APEI Earnings Call: Strong Growth Amid Challenges

American Public Education, Inc. ((APEI)) has held its Q1 earnings call. Read on for the main highlights of the call.

American Public Education, Inc. (APEI) recently held its first quarter 2025 earnings call, revealing a strong financial and operational performance. The company showcased impressive revenue growth and enrollment increases, particularly at Rasmussen and Hondros, alongside improved margins. Despite these positive developments, challenges persist, notably with the Graduate School USA’s performance and an anticipated Q2 net loss due to specific financial adjustments.

Positive Enrollment Growth

Rasmussen and Hondros reported significant enrollment growth, marking the fourth consecutive quarter of year-over-year increases. Rasmussen’s enrollment rose by 7% in Q1 2025 and 8% in Q2 2025, while Hondros saw a 9.6% increase in Q1 2025, with Q2 continuing the positive trend at 13.5% year-over-year.

Improved Financial Performance

APEI’s financial metrics improved significantly, with a 6.6% increase in revenue to $164.6 million and a nearly 25% rise in adjusted EBITDA. The adjusted EBITDA margin expanded by nearly 200 basis points to 12.9% from 11% in Q1 2024, showcasing the company’s robust financial health.

Increased EBITDA and Revenue Guidance

The company raised its full-year adjusted EBITDA guidance by $2 million, now ranging between $77 million and $87 million. Additionally, net income guidance has been adjusted to be between $23 million and $30 million, reflecting confidence in continued financial growth.

Successful Cost Management

APEI is leveraging increased enrollment and disciplined cost management to improve operating leverage. A notable plan to redeem preferred shares is expected to save approximately $6 million in dividend expenses annually, underscoring effective cost control strategies.

Strong Cash Flow

APEI reported a robust cash flow from operations, reaching $37 million in the first quarter, up from $20.7 million the previous year. Total cash, cash equivalents, and restricted cash increased by $28.6 million since year-end 2024, highlighting strong liquidity.

Challenges at Graduate School USA

Graduate School USA faced revenue declines due to government initiatives and budget uncertainties, with revenue dropping to $3.7 million from $4.2 million the prior year. The institution reported an EBITDA loss of $2.1 million, compared to a $1.1 million loss previously.

Q2 Net Loss Expectation

APEI anticipates a Q2 2025 net loss available to common shareholders between $2.5 million and $0.7 million. This expectation is influenced by a $2.9 million redemption premium and $1.7 million in combination-related costs.

Hondros EBITDA Performance

Despite revenue growth, Hondros reported an EBITDA loss of $0.2 million in Q1 2025. This was attributed to a shift towards shorter-duration LPN programs, which require more frequent enrollment cycles.

Forward-Looking Guidance

APEI’s forward-looking guidance remains optimistic, with substantial improvements in financial metrics exceeding previous expectations. Revenue grew by 6.6% to $164.6 million, and adjusted EBITDA increased by nearly 25%. The company raised its full-year adjusted EBITDA guidance by $2 million to a range of $77 million to $87 million and maintained its revenue forecast between $650 million and $660 million.

In conclusion, American Public Education, Inc.’s earnings call highlighted a strong financial performance with notable enrollment growth and improved margins. While challenges remain, particularly with Graduate School USA, the company’s forward-looking guidance reflects confidence in continued growth and financial stability.