Q2 2021 American Public Education Inc Earnings Call

And then.

[music].

Good day, and thank you for standing by.

Welcome to the American Public Education reports second quarter 2021 results conference call. At this time, all participants are in a listen only mode I'm sorry, the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press Star and then the number 1 on your telephone keypad.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.

Thank you I would now like to hand, the conference over to your Speaker today, Mr. Rick Sunderland Chief Financial Officer. Please go ahead.

Thank you operator, and good evening everyone.

Materials that accompany today's conference call are available and the events and presentations section of the API website. Please note that statements made in this conference call and and the accompanying presentation materials regarding American public education.

Considering our RASK Boston University that are not historical facts may be forward looking statements based on current expectations assumptions estimates and projections about American public education and the industry.

These forward looking statements are subject to risks and uncertainties that could cause actual future events.

To differ materially from those expressed or implied by such statements forward.

Forward looking statements may be able to be identified by words, such as anticipate believe seek could estimate expect intend may plan should will and wood and similar words or their opposites.

Forward looking statements include without limitation statements regarding the impact of recent disruption to the army's tuition assistance programs.

<unk> growth registrations and enrollment revenue net income earnings per share and EBITDA expected benefits of the acquisition of restaurants and University. The closing of the acquisition and its timing expected financial results for restaurants, and future impacts of the COVID-19 pandemic the ability to transform the student.

<unk> and deliver a return on Learner's educational investment the impact of organizational changes and the ability to maintain and attractive risk profile plans with respect to recent and current and future initiatives and future demand for online and nursing education.

Actual results could differ materially from those expressed or implied by these forward looking statements as a result of various factors, including risks related to actions taken by the department of defense our branches of the U S armed forces, including actions related to the disruption and suspension of tuition assistance the effects of and Apis response.

To the COVID-19, pandemic, including impacts on the demand environment as the pandemic debates the acquisition of restaurants, and University changes too and expectations regarding our enrollment registration and the composition of our student body and the risk factors described and the risk factors section and elsewhere and the <unk>.

And its quarterly report on form 10-Q filed with the SEC today and the company's most recent annual report on form 10-K, and the company's other SEC filings.

The company undertakes no obligation to update publicly any forward looking statement for any reason unless required by law, even if new information becomes available or other or other events occur and the future.

I'll now turn the call over to our CEO Angela Selden.

Good afternoon, and thank you for joining our call to discuss American public educations second quarter earnings along with an update on our business momentum.

And I'll cover 4 topics before turning the call over to our CFO, Rick Sunderland, who will review some key financial metrics and results.

First I will provide an update on Nebraska and transaction net.

Next I will discuss momentum at apus, including and Army portal update sharing context regarding the continued impact. The average has had on both our enrollment and cash collection and I will also share. Some actions we have taken to reaccelerate momentum along with efforts underway to shore up cash flow.

Third will be and update on Handros nursing momentum and last I will share plans to begin providing you with a longer term outlook. So you can better measured quarterly and annual performance and the context of our strategic goals.

Turning to page 4.

To discuss the Rasmus and transaction.

We remain on track to close the <unk> and transaction in the third quarter of 2021.

And we have shared previously <unk> and University has approximately 18000 students with a roughly 50.50 mix of nursing and non nursing students and 40% of non nursing students and health Sciences.

When we announced the transaction in October 2020, we shared that Rasta since fiscal year 2020 year end results ending September were $256 million of revenue and approximately $40 million of adjusted EBITDA.

On a trailing 12 month basis.

And on audited financials through June of 2021.

And <unk> and generated $273 million of revenue and $46 million of adjusted EBITDA demonstrating.

And continued growth and margin expansion of about 120 basis points.

For the 6 month period, ending June 32021.

Rasmussen grew revenue over 9% to $137 million from $126 million and adjusted EBITDA grew to $22 million from $18 million.

Upon closing rapidly and will become a wholly owned subsidiary of API.

We have worked together collaboratively with Rasmussen on integration planning and a smooth transition remains job 1 so as not to disrupt <unk> momentum and.

As we have become more familiar with their assets and team its leaders and the business. We are extremely pleased that the institution. We are acquiring is not only as originally understood, but even better in many respects.

We continue to explore synergy opportunities from the transaction, our initial expectation of $5 million and synergies in the first 12 months. Following close now appears to be modest and we expect we should exceed that amount.

We could not be more excited to welcome rasmussen into the API portfolio.

Moving to page 5.

Let me turn to the status of the Army's new tuition assistance portal ignite Ed which allows enlisted soldiers to utilize their earned tuition benefit for serving our country.

As we shared with you on our May earnings call in late January 2021, the army notified all higher education providers that it's prior tuition assistance or Ta system go Army add we'll go offline for approximately 3 weeks starting on February 12, and would be replaced with the new CIS.

Army ignite add on March 8.

And ignite Ed was indeed brought online on March 8 but experienced data transfer issues and was taken back offline thereafter.

5 months after the old Ta system was taken offline the new Ta system Ignite Ed was brought online on July 19.

Since then only portions of the new system appeared to be operating successfully.

Ignite data requirements continue to change and.

The new manual processes are flooding the army's on based general services counselors.

Thus since early March only apus students willing to forego actual ta certainty continued to enroll with and acceptance of policy or ETP.

As a result army registrations were down 26% in <unk> versus a 51% increase in the second quarter of 2020.

Please keep in mind, however, that 2020 head and also experienced a COVID-19 related increase.

We have seen our July 2021, and August 2021 starts also affected where army enrollments were down 21% versus last July and August enrollment will also be adversely impacted down by approximately 4%.

In addition to enrollment challenges the portal outage has also affected our ability to collect outstanding balances from the army through the system.

Today this balanced approach is $17 million and unpaid tuition.

As the largest educator of army soldiers, we have been and continue to work with the army to share files test and validate the system and continue to collaborate.

We continue to work intensely to reach soldiers and help them Register and many of whom contacted us previously and deferred enrolling due to the uncertainty around their eligibility for tuition assistance.

As we look to September which is traditionally 1 of our strongest months, we are working to generate a bounce back and registration as soldiers look toward the fall enrollment period.

We can't yet fully forecast the lingering effects into the fourth quarter. Unfortunately, what was originally explained as a transition period of 3 weeks and and outage period has turned into be already a 5 plus month period.

Despite this setback we expect that this is a onetime event that essentially shifts many of the lost enrollment out by about a half a year.

Overall total net registrations of 82600 and the second quarter of 2021 were down 8% versus the same period and 2020 at the low end of our guidance.

However to put that and perspective that is still up 9% versus the second quarter of 2019 or about 4% on a 2 year CAGR basis.

Outside army military segments, including Navy and several others remained strong.

We have seen a moderation and demand across non military student segments, which we believe is caused by students taking a pause in their education due to positive economic trends and a general decision over the summer to engage and other areas of life previously put on hold by the Covid Panther.

<unk>.

With respect to the third quarter, we expect that registrations will be down 8% to 13% to between 78000, 583000, which would still be up versus the third quarter of 2019 by 2% to 8%. Despite the sharp impact from the portal outage.

As we move to page 6 even as the army portal issue starts to moderate and we remain optimistic that we will return to growth at apus.

We felt compelled to take swift action to improve apus enrollment momentum.

Mentum for the remainder of 2021 and to improve the foundation for longer term growth.

First Dr. <unk> President of Apus has asked Harry Wilkins, and Honduras, CEO to assist us and further modernizing enrollment and admissions much like he has done recently when he returned hydro's.

And to transfer he returned to hydro's to transform and grow the institution over the last 2 years.

Harry has deep familiarity with <unk>, having served from 2001 to 2013 and adviser trustee and CFO before beginning his first chairman and CEO of Honduras.

Harry has deep familiarity with the Apus operating model the systems and the value levers to pull that can improve enrollment momentum.

Harris focus will be on both near term growth initiatives and building a healthy sustainable student centric admissions and enrollment processes.

Apus has also engaged an outside consulting firm to support Harry and the entire <unk> team with resources to carry out this important work.

And Hydro's Harry has built a strong team and a solid operating model. So the API board of directors and I have gotten comfortable with this near term need to split his time between <unk> and apus.

In parallel to the growth initiatives and Harry and team are working on we have implemented cost reductions across apus and API commensurate with the lower enrollment to bolster EBITDA and cash flow in 2021 and beyond in order to make up for some of the loss of cash flow from army.

These plans include a modest but strategic reduction in head count along with other non labor cost savings that are expected to result in between 5 and $6 million and savings and improved EBITDA for the balance of 2021.

We are taking a very ROI focused approach to ensure that we're investing and the most productive areas that preserve our academic and student service strength.

Last Apus is just hired a veteran leader to head up corporate partnerships. This individual has and past roles secured meaningful corporate partnerships with some of the most widely known consumer brands and we look forward to the impact of his contributions.

Let's turn our attention to Honduras on page 7 which continues to perform at a high level.

Total enrollment in second quarter increased 36% to almost 2400 students driven by strong growth and both the pn and ADN programs.

The NRO RN program has continued to perform strongly up 45% and part driven by the launch of our direct entry program and the fourth quarter of 2019 as well as continued momentum and our Pn program, which acts as a feeder to the ADN program for.

For the third quarter of 'twenty, 1 we expect total enrollment to be up 19% to over 2300 students versus a year ago.

Congress continues to be profitable both for the quarter and year to day.

While we have seen third quarter, new student enrollment softened and part we believe due to the prospective students choosing to defer enrollment to enjoy summer activities.

The early metrics for the fourth quarter show resurgence and enrollment.

This term is shaping up to be the best ever with strong new student growth, which would be on top of 34% growth in the same term of 2020.

Further supporting our enthusiasm for <unk> continued enrollment growth is at the Indiana Board of nursing and increase the cap on student enrollment at our Indianapolis campus by 100% to 60 from 30 and will have the opportunity to request an additional increase in February of 2022.

The first cohort of students to graduate and fit for the and collect exam resulted in a 100% pass rate further.

Further demonstrating the high quality of our Pn program and.

Enrollment at our recently opened Akron, Ohio campus is now ramping and as we shared with you during our May earnings call. We are in the process of obtaining the approvals to open a campus and the Detroit, Michigan area, which could be opened as soon as <unk> of 2022.

As I mentioned in my opening comments, we're enthusiastic about the continuing transformation of our company and our institutions and the closing of the <unk> acquisition to.

To help you track our performance and our trajectory over time and hold us accountable to our goals, we intend to host an investor analyst day in the late fourth quarter or early in 2022 to provide you with our longer term strategic outlook and financial and operating metric targets.

As part of this we also anticipate harmonizing, our kpis across the institutions and business units. So that we're speaking consistently about those metrics. We're excited about our plans and look forward to sharing more with you and the coming months.

Now, let me invite Rick to discuss some key financial metrics from the quarter and our guidance.

Thank you Angie going on to page 8.

Because as you noted disruption to army Ta had an adverse impact on second quarter registrations at Apus.

And this together with other factors and you discussed and turn adversely impacted revenue for the quarter for the quarter consolidated revenue decreased $4.1 million per 5% as compared to the prior year and our <unk>.

Segment <unk> revenue.

Revenue decreased quarter over quarter by $6.7 million were approximately 9% driven by a 26% decrease and army registration and.

And the revenue decline at Apus.

This was partially offset by a $2.5 million for approximately 29% quarter over quarter increase and revenue and <unk> driven by a 36% increase and total student enrollment.

Cost of expenses for the 3 months ended June 32021 were $76.3 million and increase of $3 million or 4% compared to $73.1 million and the prior year period.

And 80% of the increase and cost and expenses was primarily due to a $2.4 million increase and cost of expenses and Honduras due to higher student enrollment.

On some expenses and our API segment increased <unk> 6 million as compared to the prior year period, driven by quarter over quarter increase and professional fees.

Related to the integration planning for the restaurants and acquisition and increases and information technology costs related to our multiyear technology transformation program for.

And for the quarter.

API segment professional fees increased $2 million and information technology costs increased <unk> 6 million as compared to the prior year quarter.

And structural costs and services expenses decreased <unk> 3 million or 1% to $30.4 million and as a percentage of revenue increased to 39.0% from 37, 4% and the prior year period.

The decrease and instructional costs and services expense dollars was primarily due to a decrease and faculty compensation and instructional materials costs at apus.

Partially offset by increases in Honduras.

Due to changes and enrollment volume.

Selling and promotional expenses increased <unk> 4 million or 2.5% to $17.5 million and as a percentage of revenue increased to 22, 4% from 28% and the prior year period.

Advertising costs increased a total of zero point $5 million and our <unk>.

And HCN segments compared to the prior year period, as we continue to invest in marketing channel.

<unk> and administrative expenses increased $3.8 million or 17, 1% $25.5 million and as a percentage of revenue increased to 32, 6% from 26, 5% and the prior year period.

And the increase and general and administrative expenses was primarily due to a $2 million increase and professional fees related to the planning for the restaurants and acquisition and a zero point $6 million increase and information technology cost both in our API segment, and a <unk> 5 million increase in bad debt expense and <unk>.

<unk>.

Second quarter 2021, consolidated bad debt expense was $1.4 million to 1.8 per cent of revenue compared to $1 zero million were 1.2% of revenue and the prior year period.

Depreciation and amortization expense decreased <unk> 9 million to $2.5 million and as a percentage of revenue decreased to 3.2% of revenue from 4.1% and the prior year period.

Operating income for the second quarter decreased by $7.2 million to 2 point Jeremy.

Compared to operating income of $9.2 million and the prior period due to lower registration volume at Apus, and our investments and Ross and Rasmussen and acquisition integration planning and information technology and API. It should be noted that <unk> returned to profitability and the 2021 quarter and year to day periods.

Consolidated net income for the quarter decreased to <unk> 5 million or <unk> <unk> per diluted share compared to net income of $6.7 million or <unk> 45 per diluted share and the prior year period.

Adjusted EBITDA for the 3 months ended June 32021 was $9.9 million compared to $15.5 million and the prior year period, adjusted EBITDA excludes non cash compensation expense loss on disposals of long lived assets and professional fees, most of which were related to the planning and execution.

On the restaurants and acquisition.

A reconciliation of EBITDA and adjusted EBITDA to net income the comparable GAAP financial measure is included in the table and our earnings release under the caption GAAP net income to adjusted EBITDA.

Cash at June 32021 was $317 million compared to $227.7 million at December 31.

And the disruption to army Ta adversely impacted cash flow from operations during the period.

At June 30 the.

A total of $14.9 million and accounts receivable is due from from the army of which $10.6 million is older than 60 days from core start and.

In addition, and.

In addition to the impact of delays and payments from the army a year over year increase and cash taxes paid and other changes in working capital due to the timing of receipts and payments.

Mostly impacted cash flow during the period as compared to the prior year.

Going on to page 9 Ati's outlook for the third quarter of 2021 is as follows. Please note. This guidance is API without rasmuson.

But to go on for Barmy, ignite and on July 19th and the slow ramp up and RV registration volume through the new system disruption disruption of army registrations at Apus due to the transition is impacting the third quarter further near term demand for our HOS programs being adversely impacted by the abatement of COVID-19.

And as described by Andrew earlier, we are working to re accelerate registration momentum at Apus and at the same time right size, our cost structure at apus to align with current registration volume.

Third quarter net course registrations at Apus are expected to decrease between negative, 13% and negative 8% year over year.

And Honduras third quarter total student enrollment increased by 19% year over year to over 2300 students.

And the third quarter of 2021 consolidated revenue is expected to decline between -7% and -4% year over year. The company expects net income to be breakeven to be between breakeven and a profit of $1 million and earnings per diluted share.

Between zero and <unk> <unk> per diluted share.

The outlook for the third quarter net income includes the following on a pre tax basis.

Approximately between $1.5 million to $2.5 million and professional fees related to integration planning and execution of the restaurants and acquisition and approximately $2 million and professional fees and supportive enrollment and student retention and momentum at Apus and.

Approximately between $1.3 million and $2.3 million and cost savings and our API segment segment net of severance and.

Adjusted EBITDA is expected to between day between $6.5 million and $8.5 million and the third quarter of 2021.

Now I will turn the call back to Andrew for final remarks.

Thanks, Rick let's turn to page 10.

As we look forward to the back half of this year our priorities continue to include <unk>.

First ensuring a high quality execution of the integration plan for Rasmussen University, including the synergy capture.

Regaining both army enrollment momentum and transforming the admissions and enrollment processes at apus.

All while staying true to our mission of.

Delivering a high quality education at an affordable price to students at each of our institutions.

Operator, please now open the line for questions.

Thank you Angie and as a reminder to ask your question just fresh Saar and then the number 1 on your telephone keypad again, just press Star and then the number 1 on your telephone keypad and if you need to withdraw your question distressed accounts. Please standby will be compile the Q&A roster.

Your first question comes from the line of Tobey Sommer from Truest Securities. Sir Your line is open.

Hey, good evening, everyone. This is jasper bibb on for kind of base and interest wanted to ask 2 clarification questions on Ta.

At this point our most army students are interest bearing now able for CPA benefits further fall classes without.

And exceptional policy and what's kind of and the general experience.

Okay.

And it's reimbursed for classes they might have taken during the pharmacists and offline.

Hi.

I'll start this question and then ask Derek to provide any additional details.

So without going into lots of specificity.

And we'll share with you is that.

The issue the data issue that exists right now is the big returning students ability to tap into their degree plan. The degree plan when loaded into the Ta system help the army understand what program the students pursuing from a higher education perspective and also.

And to understand which courses they have already taken the data exchange on the degree plants isn't working right now so the vast majority of our <unk>.

Our students continue to be operating in an exception to policy very few of the students that we're serving today have successfully processed 30 day request through the army ignite Ed system.

Okay. That's helpful and then.

And some of your peers cited a bit of upward pressure on acquisition costs. I was curious what your experience has been on that front and.

And how youre marketing yields trended.

Great question, 1 of the key focus areas that Harry Wilkins will.

And time on in conjunction with.

Apus leadership is really a focus on converting the leads that we're receiving.

And the value proposition of Hei ROI higher Ed return on educational investment. The fact that we have a very affordable.

Opportunity for students to pursue their higher education.

We don't see pressure on the.

And cost what we want to do is make sure. We take every lead that we receive and convert every 1 of those at that at the highest probability of conversion and so a big focus for us will be optimizing the marketing investments that we've been making over the course and the last.

6 months of 2021 to ensure that we make the most of it and marketing dollars for spending.

Okay, and then just following up on the strategic initiatives.

Yes and discussed earlier.

Can you give a bit of color on on the opportunity youre seeing on corporate partnerships and <unk>.

Just talk about what types of corporate you might be targeting and that effort just given the unique student body.

Heavily military and veterans.

On the surface.

Great Great question, I think we see that there is a keen interest in.

Military and veterans.

Students and their backgrounds and the discipline the experiences that they've received and so we believe that there is a really symbiotic relationship that can be established between.

And our student population and the.

The corporate.

Companies, who are who are looking intently at finding ways to tap into active duty military students, who are who are stepping away and veterans and so.

And through that lens that we'll be focusing a lot of our time and attention with our new corporate partnership leader.

Thanks for taking my question and I'll get back.

And so much.

Thank you. Your next question comes from the line of Stephen Sheldon from William Blair. Your line is open.

Hey, Thanks for taking my questions.

Wanted to ask.

First on what still needs to be done or what are what approvals are still needed to get the RASM and deal done and what's your level of confidence that are being completed now relative to a few months ago.

Hi, Steven Great question.

And really not in a position to discuss the details around the remaining closing conditions, but we have a very high degree of confidence that we will be able to close the rapid and transaction.

By the end of the third quarter.

Okay, Great and then just it sounds like rather than continuing to put up really impressive growth or anything you can share there on what growth trends and maybe look like between their nursing and non nursing program and the potential sustainability of that growth had been putting up here over the last year or so.

I'm going to turn that question over to Steve centers.

Moving.

The general trend and <unk>.

And without getting into the specifics.

Is that the nursing business and the enrollment there has outpaced the non nursing and Thats really a trend that has been consistent for the last several years and so the mix shift has moved more dramatically towards the nursing side and is roughly 50, 50, now which view.

Look back 2 or 3 or 4 years ago was closer to 30% on nursing side.

And that has a lot and again with where that has a lot to do with where they've been focusing their marketing and marketing dollars and their resources and rolling out programs as well.

Thanks.

Thank you. Your next question comes from the line of Greg <unk> from Sidoti Your line is open.

Hey, guys. Thanks for taking my questions.

And in light on the good trend, you've seen and Honduras, you mentioned, the and collapsed and they can't.

And with 100% can you speak to the overall and clicks pass rate trends that you've been seeing and lighting the enrollment recoveries that are.

Going on there.

Hi, Greg Great to speak with you what we're seeing so far in 2021 is a slight improvement as you know and collect scores are measured by program by campus and so we pay very careful attention to those to those trends the continuous improvement initiatives.

Is that <unk> put in place include Keane.

Keen focus on the academic rigor the sequencing of the courses.

The support the academic advising and support that we've.

Implemented at <unk> in order to be able to make sure that students have the both the content that they need and also the confidence to be able to prepare for and fit for the uncollected van and so we believe that all of those investments are paying off in terms of what we're seeing is improvements year over year.

Great and then just 1 more question just trying to.

Put together the guidance.

And if I'm not mistaken you said July.

For Army registrations was down 21% and then improved to down 4% in August.

And might be and correct in saying that but if I am correct.

How should we be thinking about.

Revenue per student and the impact on that on <unk>.

And that you have sort of a strong rebound at the tail on to the quarter.

So.

Greg revenue per student is on average lower than <unk>.

And then our non military students right. So.

And what's called the Freedom Grant. So there is the underground level and $2.50 per.

And for credit hour.

Non military are 285, so it's about $35 difference.

And as you've seen the mix shift.

A shift towards more and military.

Away from the non military which has been the trend over the last.

Year on year and a half.

And I probably have observed.

And a slight decline and overall revenue per student of course that would have been offset by the 5% tuition increase we did for the non military students.

And.

And January of 2020.

From IC and I don't think that mix shift is necessarily material in terms of overall kind of revenue trends versus.

Registration trends they tend to they tend to track pretty closely and if you go back to the first quarter. There was a there was some daylight between those 2 simply because the first quarter of 'twenty as a comparable period.

With the first quarter of the price increase and it was making its way into the system. Our students can register 5 months and events, but if you look at apus in the second quarter, the change and overall revenues.

Is tracking fairly.

Fairly closely to the change and overall registrations.

That's helpful. Thanks, a lot.

Thank you. Your next question comes from the line of Raj of B Riley. Your line is open.

Hi.

Thank you guys.

And my questions. So I wanted to understand the army portal was supposed to be back in June.

But then it didn't come back on to the third week.

And July.

But it came back on but the data exchange is not working.

For the students who want to.

Get on and figure out whether they will get approval could you. Please.

And give some more color on that.

Sure Ryan and TNT I'll start and then happy to have Rick way and with more details.

Our understanding is that when they moved from their old system go Armenia to the new system ignite and that there was a process and procedure change.

In the past the soldiers would enroll simultaneously and the Ta system and in our system and now they've created more dependency.

<unk> data feeds back and forth. So now the students need to enroll and are.

In our system.

And we send those requests and inquiries to the ignite AD system and then they are supposed to push the information back to us with the approvals.

Dilemma as I mentioned, a few minutes ago is that day approved ta when they see that a soldier has a degree plan and they understand which courses that soldiers already taken and given that the degree plan.

Data load hasnt been successful our understanding is for any for any institution and not the stars right. The changing of the basically the lay out of the data feed.

On.

Any any soldier, who had a degree play and with US prior is basically and enrolling and courses through the ETP when they choose to do that.

And with the belief and the hope that when.

Their degree plan and gets loaded into the new system and the courses that they've taken and subsequently match up to that degree plan that that will trigger.

Satisfactory set of conditions that allowed ta to cover those.

Those enrollment.

So as you.

I'm sure for you it is a challenge to and.

And what the next 1 is going to look like the standard our student.

And we're also experiencing it because we are also given the information which is the best.

Information that the army has at any point in time about what they believe will be a positive next step and we take those steps together and.

And we are seeing forward progress, but as you can see from the commentary you provided today and it's not.

Fully successful at this point and that is measured both in terms of.

Ta approved enrollment, but also the $17 million of.

Since that we have served through the ETP that we haven't been able to collect.

Any kind of payment on so far.

And so hey, Raj, it's Rick let me just add to that I agree with everything and everything and he said I just want to highlight the point that the issue exists on the army side and not on our side.

Continue to continue to update.

File specification.

And I'm going to give a shot out to our ITT and they probably never had debt on the earnings call before because they've been very agile in responding to the.

Incremental changes that the army provides us as the final specs, making sure that we're staying as current as we can.

Related to the final requirements so.

It's an army side issue they are working through some some feel the specifications on their side.

And close to that updating the files on our end and are ready to submit when we get the green light from the army.

So.

Is it fair to say for all practical purposes.

Portal is.

So not effective.

Slash working and the sensors.

Enrolling beyond the student and and then getting paid.

Last quarter, so that is that and why <unk> guided.

On the impact is similar to what the <unk> impact was because of this portal outage.

Yes.

Certainly for the student returning students we have over 22000 students.

Whose degree plans have not yet been successfully loaded into the ignite Ed system.

And we believe that the new student process.

That has more promise we are seeing a trickle of students coming through.

And the what should be the new.

New fully operational process.

But we've seen.

Predominantly the same situation that we had in the last quarter to answer your question specifically, yes.

And so and you don't know whether this extends into Q4 or not and was in Q2 about 25, and that's the right about a quarter of the enrollment for military and will impact is that a similar number of new.

And so in the third quarter.

Yes.

We believe it's roughly that same that same impact and in Q3 yet.

Okay.

Okay. Thank you and then.

Our next question is also seems like the non military surprised to the downside and.

Second quarter as well.

Just wanted to kind of understand what could you do to fix that and get it to grow again.

Yes, it's a small it's a small.

Decline.

Very modest relative to some of the other declines we're seeing and.

And certainly.

We have.

Taken Swift action.

Dr Wei Dai cash.

As I mentioned introduced Harry Wilkins into the Apus enrollment and admissions process.

We feel that currently our marketing.

Investments are yielding high.

High quality leads and what we want to do over the course of the next really the next 4 months is too.

Work every single 1 of those leads and ensure that we are maximizing the enrollment momentum and impact that we can from the leads that were.

And that we're generating we have a substantial number of non.

Non military leads that are coming into the top of the funnel and we're turning over every stone to make the most of those leads.

Got it.

I'll take it off on them. Thanks, Okay. Thank you Raj.

Thank you there are no further questions at this time I will now turn the call back to Inc. Please go ahead.

Thank you everyone have a good evening. This concludes our call. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.

Yeah.

Okay.

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