Consolidated Financial Statements. 3 AMERICAN PUBLIC EDUCATION, INC. Consolidated Statements of Income (In thousands, except per share amounts) Three Months Ended March 31, 2026 2025 (Unaudited) Revenue $ 174,738 $ 164,551 Costs and expenses: Instructional costs and services 74,630 74,944 Selling and promotional 37,867 35,205 General and administrative 36,290 36,407 Depreciation and amortization 4,154 3,992 Loss on assets held for sale (Note 2) — 1,527 Loss on disposals of long-lived assets 154 230 Total costs and expenses 153,095 152,305 Income from operations before interest and income taxes 21,643 12,246 Loss on extinguishment of debt (Note 7) ( 1,672 ) — Interest expense, net ( 725 ) ( 887 ) Income before income taxes 19,246 11,359 Income tax expense 1,515 2,466 Net income $ 17,731 $ 8,893 Preferred stock dividends — 1,432 Net income available to common stockholders $ 17,731 $ 7,461 Income per common share: Basic $ 0.97 $ 0.42 Diluted $ 0.94 $ 0.41 Weighted average number of common shares: Basic 18,282 17,840 Diluted 18,804 18,417 The accompanying notes are an integral part of these Consolidated Financial Statements. 4 AMERICAN PUBLIC EDUCATION, INC. Consolidated Statements of Comprehensive Income (Loss) (In thousands) Three Months Ended March 31, 2026 2025 (Unaudited) Net income $ 17,731 $ 8,893 Other comprehensive gain (loss), net of tax: Unrealized loss on hedging derivatives — ( 63 ) Tax effect — 17 Unrealized loss on hedging derivatives, net of taxes — ( 46 ) Reclassification of gain to net income 24 7 Tax effect ( 6 ) ( 2 ) Reclassifications of gain to net income, net of taxes 18 5 Total other comprehensive gain (loss) 18 ( 41 ) Comprehensive income $ 17,749 $ 8,852 The accompanying notes are an integral part of these Consolidated Financial Statements. 5 AMERICAN PUBLIC EDUCATION, INC. Consolidated Statements of Stockholders’ Equity (Unaudited) (In thousands, except share amounts) Additional Paid-in Capital Accumulated Other Comprehensive Income (loss) Accumulated Earnings (Deficit) Total Stockholders’ Equity Preferred Stock Common Stock Shares Amount Shares Amount Balance as of December 31, 2025 — $ — 18,125,860 $ 181 $ 311,119 $ ( 18 ) $ ( 16,500 ) $ 294,782 Exercise of stock options — — 470 — 17 — — 17 Issuance of common stock under employee benefit plans — — 480,429 5 ( 5 ) — — — Deemed repurchased shares of common and restricted stock for tax withholding — — ( 177,765 ) ( 2 ) ( 7,708 ) — — ( 7,710 ) Stock-based compensation — — — — 2,327 — — 2,327 Repurchased and retired shares of common stock — — ( 17,840 ) — — — ( 1,000 ) ( 1,000 ) Other comprehensive gain — — — — — 18 — 18 Net income — — — — — — 17,731 17,731 Balance as of March 31, 2026 — $ — 18,411,154 $ 184 $ 305,750 $ — $ 231 $ 306,165 Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Earnings (Deficit) Total Stockholders’ Equity Preferred Stock Common Stock Shares Amount Shares Amount Balance as of December 31, 2024 400 $ 39,691 17,712,575 $ 177 $ 305,823 $ ( 7 ) $ ( 41,805 ) $ 303,879 Preferred stock dividends — — — — — — ( 1,432 ) ( 1,432 ) Exercise of stock options — — 14,431 — 143 — — 143 Issuance of common stock under employee benefit plans — — 480,515 5 ( 5 ) — — — Deemed repurchased shares of common and restricted stock for tax withholding — — ( 171,100 ) ( 2 ) ( 3,691 ) — — ( 3,693 ) Stock-based compensation — — — — 2,263 — — 2,263 Other comprehensive loss — — — — — ( 41 ) — ( 41 ) Net income — — — — — — 8,893 8,893 Balance as of March 31, 2025 400 $ 39,691 18,036,421 $ 180 $ 304,533 $ ( 48 ) $ ( 34,344 ) $ 310,012 The accompanying notes are an integral part of these Consolidated Financial Statements. 6 AMERICAN PUBLIC EDUCATION, INC. Consolidated Statements of Cash Flows (In thousands) Three Months Ended March 31, 2026 2025 (Unaudited) Operating activities Net income $ 17,731 $ 8,893 Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 4,154 3,992 Loss on extinguishment of debt 1,627 — Amortization of debt issuance costs 235 348 Stock-based compensation 2,327 2,263 Deferred income taxes 929 1,245 Loss on assets held for sale — 1,527 Loss on disposals of long-lived assets 154 230 Changes in operating assets and liabilities: Accounts receivable, net of allowance for bad debt 26,952 20,593 Prepaid expenses ( 4,955 ) ( 6,919 ) Income tax receivable 191 1,126 Operating leases, net ( 289 ) ( 58 ) Other assets 285 ( 405 ) Accounts payable 3,316 2 Accrued compensation and benefits ( 146 ) ( 2,507 ) Accrued liabilities 8,616 5,055 Deferred revenue and student deposits 2,177 1,613 Net cash provided by operating activities 63,304 36,998 Investing activities Capital expenditures ( 2,527 ) ( 3,902 ) Proceeds from the sale of real property — 500 Net cash used in investing activities ( 2,527 ) ( 3,402 ) Financing activities Cash paid for repurchase of common stock ( 8,710 ) ( 3,693 ) Cash received from exercise of stock options 17 143 Preferred stock dividends paid — ( 1,432 ) Cash paid for principal on borrowings and finance leases ( 96,478 ) ( 53 ) Cash received from borrowings 90,000 — Cash paid for debt issuance costs ( 1,107 ) — Net cash used in financing activities ( 16,278 ) ( 5,035 ) Net increase in cash, cash equivalents, and restricted cash 44,499 28,561 Cash, cash equivalents, and restricted cash at beginning of period 176,499 158,941 Cash, cash equivalents, and restricted cash at end of period $ 220,998 $ 187,502 Supplemental disclosure of cash flow information Interest paid $ 1,762 $ 2,398 Income taxes paid $ 396 $ 80 The accompanying notes are an integral part of these Consolidated Financial Statements. 7 AMERICAN PUBLIC EDUCATION, INC. Notes to Consolidated Financial Statements Note 1. Nature of the Business American Public Education, Inc., or APEI, together with its subsidiary referred to as the Company, is a provider of online and campus-based postsecondary education to students. Effective March 2, 2026, the Company completed the merger of the legal entities that owned and operated the Company’s three institutions, American Public University System, or APUS, Rasmussen University, or RU, and Hondros College of Nursing, or HCN, with American Public University System, Inc. surviving the merger. The Company provides education services through the following reportable segments: • Military+, which was formerly the APUS Segment, provides online postsecondary education directed primarily at the needs of the military, veterans, extended military and veteran families, and other public service and service-minded communities, through APUS, which includes American Military University and American Public University. • Health+, consisting of the businesses that formerly comprised the RU Segment and the HCN Segment, provides nursing- and health sciences-focused and other postsecondary education, including business, technology, and education, to students through RU and HCN. Until the planned combination of APUS, RU, and HCN into one consolidated institution named American Public University System, or the Combination, is approved by the U.S. Department of Education, or ED, and the U.S. Department of Education expands the scope of APUS’s certification to include RU and HCN, each institution will continue to operate as a separately accredited institution with its own education regulatory approvals. APUS, RU, and HCN are licensed or otherwise authorized by state authorities to offer education programs to the extent the institutions believe such licenses or authorizations are required, and APUS, RU, and HCN are certified by ED to participate in student financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, or Title IV programs. The accompanying Consolidated Financial Statements reflect the operations of American Public Training LLC, which is referred to herein as Graduate School USA, or GSUSA, through July 25, 2025, or the GSUSA Sale Date. Adjustments to reconcile segment results to the Consolidated Financial Statements are included in Corporate and Other. These adjustments include unallocated corporate activity and eliminations, and, prior to the GSUSA Sale Date, the operational activities of GSUSA. Prior period segment disclosures have been recast to conform to the current period presentation. Please refer to “Note 8. Segment Information” for more information on the Company’s reportable segments. Note 2. Summary of Significant Accounting Policies A summary of the Company’s significant accounting policies follows: Basis of Presentation and Accounting The Company has prepared the accompanying unaudited, interim consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP. Business Combinations The Company accounts for business combinations in accordance with Financial Accounting Standards Board Accounting Standards Codification 805, Business Combinations , or FASB ASC 805, which requires companies to use the acquisition method for all business combinations. Under ASC 805, the assets and liabilities of an acquired company are reported at business fair value along with the fair value of acquired intangible assets at the date of acquisition. Goodwill 8 represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed, and the fair value assigned to identifiable intangible assets. Principles of Consolidation The accompanying unaudited interim consolidated financial statements reflect the accounts of APEI and its wholly owned subsidiary. All material intercompany transactions and balances have been eliminated in consolidation. The Company’s reportable segments are determined in accordance with FASB ASC 280, Segment Reporting, and are based upon how the chief operating decision maker, or CODM, analyzes performance and makes decisions. The Company organizes its business across two reportable segments: Military+ and Health+. Each segment represents an educational division that provides a variety of postsecondary academic programs. Unaudited Interim Consolidated Financial Information The unaudited interim Consolidated Financial Statements do not include all the information and notes required by GAAP for audited annual financial statement presentations. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s financial position, results of operations, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for future periods, including the year ending December 31, 2026. This Quarterly Report on Form 10-Q, or this Quarterly Report, should be read in conjunction with the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or the Annual Report. Use of Estimates 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 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. Cash and Cash Equivalents The Company considers all short-term highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of demand deposits with financial institutions, money market funds, and U.S. Treasury bills. Cash and cash equivalents are Level 1 assets in the fair value reporting hierarchy. Restricted Cash Restricted cash includes funds held for students for unbilled educational services that were received from Title IV programs. As a trustee of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with ED. Total restricted cash as of March 31, 2026, and December 31, 2025, was $ 3.4 million and $ 2.4 million, respectively. Assets Held for Sale Assets held for sale represent excess real property located in Charles Town, West Virginia of the Company’s Military+ segment. The Company classifies long-lived assets 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 properties are recorded at the lower of the carrying value or fair value, less costs to sell, until such time the assets are sold. In the first quarter of 2025, APUS 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 was included in loss on assets held for sale in the accompanying Consolidated Statements of Income for the three months ended March 31, 2025. The sale was completed in June 2025 for net sales proceeds of 9 $ 6.6 million. There were no assets held for sale as of March 31, 2026, and December 31, 2025. 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 of acquired intangible assets at the date of acquisition. Goodwill is not amortized. The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles Goodwill and Other , and Accounting Standards Update, or ASU, 2017-04, Intangibles – Goodwill and Other (Topic 350) : Simplifying the Test for Goodwill Impairment . The Company’s goodwill and intangible assets are deductible for tax purposes. The Company annually assesses goodwill for impairment, or more frequently if events or circumstances indicate that goodwill might be impaired. Goodwill impairment testing consists of an optional qualitative assessment as well as a quantitative test. The quantitative test compares the fair value of a 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. 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 indefinite-lived and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets. For additional details regarding goodwill and intangible assets, please refer to “Note 5. Goodwill and Intangible Assets” to the Consolidated Financial Statements. Series A Senior Preferred Stock The Company redeemed all 400 outstanding shares of the Series A Senior Preferred Stock in June 2025. Accordingly, there were no preferred stock dividends declared or paid during the three months ended March 31, 2026. During the three months ended March 31, 2025, dividends declared and paid on the Series A Senior Preferred Stock were $ 1.4 million. 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, 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. 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, and is measured using the Company’s closing stock price on the date of the grant. An accelerated one-year period is used to recognize stock-based compensation cost for employees who have reached certain service and retirement eligibility criteria on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model that uses certain assumptions. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of the Company’s common stock. In addition, the Company determines the risk-free interest rate by selecting the U.S. Treasury constant maturity for the same maturity as the estimated life of the option quoted on an investment basis in effect at the time of grant for that business day. Estimating the percentage of share-based awards that are expected to vest, and in the case of performance stock units, the level of performance that will be achieved and the number of shares that will be earned, requires judgment. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. 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 accompanying Consolidated Financial Statements. Estimates of fair value are subjective and are not 10 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, 2026, and 2025, was as follows (in thousands): Three Months Ended March 31, 2026 2025 (Unaudited) Instructional costs and services $ 233 $ 239 Selling and promotional 211 204 General and administrative 1,883 1,820 Total stock-based compensation expense $ 2,327 $ 2,263 Incentive-based Compensation The Company provides incentive-based compensation opportunities to certain employees through cash incentive and equity awards. The expense associated with these awards is reflected within the Company’s operating expenses. For the years ending December 31, 2026, and 2025, the Management Development and Compensation Committee of the Board approved annual incentive arrangements for senior management employees. The aggregate amount of awards payable, if any, is dependent upon the achievement of certain Company financial and operational goals and the satisfaction of individual performance goals. Given that the awards are generally contingent upon achieving annual objectives, final determination of the current year incentive awards cannot be made until after the results for the year are finalized. The Company recognizes the estimated fair value of performance-based restricted stock units by assuming the satisfaction of any performance-based objectives at the “target” level, which is the most probable outcome determined for accounting purposes at the time of grant and multiplying the corresponding number of shares earned based upon such achievement by the closing price of the Company’s stock on the date of grant. 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 months ended March 31, 2026 and 2025, the Company recognized an aggregate incentive-based compensation expense of $ 1.9 million and $ 1.8 million, respectively. Income Taxes 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. Recent Accounting Pronouncements The Company considers the applicability and impact of all ASUs issued by the FASB. All ASUs issued subsequent to the filing of the Annual Report on March 12, 2026, were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s consolidated financial position and/or results of operations. Note 3. Revenue Disaggregation of Revenue In the following table, revenue, shown net of grants and scholarships, is disaggregated by source. The table also includes a reconciliation of the disaggregated revenue within the reportable segments (in thousands): 11 Three Months Ended March 31, 2026 (Unaudited) Military+ Health+ Corporate and Other Consolidated Instructional services, net of grants and scholarships $ 88,005 $ 70,920 $ ( 61 ) $ 158,864 Graduation fees 1,113 — — 1,113 Textbook and other course materials — 12,236 — 12,236 Other fees 325 2,200 — 2,525 Total Revenue $ 89,443 $ 85,356 $ ( 61 ) $ 174,738 Three Months Ended March 31, 2025 (Unaudited) Military+ Health+ Corporate and Other Consolidated Instructional services, net of grants and scholarships $ 82,551 $ 64,115 $ 3,678 $ 150,344 Graduation fees 1,087 — — 1,087 Textbook and other course materials — 11,822 — 11,822 Other fees 308 990 — 1,298 Total Revenue $ 83,946 $ 76,927 $ 3,678 $ 164,551 For the three months ended March 31, 2026, Corporate and Other includes the elimination of intersegment revenue for courses taken by employees of one reportable segment at another reportable segment. For the three months ended March 31, 2025, Corporate and Other includes tuition and contract training revenue earned by GSUSA and the elimination of intersegment revenue for courses taken by employees of one segment at other segments. Contract Balances and Performance Obligations The Company had no contract assets or deferred contract costs as of March 31, 2026, and December 31, 2025. The Company recognizes a contract liability, or deferred revenue, when a student begins a course or starts a term. Deferred revenue at March 31, 2026, was $ 25.2 million and includes $ 16.6 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 8.6 million in consideration received in advance for future courses or terms, or student deposits. Deferred revenue represents the Company’s performance obligation to transfer future instructional services to students. Deferred revenue at December 31, 2025, was $ 23.0 million and includes $ 15.0 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $ 8.0 million in student deposits. 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 providing performance obligations, a contract receivable is created, resulting in accounts receivable on the accompanying Consolidated Balance Sheets. The Company uses the portfolio approach, a practical expedient, to evaluate if a contract exists and to assess collectability at the time of contract inception based on historical experience. Contracts are subsequently reviewed for collectability if significant events or circumstances indicate a change. The allowance for doubtful accounts is based on management’s evaluation of the status of existing accounts receivable. Among other factors, management considers the age of the receivable, the anticipated source of payment, and historical allowance considerations. Consideration is also given to any specific known risk areas among the existing accounts receivable balances. Recoveries of receivables previously written off are recorded when received. APUS and RU do not charge interest on past due accounts receivable. HCN charges interest on payment plans when a student graduates or otherwise exits the program. Interest charged by HCN on payment plans was not material for the periods presented. 12 Note 4. Leases 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: • the lease transfers ownership of the asset at the end of the lease; • the lease grants an option to purchase the asset that the lessee is expected to exercise; • the lease term reflects a major part of the asset’s economic life; • the present value of the lease payments equals or exceeds the fair value of the asset; or • the asset is specialized with no alternative use to the lessor at the end of the term. Operating Leases The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for one or more years. 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 2029. Excluding a campus being closed in 2026, the Company leases 27 campuses located in eight states for the Health+ segment under operating leases that expire through December 2034. Prior to the GSUSA Sale Date, GSUSA leased classroom and administrative office space in Washington, D.C. and Honolulu, Hawaii. 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 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 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 months ended March 31, 2026, was $ 3.5 million compared to $ 4.9 million for the three months ended March 31, 2025. Lease expense for the three months ended March 31, 2025, included lease expense for leased classroom and administrative office space leased by GSUSA prior to the GSUSA Sale Date. 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 months ended March 31, 2026, was $ 3.5 million, compared to $ 4.7 million for the three months ended March 31, 2025, and is included in operating cash flows. Finance Leases The Company leases copiers and printers pursuant to leases that are classified as finance leases and that expire in 2027. The Company pledged the assets financed to secure the outstanding leases. As of March 31, 2026, the total finance lease liability was $ 0.2 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 for both the three months ended March 31, 2026, and 2025, 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, 2026 (in thousands): 13 Maturity of Lease Liabilities (Unaudited) Operating Leases Finance Leases 2026 (remaining) $ 10,754 $ 160 2027 13,957 36 2028 12,560 — 2029 10,831 — 2030 9,221 — 2031 8,926 — 2032 and beyond 11,468 — Total future minimum lease payments $ 77,717 $ 196 Less: imputed interest ( 12,714 ) ( 7 ) Present value of operating lease liabilities $ 65,003 $ 189 Less: lease liabilities, current ( 10,993 ) ( 189 ) Lease liabilities, long-term $ 54,010 $ — Balance Sheet Classification (Unaudited) Current: Operating lease liabilities, current $ 10,993 Finance lease liabilities, current 189 Long-term: Operating lease liabilities, long-term 54,010 Finance lease liabilities, long-term — Total lease liabilities $ 65,192 Other Information (Unaudited) Weighted average remaining lease term (in years): Operating leases 5.99 Finance leases 0.91 Weighted average discount rate: Operating leases 5.4 % Finance leases 7.0 % Note 5. Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets are reviewed for impairment annually, or more frequently if events or circumstances indicate that goodwill might be impaired or the carrying amount of an asset may not be recoverable. During the three months ended March 31, 2026, in connection with the Combination and just prior to the merger of the legal entities that owned and operated the Company’s three institutions, the Company completed a quantitative assessment of goodwill and indefinite-lived intangibles for the Company’s prior reportable segments RU and HCN. The assessment concluded that the fair value of goodwill for RU and HCN exceeded their carrying values by approximately $ 90.8 million, or 60 %, and $ 26.0 million, or 55 %, respectively. All recorded identified intangible assets with a definite useful life were fully amortized as of December 31, 2024. Note 6. Income Per Common Share Income per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income available to common stockholders is net income adjusted for preferred stock dividends declared and loss on redemptions of preferred stock. Diluted income per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, increased by the shares used in the per share calculation by the dilutive effects of restricted stock 14 and option awards. The table below reflects the calculation of income 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 per common share (in thousands, except per share amounts). Three Months Ended March 31, 2026 2025 (Unaudited) Income per common share Net income $ 17,731 $ 8,893 Preferred stock dividend — 1,432 Net income available to common stockholders $ 17,731 $ 7,461 Basic weighted average shares outstanding 18,282 17,840 Income per common share $ 0.97 $ 0.42 Diluted income per common share Net income available to common stockholders $ 17,731 $ 7,461 Basic weighted average shares outstanding 18,282 17,840 Effect of dilutive restricted stock and options 522 577 Diluted weighted average shares outstanding 18,804 18,417 Diluted income per common share $ 0.94 $ 0.41 There were no anti-dilutive options for the three months ended March 31, 2026. For the three months ended March 31, 2025, there were 73,000 anti-dilutive stock options that were excluded from the calculation of diluted earnings per share. Note 7. Long-Term Debt On March 9, 2026, the Company entered into a Credit Agreement with PNC Bank, National Association, as administrative agent, or the Agent, and a syndicate of lenders, or the 2026 Credit Agreement. The 2026 Credit Agreement provides for (i) a $ 90.0 million senior secured term loan, or the 2026 Term Loan, and (ii) a senior secured revolving credit facility in an aggregate principal amount of up to $ 40.0 million, or the 2026 Revolving Credit Facility, or, together with the 2026 Term Loan, the 2026 Facilities, $ 25.0 million of which may be utilized for the issuance of letters of credit. The 2026 Revolving Credit Facility also includes a $ 5.0 million subfacility for swing line loans. The 2026 Facilities are scheduled to mature on March 9, 2031, or the Maturity Date. The 2026 Credit Agreement replaces that certain Credit Agreement dated as of September 1, 2021, as amended, by and among the Company, as borrower, the lenders from time to time party thereto and Macquarie Capital Funding, LLC, as administrative agent and collateral agent, or the Prior Credit Agreement. The 2026 Revolving Credit Facility replaces the Company’s prior $ 20.0 million senior secured revolving credit facility under the Prior Credit Agreement, and the proceeds of the 2026 Term Loan, together with cash on hand, were used to repay the approximately $ 96.4 million principal amount outstanding under the Company’s prior $ 175.0 million term loan under the Prior Credit Agreement. In connection with this extinguishment of debt, the Company recorded a loss on extinguishment of debt of $ 1.7 million, primarily related to the write-off of unamortized deferred financing costs. The loss is included in loss on extinguishment of debt in the accompanying Consolidated Statements of Income for the three months ended March 31, 2026. Under the 2026 Credit Agreement, outstanding borrowings under the 2026 Facilities bear interest at a rate per annum (subject to increase during an event of default) of a Secured Overnight Financing Rate, or SOFR rate, plus a margin ranging from 1.75 % to 2.75 %, depending on the Company’s Consolidated Total Net Leverage Ratio (as defined in the 2026 Credit Agreement). A commitment fee ranging from 0.20 % to 0.35 %, also depending on the Company’s Consolidated Total Net Leverage Ratio, is payable quarterly in arrears based on the average daily unused amount of the commitments under the 2026 Revolving Credit Facility. The Consolidated Total Net Leverage Ratio reflects a ratio of consolidated total indebtedness, net of unrestricted cash and cash equivalents up to $ 100.0 million, to consolidated EBITDA. As of March 31, 2026, the interest rate applicable to the 2026 Facilities was 5.42 %. 15 Interest expense was $ 2.0 million for the three months ended March 31, 2026, compared to $ 2.4 million for the three months ended March 31, 2025. The Company is required to make principal payments of the 2026 Term Loan on the last day of each quarter, commencing with the quarter ending June 30, 2026, in an amount equal to approximately $ 1.1 million for the first three quarterly payments, approximately $ 1.7 million for the following eight quarterly payments and approximately $ 2.3 million for the final eight quarterly payments prior to the Maturity Date. Quarterly principal payments of the 2026 Term Loan will continue until the Maturity Date, on which date (i) the outstanding principal amount of the 2026 Term Loan, together with accrued and unpaid interest thereon and other amounts owed under the 2026 Credit Agreement, will be required to be paid in full and (ii) the outstanding principal amount of any borrowings under the 2026 Revolving Credit Facility, together with accrued and unpaid interest thereon and any other amounts owed under the 2026 Revolving Credit Facility, will be required to be paid in full. Subject to certain exceptions, the Company is also required to make mandatory prepayments of the 2026 Term Loan with the proceeds of asset sales, casualty and condemnation events, and unpermitted debt issuances. The Company may make voluntary prepayments of the borrowings under the 2026 Facilities at any time without premium or penalty. The 2026 Facilities are and will be guaranteed by APUS and certain of the Company’s future subsidiaries that are required to become a party thereto as guarantors, or Guarantors. The obligations of the Company and the Guarantors under the 2026 Credit Agreement are secured by a pledge of substantially all of their respective assets, pursuant to the terms of the Security and Pledge Agreement dated as of March 9, 2026, by and among the Agent, the Company, and the Guarantors from time to time party thereto. The 2026 Credit Agreement contains customary affirmative and negative covenants, including limitations on the Company’s and its subsidiaries’ ability, 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, make capital expenditures, 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 2026 Facilities. In addition, the 2026 Credit Agreement contains financial covenants that require the Company to (i) maintain a Consolidated Total Net Leverage Ratio of no greater than 2.50 to 1.00, (ii) maintain a Consolidated Interest Coverage Ratio of no less than 2.50 to 1.00, and (iii) maintain a minimum balance of domestic unrestricted cash and cash equivalents of $ 40.0 million. As of March 31, 2026, the Company was in compliance with all financial covenants. Long-term debt consists of the following as of March 31, 2026, and December 31, 2025 (in thousands): As of March 31, 2026 As of December 31, 2025 (Unaudited) Credit agreement $ 90,000 $ 96,425 Less: Deferred financing fees ( 1,734 ) ( 1,760 ) Total debt 88,266 94,665 Less: Current portion ( 5,063 ) — Long-Term Debt $ 83,203 $ 94,665 Scheduled maturities of long-term debt as of March 31, 2026, are as follows (in thousands): Maturities of Long-Term Debt (Unaudited) Loan Payments 2026 (remaining) $ 3,375 2027 6,750 2028 6,750 2029 9,000 2030 9,000 2031 55,125 Total $ 90,000 16 Note 8. Segment Information The Company’s Chief Executive Officer, as the CODM, organizes the company, manages resource allocations, and measures performance among the Company’s reportable segments. In connection with the planned Combination, the Company now has two reportable segments: Military+ and Health+. The Company has recast its historical results to reflect this change. For additional details, please refer to “Note 1. Nature of the Business” to the accompanying Consolidated Financial Statements. Corporate and Other includes unallocated corporate activity and eliminations to reconcile segment results to the Consolidated Financial Statements, and, prior to the GSUSA Sale Date, included GSUSA revenue and expenses. GSUSA did not meet the quantitative thresholds to qualify as a reportable segment. 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 March 31, 2026 2025 (In thousands) Military+ Segment Revenue $ 89,443 $ 83,946 Instructional costs and services 26,207 27,311 Selling and promotional 16,936 15,701 General and administrative 14,391 14,234 Other (1) 1,191 2,574 Income from operations before interest and income taxes $ 30,718 $ 24,126 Health+ Segment Revenue $ 85,356 $ 76,927 Instructional costs and services 48,446 44,453 Selling and promotional 20,732 18,399 General and administrative 12,927 12,050 Other (2) 2,734 2,843 Income (loss) from operations before interest and income taxes $ 517 $ ( 818 ) Corporate and Other Revenue (4) $ ( 61 ) $ 3,678 Instructional costs and services ( 23 ) 3,179 Selling and promotional 199 1,105 General and administrative 8,972 10,123 Other (3) 383 333 Loss from operations before interest and income taxes $ ( 9,592 ) $ ( 11,062 ) Total reportable segment revenue $ 174,799 $ 160,873 Corporate and Other revenue (4) ( 61 ) 3,678 Total consolidated revenue $ 174,738 $ 164,551 Total reportable segment income from operations before interest and income taxes $ 31,235 $ 23,308 Corporate and Other (loss) from operations before interest and income taxes ( 9,592 ) ( 11,062 ) Total consolidated income from operations before interest and income taxes $ 21,643 $ 12,246 (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, loss on leases, and depreciation and amortization expense. (3) Includes depreciation and amortization expense. 17 (4) Includes the elimination of intersegment revenue for courses taken by employees of one reportable segment at another reportable segment. Three Months Ended March 31, 2026 2025 (In thousands) Depreciation and amortization Military+ Segment $ 1,055 $ 1,029 Health+ Segment 2,716 2,630 Total reportable segment depreciation and amortization $ 3,771 $ 3,659 Corporate and Other 383 333 Total consolidated depreciation and amortization $ 4,154 $ 3,992 Interest expense, net Military+ Segment $ 423 $ 319 Health+ Segment 151 466 Total reportable segment interest expense, net $ 574 $ 785 Corporate and Other ( 1,299 ) ( 1,672 ) Total consolidated interest expense, net $ ( 725 ) $ ( 887 ) Income tax expense (benefit) Military+ Segment $ 7,758 $ 7,734 Health+ Segment 166 ( 421 ) Total reportable segment income tax expense $ 7,924 $ 7,313 Corporate and Other ( 6,409 ) ( 4,847 ) Total consolidated income tax expense $ 1,515 $ 2,466 Note 9. 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. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses associated with any such contingency. From time to time, the Company is involved in legal matters in the normal course of its business. Note 10. Concentration The Company’s students utilize various payment sources and programs to finance their education expenses, including funds from: the U.S. Department of Defense, or DoD, tuition assistance programs; education benefit programs administered by the U.S. Department of Veterans Affairs, or VA; federal student aid from Title IV programs; and cash and other sources. A summary of Military+ revenue derived from students by primary funding source is as follows: Three Months Ended March 31, (Unaudited) 2026 2025 DoD tuition assistance programs 45 % 44 % VA education benefits 24 % 24 % Title IV programs 17 % 18 % Cash and other sources 14 % 14 % A summary of Health+ revenue by institution, RU and HCN, derived from students by primary funding source is as follows: Three Months Ended March 31, (Unaudited) RU 2026 2025 Title IV programs 76 % 77 % Cash and other sources 22 % 22 % VA education benefits 2 % 1 % Three Months Ended March 31, (Unaudited) HCN 2026 2025 Title IV programs 84 % 85 % Cash and other sources 15 % 14 % VA education benefits 1 % 1 % 18