Q2 2025 American Public Education Inc Earnings Call

After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad once again star one and if you'd like to withdraw your question simply press Star one again. Thank you.

I would now like to turn the call over to Brian <unk> head of Investor Relations Brian.

Thank you Greg and good afternoon, everyone welcome to American Public Education's conference call to discuss second quarter 2025 results.

Joining us on the call today are Angela Selden, President and Chief Executive Officer, Rick Sunderland Executive Vice President and Chief Financial Officer, and Gary Johnson, Senior Vice President of strategy and growth materials for the call today are available in the events and presentation section of <unk> website.

Statements made during this conference call and any accompanying presentation regarding API and its subsidiaries that are not historical facts may be forward looking statements based on current expectations assumptions estimates and projections forward looking.

Statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements such as those identified in our Form 10-K under the heading risk factors, including those related to potential impacts from government shutdowns were changing federal or state government policies practices.

And laws, including impacts on revenues or the timing of receivables forward looking statements may sometimes be identified by words like anticipate believe seek could estimate expect can may plan potentially.

<unk> should will would and similar or opposite words.

Forward looking statements include without limitation statements regarding expectations for registrations and enrollments revenue earnings and adjusted EBITDA and other earnings guidance, Our foundation for growth combination of our institutions campus and corporate center consolidation the redemption of our preferred stock future governmental or regulatory.

Inventory actions and a response to those actions changing market demands and our ability to satisfy such demands and any other company initiatives.

This presentation contains references to non-GAAP financial information a reconciliation between the non-GAAP financial measures we use in the most directly comparable GAAP measures is located in the appendix of today's presentation and in the earnings release management believes that the presentation of non-GAAP financial information provides useful supplemental information to investors.

Regarding its results of operations and should only be considered in addition to and not as a substitute.

For or superior to any measure of financial performance prepared in accordance with GAAP.

Now I'd like to turn the call over to Apis.

And CEO Angela Selden Angy. Please go ahead.

Thank you Brian Good afternoon, and thank you for joining American public Educations second quarter 2025 earnings Com.

We are very pleased with our outperformance in the second quarter of 2025, and notably our accomplishments in simplifying the business and the balance sheet.

We have several areas to highlight during today's call.

First a P I outperformed second quarter 2025 financial guidance in the second quarter, we exceeded the top end of our guidance for revenue net income EPS and adjusted EBITDA.

Disciplined operations at our education units, along with continued enrollment growth has helped to drive improved financial performance.

Next several important simplification milestones were achieved that improve our balance sheet and overall financial position.

We completed the sale of two corporate administrative buildings collecting over $22 million.

The department of education removed restrictions on the $24 $5 million letter of credit from the 2021 acquisition of Rasmussen that cash is now unrestricted on our balance sheet.

And finally, we redeemed our preferred equity for a total amount of approximately $43 million, which was fully funded by the proceeds from the building sale and the release of the restricted cash.

Going forward. This will allow a P I annually to say $6 million from the elimination of the cash dividend payments.

We believe we are now positioned with an improved capital structure and more financial flexibility to invest in growth initiatives.

Third after quarter end on July 25th 2025, we completed the sale of graduate School USA.

We believe this is a great outcome for API for graduate school its employees and its students.

As we determined that graduate school was no longer a strategic fit for our future growth strategy. We are pleased to find the business of new homes, which is more aligned with the graduate school mission and market position, allowing us to focus on growing our core health care and military businesses.

Next we are pleased with the double digit enrollment growth at both Rasmussen and Andreas.

10% and 18% respectively.

Further driving expanding margins and greater profitability.

Fifth I'm pleased to announce the appointment of James Konigsberg, as our interim Chief innovation and Technology Officer.

<unk> is investing in intelligent infrastructure predictive analytics and personalized digital tools to modernize every part of the learner journey game.

James will lead our transformation efforts aimed at improving access and student persistence and delivering more responsive mission aligned educational experiences.

James has been an invaluable resource on our ATI board of directors and he will be stepping away from his board service to focus on this important assignment.

James brings more than two decades of experience leading technology strategies in education and has served as a strategic advisor to a number of high growth startup and education focused companies.

Next we continue to move closer to overall simplification regarding the combination of a P O S Rasmussen and Honduras into a single a credit institution.

We have received H L C and state agency approvals discussions with the department of Education, and H L. C are ongoing regarding the timing to complete the transaction.

Finally in summary, the improvements to the business and financial position provide us an opportunity to strengthen our full year guidance, our CFO, Rick Sunderland will give a deeper dive into the updated 2025 guidance, but at a high level.

Even with the sale of graduate school, we are maintaining our full year revenue guidance, which now reflects the exclusion of five months of graduate school revenue for the remainder of 2025.

And we are increasing adjusted EBITDA guidance expected now to be between $81 million and $88 million.

I'd now like to provide some additional details about the two Q2 thousand 25 results starting first with a P S nursing and health care institutions.

Speaker #1: Next, we continue to move closer to overall simplification regarding the combination of APUS, Rasmussen, and Hondros into a single accredited institution. We have received HLC and state agency approvals.

Rather I think continues to produce strong results <unk> enrollment increase from 7% in <unk>, 25% to 10% in <unk> 25, representing the fifth consecutive quarter of year over year enrollment increases.

Speaker #1: Discussions with the Department of Education and HLC are ongoing regarding the timing to complete the transaction. Finally, in summary, the improvements to the business and financial position provide us an opportunity to strengthen our full-year guidance.

Our three pronged strategy to improve outcomes managed costs and grow enrollment has continued to produce positive results.

Speaker #1: Our CFO, Rick Sunderland, will give a deeper dive into updated 2025 guidance. But at a high level, even with the sale of graduate school, we are maintaining our full-year revenue guidance, which now reflects the exclusion of five months of graduate school revenue for the remainder of 2025.

As previously discussed Rasmus Rasmussen higher fixed cost structure allows positive enrollment trends to significantly enhance the flow through margin leading to improved operating leverage and profitability.

With our current campus footprint, we believe our strategy to build a back row continues to effectively increase enrollment and improve EBITDA flow through on each incremental students.

Speaker #1: And we are increasing adjusted EBITDA guidance expected now to be between 81 million dollars and 88 million dollars. I'd now like to provide some additional details about the two Q2025 results starting first with APEI's nursing and healthcare institutions.

And hydro's as previously reported to Q25 enrollment was strong with 13% growth as compared to <unk> 24 three.

325 enrollment increased to 18% year over year to 3700 students. We believe that the combination of Rasmussen in Honduras will provide us with a robust platform to further scale enrollment and increase margins.

Speaker #1: Rasmussen continues to produce strong results. Rasmussen's enrollment increased from 7% in two Q25 to 10% in three Q25. Representing the fifth consecutive quarter of year-over-year enrollment increases.

Turning now to a T E online university educating our nation's military veterans and their families called a P U S.

Speaker #1: Our three-pronged strategy to improve outcomes, manage costs, and grow enrollments has continued to produce positive results. As previously discussed, Rasmussen's higher fixed cost structure allows positive enrollment trends to significantly enhance the flow-through margin.

Overall, net course registrations increased 7% year over year and revenue increased over 6%. We expect continued year over year registration growth in the low to mid single digits for the remainder of 2025.

Speaker #1: Leading to improved operating leverage and profitability. With our current campus footprint, we believe our strategy to fill the back row continues to effectively increase enrollments and improve EBITDA flow-through on each incremental student.

In future years, we believe we can accelerate revenue and registration growth in apus by offering our courses and degree programs to more veterans more family members of the military and expanding our penetration with the current active duty military students.

Speaker #1: At Hondros, as previously reported, two Q25 enrollment was strong with 13% growth as compared to two Q24. Three Q25 enrollment increased to 18% year-over-year to 3700 students.

Overall, given the consistent financial and operational performance, we delivered in the last 18 months, we will host an investor day on November 20th 2025 to share our outlook for 2026 and beyond.

Speaker #1: We believe that the combination of Rasmussen and Hondros will provide us with a robust platform to further scale enrollments and increase margins. Turning now to APEI's online university educating our nation's military, veterans, and their families, called APUS.

We remain enthusiastic and our ability to continue delivering results and prioritizing growth drivers deliver profitability, while providing more students accessible and affordable educational opportunities. We look forward to welcoming you our investors and analysts to New York City.

Speaker #1: Overall net course registrations increased 7% year-over-year and revenue increased over 6%. We expect continued year-over-year registration growth in low to mid-single digits for the remainder of 2025.

Invitations are forthcoming.

In closing API enables students to experience a valuable lifelong return on their educational investment our mission remains to power purpose potential and prosperity for those in service of others.

Speaker #1: In future years, we believe we can accelerate revenue and registration growth at APUS by offering our courses and degree programs to more veterans, more family members of the military, and expanding ur penetration with the current active duty military, students.

Each of our education units is purpose built to deliver accessible and affordable higher education across the diverse range of subjects.

I'd like to thank each of our employees and our educators that worked tirelessly to make our mission a reality.

Speaker #1: Overall, given the consistent financial and operational performance we've delivered in the last 18 months, we will host and invest today on November 20th, 2025, to share our outlook for 2026 and beyond.

With that I will now turn the call over to MTI CFO, Rick Sunderland. Thank you Angie total revenue in the second quarter was $162 8 million, an increase of $9 9 million or six 5% from the prior year period.

Speaker #1: We remain enthusiastic in our ability to continue delivering results and prioritizing growth drivers to deliver profitability while providing more students accessible and affordable educational opportunities.

Second quarter revenue growth was driven by increased revenue in Russia.

And Honduras, partially offset by lower revenue at graduate school.

Speaker #1: We look forward to welcoming you, our investors and analysts, to New York City. Invitations are forthcoming. In closing, APEI enables students to experience a valuable lifelong return on their educational investment.

Total costs and expenses in the second quarter were $155 7 million, an increase of $5 1 million or three 4% as compared to the second quarter of 2024 and include $1 7 million in professional fees and general and administrative expenses related to the combination of HOS Cosmos.

Speaker #1: Our mission remains to power purpose, potential, and prosperity for those in service of others. Each of our education units is purpose-built to deliver accessible and affordable higher education across a diverse, range of subjects.

In Honduras and the sale of graduate school.

The increase was primarily driven by increases in employee compensation costs professional fees and classroom and of course materials costs, partially offset by decreases in information technology costs, depreciation and amortization expenses and occupancy costs.

Speaker #1: I'd like to thank each of our employees and our educators that work tirelessly to make our mission a reality. With that, I will now turn the call over to APEI CFO, Rick Sunderland.

In the second quarter net loss available to common shareholders.

<unk> net loss of <unk> 3 million compared to a net loss of $1 2 million in the prior year.

Speaker #2: Thank you, Angie. Total revenue in the second quarter was 162.8 million. An increase of 9.9 million or 6.5% from the prior year period. Second quarter revenue growth was driven by increased revenue at Rasmussen, APUS, and Hondros, partially offset by lower revenue at graduate school.

As noted earlier the second quarter loss included a $3 5 million loss on the redemption of our preferred stock.

Second quarter diluted.

Net loss per common share was a loss of <unk> <unk> compared to a loss per diluted share of <unk> <unk> in the prior year period.

Speaker #2: Total cost and expenses in the second quarter were 155.7 million, an increase of 5.1 million or 3.4% as compared to the second quarter of 2024.

Second quarter, adjusted EBITDA was $15 1 million, a $4 2 million or 38% increase over the prior year period. This.

Speaker #2: And include 1.7 million in professional fees in general and administrative expenses related to the combination of APUS, Rasmussen, and Hondros. And the sale of graduate school.

This was above the top end of the guidance range and represented an adjusted EBITDA margin of nine 3% as compared to seven 1% in the prior year.

At <unk> second quarter revenue increased to $81 7 million, a six 1% increase as compared to the prior year period.

Speaker #2: The increase is primarily driven by increases in employee compensation costs, professional fees, and classroom and course materials costs, partially offset by decreases in information technology costs, depreciation and amortization expenses, and occupancy costs.

Second quarter net course registrations increased seven 3% as compared to the prior year for.

For the quarter <unk> EBITDA was $22 4 million.

Speaker #2: In the second quarter, net loss available to common shareholders was a net loss of 0.3 million, compared to a net loss of 1.2 million in prior year.

EBITDA margin was 27, 4% as compared to 25, 3% in the prior year.

At Roswell.

Quarter revenue was $59 5 million, an increase of 12, 2% as compared to the second quarter of 2024.

Speaker #2: As noted earlier, the second quarter loss included a 3.5 million loss on the redemption of our preferred stock. Second quarter diluted net loss per common share was a loss of 2 cents, compared to a loss per diluted share of 6 cents in the prior year period.

In the second quarter online enrollment increased 12, 2%.

On ground enrollment increased three 2% and total enrollment grew 74% to approximately 14600 students as compared to the prior year period.

Speaker #2: Second quarter adjusted EBITDA was 15.1 million, a 4.2 million or 38% increase over the prior year period. This was above the top end of the guidance range and represented an adjusted EBITDA margin of 9.3% as compared to 7.1% in the prior year.

In the second quarter <unk> delivered positive EBITDA of <unk> 2 million as compared to an EBITDA loss of $4 7 million in the prior year.

At <unk> second quarter revenue was up 10, 5% to $18 1 million as compared to the prior year period due to continued enrollment growth for the quarter Congress total enrollment increased 13, 5% to approximately 3700 students.

Speaker #2: At APUS, second quarter revenue increased to 81.7 million, a 6.1% increase as compared to the prior year period. Second quarter net course registrations increased 7.3% as compared to the prior year.

At <unk>, the second quarter, EBITDA was <unk> 1 million as compared to an EBITDA loss of $44 million in the prior year period.

Speaker #2: For the quarter, APUS EBITDA was 22.4 million, and EBITDA margin was 27.4% as compared to 25.3% in prior year. At Rasmussen, second quarter revenue was 59.5 million, an increase of 12.2% as compared to the second quarter 2024.

Revenue, we graduate school included in corporate and other was $3 4 million as compared to $6 4 million in the prior year period for the quarter Grad School EBITDA was a loss of $2 5 million compared to an EBITDA loss of <unk> 7 million in the prior year period.

Speaker #2: In the second quarter, online enrollment increased 12.2%, on-ground enrollment increased 3.2%, and total enrollment grew 7.4% to approximately 14,600 students as compared to the prior year period.

As noted earlier in July we completed the sale of graduate school.

Cash flow from operations for the first six months of 2025 was $51 8 million compared to $33 2 million in the prior year.

Speaker #2: In the second quarter, Rasmussen delivered positive EBITDA of 0.2 million, as compared to an EBITDA loss of 4.7 million in the prior year. At Hondros, second quarter revenue was up 10.5%, to 18.1 million, as compared to the prior year period due to continued enrollment growth.

At June 32025, total cash cash equivalents and restricted cash was $176 6 million an increase of $17 6 million from year end 2024.

Restricted cash included a $24 5 million restricted certificate of deposit to secure a letter of credit related to restaurants since composite score prior to our acquisition in.

Speaker #2: For the quarter, Hondros total enrollment increased 13.5% to approximately 3,700 students. At Hondros, the second quarter EBITDA was 0.1 million, as compared to an EBITDA loss of 0.4 million, in the prior year period.

In May the letter of credit was released by Ed and therefore, the cash is no longer restricted at June 32025, total unrestricted cash and cash equivalents was $174 9 million compared to $131 9 million at December 31, 2024, an increase of $43 million.

Speaker #2: Revenue at graduate school included incorporated another was 3.4 million, as compared to 6.4 million in the prior year period. For the quarter, graduate school EBITDA was a s of 2.5 million, compared to an EBITDA loss of 0.7 million in the prior year period.

As noted earlier in the second quarter, we redeemed all of our outstanding preferred stock for $43 1 million and completed the sale of two corporate administrative office buildings in Charleston, West Virginia for net proceeds of $22 5 million.

Speaker #2: As noted earlier, in July, we completed the sale of graduate school. Cash flow from operations for the first six months of 2025 was 51.8 million, compared to 33.2 million in the prior year.

Today with these changes, including the sale of graduate school. We believe we are well positioned to invest in the continued growth of our schools.

Speaker #2: At June 30th, 2025, total cash cash equivalents and restricted cash was 176.6 million, an increase of 17.6 million from year-end 2024. Restricted cash included a 24.5 million restricted certificate of deposit to secure a letter of credit related to Rasmussen's composite score prior to our acquisition.

Capex totaled $7 6 million in the first half of 2025 compared to $11 4 million in the prior year period.

We are all on Api's term loan at June 30 was unchanged at $96 4 million and our $20 million revolving credit facility remains fully available with unrestricted cash of $174 9 million API continues to be net cash positive.

Speaker #2: In May, the letter of credit was released by Ed, and therefore the cash is no longer restricted. At June 30th, 2025, total unrestricted cash, a cash equivalence was 174.9 million, compared to 131.9 million at December 31th, 2024, an increase of 43 million.

Turning now to our third quarter and full year outlook, which covers forward looking statements.

I think to the various risks noted earlier for.

For the third quarter 2025.

<unk> total net course registrations are expected to be between 97000 to.

Speaker #2: Additionally, as noted earlier, in the second quarter, we redeemed all our outstanding preferred stock for 43.1 million, and completed the sale of two corporate administrative office buildings in Charlestown, West Virginia, for net proceeds of 22.5 million.

To 99000 registrations, representing a 5% to 7% increase when compared to last year.

At restaurants, and in Honduras third quarter student enrollments are actual because of the quarterly starts at these schools.

By restaurants in the third quarter total on ground enrollment increased 11, 7% to approximately 6700 students and total online enrollment increased 10, 8% to approximately 8200 students for an aggregate enrollment of approximately 14900 students.

Speaker #2: Today, with these changes, including the sale of graduate school, we believe we are well positioned to invest in the continued growth of our schools.

Speaker #2: CapEx totaled 7.6 million in the first half of 2025, compared to 11.4 million in the prior year period. Principal and API's term loan at June 30th was unchanged at 96.4 million, and our 20 million revolving credit facility remains fully available.

This represents a 10, 4% increase when compared to the third quarter of 2024.

At <unk> third quarter student enrollment increased 17, 6% year over year to approximately 3700 students.

Speaker #2: With unrestricted cash of 174.9 million, APEI continues to be net cash positive. Turning now to our third quarter and full-year outlook, which covers forward-looking statements.

In the third quarter of 2025 consolidated revenue is expected to be between $159 million.

Speaker #2: Subject to the various risks noted earlier. For the third quarter of 2025, APUS total net course registrations are expected to be between 97,000 to 99,000 registrations representing a 5% to 7% increase when compared to last year.

$161 million.

Excuse me the company expects third quarter net loss available to common shareholders to be between a loss of $2 9 million and $48 million or a loss.

Or between a loss of 15.

And <unk> <unk> per diluted share.

Speaker #2: At Rasmussen and Hondros, third quarter student enrollments are actual because of the quarterly starts at these schools. At Rasmussen, third quarter total on-ground enrollment increased 11.7%, to approximately 6,700 students and total online enrollment increased 10.8% to approximately 8200 students, for an aggregate enrollment of approximately 14,900 students.

This includes an anticipated 7 million to $8 5 million loss related to the sale of graduate school.

Third quarter adjusted 2025, adjusted EBITDA is expected to be between $15 million and $17 million.

For the full year 2025, there is no change to our anticipated consolidated revenue of between $650 million and $660 million net income available to common shareholders for the year is expected to be between 18 million and $24 million.

Speaker #2: This represents a 10.4% increase when compared to the third quarter 2024. At Hondros, third quarter student enrollment increased 17.6% year-over-year to approximately 3,700 students.

This guidance takes into account the loss on the preferred equity redemption and losses associated with the sale of graduate school.

We are increasing our full year 2025, adjusted EBITDA guidance to be between $81 million and $88 million.

Speaker #2: In the third quarter of 2025, consolidated revenue is expected to be between 159 million and 151 million. Excuse me. The company expects third quarter net loss available to common shareholders to be between a loss of 2.9 million and 0.8 million or a loss or between a loss of 15 cents and 4 cents per diluted share.

Full year Capex is expected to be between 18 million and $22 million.

The updated full year, adjusted EBITDA and Capex guidance translates to free cash flow expectations for the year defined as adjusted EBITDA less capex to be between $59 million and $70 million.

Speaker #2: This includes an anticipated 7 million to 8.5 million loss related to the sale of graduate school. Third quarter adjusted 2025 adjusted EBITDA is expected to be between 15 million and 17 million.

I will now pass it back to angi for closing remarks, after which we will begin our question and answer session.

Thank you Rick prior to concluding our prepared remarks and opening the call to questions I do want to take a moment to thank Steve Somers, who is leaving after five years with API.

Speaker #2: For the full year 2025, there is no change to our anticipated consolidated revenue of between 650 million and 660 million. Net income available to common shareholders for the year is expected to be between 18 million and 24 million.

He has been instrumental in leading corporate strategy, driving Investor relations and leading graduate school to an outcome, where it can thrive strategically with its new owners, Steve It's been a great partner and advocate for me and for ATI, We wish him all the best in his next endeavors.

Speaker #2: This guidance takes into account the loss on the preferred equity redemption and losses associated with the sale of graduate school. We are increasing our full-year 2025 adjusted EBITDA guidance to be between 81 million and 88 million.

Today, we welcome Gary Janssen to R. A T I earnings team.

Gary has played a critical role in API for over 18 years, and now lease growth and strategy for ATI.

Speaker #2: Full-year CapEx is expected to be between 18 million and 22 million. The updated full-year adjusted EBITDA and CapEx guidance translates to free cash flow expectations for the year, defined as adjusted EBITDA less CapEx to be between 59 million and 70 million.

We have spent much of the past year setting expectations for our investors and other stakeholders and then delivering on those results.

As soon as delivering consistent positive enrollment growth.

Speaker #2: I will now pass it back to Angie for closing remarks after which we will begin our question and answer session.

And profitability.

<unk> continues to deliver consistent growth and a high margin of profitability, we set expectations for redeeming our preferred equity selling corporate buildings, simplifying our business structure and we continue to deliver on those promises.

Speaker #1: Thank you, Rick. Prior to concluding our prepared remarks and opening the call to questions, I do want to take a moment to thank Steve Summers, who is leading after five years with APEI.

Our enterprise is purpose built to deliver affordable and accessible educational opportunities and fields, which are in high demand. We believe that this platform and this sector tailwind set API to accelerate growth and bring more educational opportunities to a greater audience across the country.

Speaker #1: He has been instrumental in leading corporate strategy, driving investor relations, and leading graduate school to an outcome where it can thrive strategically with its new owners.

Speaker #1: Steve has been a great partner and advocate for me and for APEI. We wish him all the best in his next endeavors. Today we welcome Gary Jansen to our APEI earnings team.

We are as optimistic today as we've ever been about the long term potential of our company.

Speaker #1: Gary has played a critical role at APEI for over 18 years, and now leads growth and strategy for APEI. We have spent much of the past year setting expectations for our investors and other stakeholders and then delivering on those results.

And with that I would now like to hand, the call back to Greg the operator to begin our question and answer session Greg.

Thank you Angie.

At this time I would like to remind everyone in order to ask a question simply press star and the number one on your telephone keypad once again star one.

Speaker #1: Rasmussen is delivering consistent, positive enrollment growth, and profitability. APUS continues to deliver consistent growth in a high margin of profitability. We set expectations for redeeming our preferred equity, selling corporate buildings, simplifying our business structure, and continue to deliver on those promises.

And we will pause just a moment to compile the Q&A roster.

Oh.

Alright, it looks like our first question today comes from the line of Raj Sharma with Texas Capital Raj. Please go ahead.

Yes. Thank you for taking my questions and congratulations on solid ongoing execution and solid results.

Speaker #1: Our enterprise was purpose-built to deliver affordable and accessible educational opportunities in fields which are in high demand. We believe that this platform and the sector tailwinds set APEI up to accelerate growth and bring more educational opportunities to a greater audience across the country.

Really very appreciated.

On the question on the military business I know that you've commented in the past that there was a military had a great enrollment in <unk>.

Best in 10 years, and the prospects there seem good and you seem to have raised the guidance on apus.

Speaker #1: We are as optimistic today as we've ever been about the long-term potential of our company. With that, I would now like to hand the call back to Greg, the operator, to begin our question and answer session.

Is that.

Can you is there any more color on what youre seeing out there in terms of potential enrollments in also.

Speaker #1: Greg?

Speaker #3: Thank ou, Angie. At this time, I would like to remind everyone, in order to ask a question, simply press star and the number one on your telephone keypad.

Any more clarity on the tuition assistance.

We're supposed to be from the big beautiful build the $100 million from department of defense.

Speaker #3: Once again, star one. And we will pause just a moment to compile the Q&A roster. All right. Looks like our first question today comes from the line of Raj Sharma with Texas Capital.

<unk>.

Any clarity on how that flows through the system.

Yeah, Great Great question Raj, Thanks, I'm going to hand, it direct for him to answer go ahead, you want me to talk about the typical build yes suraj it's in the bill.

Speaker #3: Raj, please go head.

Speaker #4: Yeah. Thank ou, for taking my questions and congratulations on solid ongoing results. really very appreciated. on the, I, I had a estion on the military business.

Big Beautiful Bill. It's also in the National Defense Authorization Act right. One authorizes I believe the other appropriates and so the funds are there available I think that Raj combined with the military meeting its annual recruiting goals early this year and by the way I don't think they are actually met.

Speaker #4: I know that you've commented in the past that there was military had a great execution and solid enrollment in, best in 10 years and the prospects there seem good.

Speaker #4: And you've seemed have raised the guidance, on APUS. is that, you know, can you, is there any more color on your what you were seeing out there in terms of potential enrollments and also any more clarity on the tuition assistance, that was supposed to be from the big, beautiful bill, the, the 100 million from the Department of Defense, any, clarity on how that flows through the system?

Our recruiting goals in recent years, so not only did they meet them, but they.

Let them early in the year.

As up as the largest provider of active duty military education too.

<unk>.

Benefit from those funds one thing to understand is the $100 million is authorized.

Through September of 2029, so it's a four year authorization and I think we've talked about.

The funds could be spent over a number of years with the <unk>.

Speaker #1: Yeah. Great, great question, Raj. Thanks. I'm gonna hand it to Rick for him to answer. Go head.

Increased funding levels and benefiting all education providers with us being the largest in any individual year. So.

Speaker #2: You want me to talk about the big, beautiful bill? Yeah. So Raj, it's, it's the bill. It's the big, beautiful bill. It's also in the National Defense Authorization Act, right?

We are seeing strength in military registrations and you can comment on that.

Speaker #2: One authorizes I believe the other appropriates, and so the funds are there available. I ink that Raj combined with the, military meeting it's, annual recruiting goals early this year, and by the ay, I don't think they've actually met their recruiting goals in recent years.

I think it has everything to do with it.

The reputation and the quality and the outcomes of American military University, but having the funding there supports.

Additional.

Interest and registrations with AMU and Apu.

Speaker #2: So not only did they meet them, but they met them early in the year. Sets us up as the largest provider of active duty military education, to, benefit from those, those funds.

Yeah, I'll, just click down on the question around how.

How can we benefit from a $100 million.

As Rick mentioned, it's spread over four years.

We have the estimated 30% share of all active duty would take forces from anyone. So if you take $130 million. If it's all spread equally across providers would be 30 million crossover for years, but our team on the ground has not yet been able to determine how.

Speaker #2: One thing to understand is the 100 million dollars is authorized through September of 2029. So 's a four-year authorization. And I think we've talked about, you ow, how the, the funds could be spent over a number of years, with the, increased funding levels then benefiting, all education providers with us being the largest, you know, in any individual year.

That one.

$100 million is going to be distributed made accessible.

Or in any other way.

Speaker #2: So, we are seeing strength in the military registrations and you can comment on that. I think it has everything to do with the reputation and the quality and the outcomes of American military university.

Added to that.

The.

The dollars available for education provider, so right now, it's our belief that the.

It's really about allowing more active duty to enroll.

Speaker #2: But having the, the funding there, to support, additional, interest in and, and registrations with, AMU and APU.

Because they haven't demonstrated.

Increase in the reimbursement rate they haven't demonstrated an increase in the total number of classes or the total dollar reimbursement on an annual basis, yet, but there is.

Speaker #1: Yeah. I'll just click down on the question around, how can we benefit from the 100 million? As Rick mentioned, it's spread over four years.

There is.

That those things are under consideration, but no more information has been provided Raj since our last call. We had our earnings call. We had to provide that information. So we're all waiting for more information I, just that's right I'd like to add one point. So there have been times Raj when we've been asked.

Speaker #1: you know, we have the estimated 30% share of all active duty who take courses from any one. So if you take 100 million, 30 million, if it's all spread equally across providers would be 30 million for us over four years.

Speaker #1: But our team on the ground has not yet been able determine how, that 100 million dollars is going to be distributed, made accessible, or in, in any other way, added to, you know, the, the, the dollars available for education providers.

Whether that funding is at risk and I think we have evidence now that the funding is not only at risk that it's going to be.

<unk>, alright, only not at risk not only not at risk, but activity elevated right.

Demonstrating directly the department of defense is commitment to education military, which we said, it's an all volunteer force.

Speaker #1: So right it's our belief that, the, it's really about allowing more active duty to enroll, because they haven't demonstrated, an increase in the reimbursement rate.

Recruit on we'll give you a skill and we'll give you an education and they're putting money behind the second of the two.

Speaker #1: They haven't demonstrated an increase in the total, number of classes or the total dollar reimbursement on an annual basis. Yet, but there is, there is, talk that those things are under consideration.

Got it that's super helpful. Thank you and then just lastly.

I noticed that Ross nuisance.

Margins.

Great performance on the enrollment increases.

Speaker #1: But no more information has been provided, Raj, since the last call we had, earnings call we had, to provide that information. So we're all, waiting for more information.

<unk> margins were down sequentially Q2 versus Q1 on flat revenues.

Anything in particular going on there and then I have a follow on question on just overall it seems like <unk>.

Speaker #2: I, I just, that's right. I'd like to add one point. So there have been times, Raj, when we've been asked, whether that funding is at risk.

<unk> in Honduras are at breakeven levels, and so you should be seeing as you've talked about in the past operating leverage kicking in in a bigger way.

Speaker #2: And I ink we have evidence now that the funding is not only at risk, but it's gonna be, elevated. Right?

Speaker #1: Not only not at risk.

Is a lot of the increase in the EBITDA.

Speaker #2: Not only not at risk, but it's gonna be elevated. Right? demonstrating directly the Department of Defense's commitment to education and military. Which we've

Coming from largely are projected to be coming from that <unk>.

<unk> is G&A also kind of coming down or changing the DNA levels.

Speaker #1: Right. That's right.

Speaker #2: id it's an all-volunteer force. They recruit on, we'll give you the skill and we'll give you an ation. And they're putting money behind the second of the two.

I'm, sorry long winded.

Two questions.

Yes, let me let me start with the first one and then you may have to clarify the second one.

Speaker #4: Got it. That's, that's super helpful. Thank you. And then just lastly, I, I noticed that Rasmussen's, margins, a, , a great, performance on the enrollment increases.

So the first one on sequentially.

Youre correct, our margin is lower in Q2, and the first quarter.

They implemented a new one.

What would you call that provider, it's not the LMS, but it's of course delivery yeah.

Speaker #4: but Rasmussen's margins were down sequentially Q2 versus Q1, you know, on flat revenues. anything in going on there? And then I have a follow-on question on just overall, it seems like Rasmussen and, Hondros are at break-even levels and so you're, you should be seeing, as you've talked about in the past, you know, operating leverage kicking in in a bigger way.

Of course materials for the nursing program.

A new vendor a new provider of course materials for the nursing program and the management team at Ross take them.

Negotiated what I'll describe as a discount in the first quarter the first quarter of that.

New vendor relationships and so when we get to the second quarter. The costs. There are fully loaded you should consider that to be kind of the run rate costs as it relates to course materials.

Speaker #4: is a of the increase in the EBITDA coming from, largely or, you know, projected to be coming from that? And or is G&A also kind of coming down or changing the G&A levels?

The other element sequentially would be.

All of the schools.

And ATI have their annual.

Speaker #4: So I'm ry, long-winded, two, two questions.

Salary increases merit increases beginning April one so the second quarter.

Speaker #2: Yeah. Let me, let me start with the first one, and then you may have to arify the second one. so the first one, sequentially, you, you're correct.

Yes.

As a load of salaries that reflects the new compensation for all employees.

Speaker #2: The margin is lower in Q2. In the first quarter, they implemented a new, what would you call the, the provider? It's not the LMS, but it's a course delivery,

Got it. Thank you and then so the second part was.

The breakeven.

You've been talking about filling in seats.

Speaker #1: Yeah. It's a, it's course materials for the nursing program.

The extra seats and that will drive the margins up.

Speaker #2: So Raj, a new vendor, a new provider, course materials for the nursing program. And the management team at Ras thanked them. negotiated what I'll describe as a discount in the first quarter.

Goodbye profit is down to the bottom line is that what's happening less NUCYNTA is almost is that breakeven.

Congress is at breakeven and operating leverage kicks in in a bigger way.

Speaker #2: The first quarter of that, new vendor relationship. And so when we get to the second quarter, the costs there are fully loaded. You should consider that to be kind of the run rate cost as it relates to course materials.

Improving profitability moving forward is that what's happening or also as G&A do you expect G&A levels to stay here or come down.

Speaker #2: The other, element sequentially would be all the schools and API have their annual salary increases merit increases beginning April 1st. So the second quarter has a load of salaries that reflects the, the new compensation for all employees.

Well Theres no question. So can we just do.

Quarter to quarter Q1 of 24 to Q.

Q1 to 25 right there's almost a.

$4 $85 million change in EBITDA, there and the EBITDA flow through was about 70, 576%.

<unk> is true in Q2, where we are at minus four seven for the second quarter and were positive.

Speaker #4: Got it. Thank you. And then so the second part was, you know, the break-even, I mean, you know, and you've been talking filling in seats, you know, the extra seats and that would drive the margins up or drive profits down to the bottom line.

0.2 in the second quarter and the flow through again, it's above 75%. So that there is such a dramatic flow through on that next dollar of revenue now.

That that we will see we will expect continued acceleration as the enrollments continue to grow at Rasmussen.

Speaker #4: Is that what's happening, Rasmussen is almost at, you know, is at break-even? Hondros is at break-even. And operating leverage here kicks in in a bigger way.

The other part of your question is about G&A.

We pay very careful attention to our non student facing investments.

Speaker #4: Improving profitability moving forward. Is that what, what's happening? , and, and or also is G&A do you expect G&A levels to stay here or come down?

And we do not anticipate big step fixed increases in those <unk>.

Speaker #1: Yeah. No. Well, there's no question. So can we just do, quarter to quarter, Q1 to 24 to, Q1 to 25, right? There's almost a four, 4.85 million dollar change in EBITDA there.

Expenditures for the remainder of 2025.

The only thing that will increase will be those things that are tied to.

Volume increases in in the students faculty for example, eclipsing materials et cetera.

Speaker #1: And the EBITDA flow-through is about 75, 76%. The same is true in Q2 where we are at minus 4.7 for the second quarter and we're positive 0.2 in the second quarter and the flow-through again is above 75%.

I would add Raj you were focused on G&A. We're focused on every part of the P&L right and S&P, we're seeing continued improvement.

Reductions in our advertising costs at Roswell seeing.

Speaker #1: So the, there's such a dramatic flow-through on that next dollar of revenue. Now, that the, we will see, we will expect continued acceleration as, the enrollments continue grow at Rasmussen.

Seeing improvements.

Lead flow right and you've got the enrollment growth so.

I would want to call out the efficiency.

<unk> experience in marketing across the enterprise and specifically at Ross.

Speaker #1: the other part of your question is about, G&A. we paid very careful attention to our non-student-facing investments. And, and we do not anticipate big step fixed increases in those, expenditures.

Got it Super helpful. Thank you again I'll take it offline and great Great continued execution congratulations David. Thank you so much Raj. Thank you very much.

Yeah absolutely.

Thanks Raj.

And our next question comes from the line of Max Michaels with Lake Street Capital markets. Max. Please go ahead.

Speaker #1: for remainder of 2025. the only thing that will increase will be those things that are tied to, you ow, volume increases in, in, the students like faculty, for example, of which the materials etc.

Hey, guys. Thanks for taking my question and congratulations on sale.

Graduate USA as well as cleaning up the balance sheet, a little bit here just a quick question on Rasmussen real quick now with the department of Ed.

Speaker #2: And I, I would add, Raj, you were focused on G&A. We're ocused on every part of the, the P&L, right? In S&P, we're seeing continued improvement.

Unlocking basically that 24 and a half million dollars you guys talked about the restriction you had from adding new programs and locations you guys have internal expectations around new program adds and campus expansions.

Speaker #2: Meaning reductions in our vertising costs at Ras while seeing, seeing improvements in lead flow, right? And, and you've got the, enrollment growth. So I would, I'd want to call out the efficiency where we continue to experience, in, in marketing across the enterprise.

At the company.

Yeah, It's a great question.

We have locked in November of November.

November 20th of this year for an Investor meeting that we are hosting in New York City, and we're really excited to share a multiyear view of our campus opening strategy or program position strategy. So we look forward to hosting Lake Street.

Speaker #2: And specifically at Ras.

Speaker #4: Got it. Thank you. It's super helpful. Thank you again. I'll, I'll take it offline and great, great continued execution. Congratulations.

Speaker #1: Thank you. Thank you so

Speaker #4: Thank you.

Speaker #1: much, Raj. Thank you very much.

Speaker #4: Yeah. Absolutely.

Sure that multi year view with you.

Speaker #3: Thanks, Raj. And our xt question comes from the line of Max Michaels with Lake Street Capital Markets. Max, please go head.

Okay. Thank you guys and then just maybe a quick question around the <unk> scores here I know you guys don't.

Speaker #5: Hey, guys. Thanks for taking my question and, congratulations on the sale of, graduate USA as well as, cleaning up the balance sheet a little bit here.

Sure the data anymore, but how would you say those trended in Q2.

We are we do not have all Q2 results in August they are pacing as we had expected so.

Speaker #5: A quick estion on Rasmussen real quick. Now with the Department of Ed re, unlocking basically that 24 and a half million dollars, and you guys talked about the restriction you had on from adding new programs and locations.

We don't have any concerns at this point, but we're still awaiting a few oddly a few campus state combinations to report their results. So we're paying careful attention to that we know theyre not posted publicly yet either so there's a slowdown in posting results we're not sure why.

Speaker #5: Do you ys have internal expectations around new program ads and campus expansions, at the company?

Speaker #1: Yeah. That's a great question. we, have locked in November of November 20th of this year for an investor meeting that we're hosting in New York City.

And then last one for me guys just with the department of Ed releasing that letter of credits of $24 5 million, a $22 million coming in from the sale of the administrative buildings.

Speaker #1: And we're ally excited to share a multi-year view. Of our campus opening strategy, our program addition strategy. So we look forward to hosting Lake Street, to share that multi-year view with you.

$6 million in savings you guys are getting from cleaning.

Clean up the preferred maybe how would you rank maybe investments going forward in 2025 in terms of the company.

Yes.

Thank you for that question. So let me let me ranked them in and you can correct my ranking if she doesn't agree.

Speaker #2: Okay. Thank you, guys. And then just maybe a quick question around the end, NCLEX scores here. I know you guys don't share the data anymore, but how would you say those trended in Q2?

First of all I've been saying this we intend to invest in our growth initiatives.

So that would be health care expansion, which we've talked about and technology and we.

Speaker #1: we, we do not have all Q2 results in, but they're pacing as we had expected. So, we don't have any concerns at this point.

Yeah.

It is.

Change in the technology structure.

Speaker #1: but we're still awaiting a few, oddly a few campus state combinations, to report, their, their results. So we're paying careful attention to that. We know they're not posted publicly yet either.

API.

Rich sit in.

Tuck in acquisitions.

I would generally characterize that as.

Campus single or.

Small campus type acquisitions.

Speaker #1: So, there's a slowdown in posting results. We're not sure why.

You all know we have to keep a minimum amount of cash for regulatory compliance and we do pay attention to our leverage ratio and lastly, wireless would be stock repurchases <unk> dividends.

Speaker #2: And then last one from you guys. Just with the Department of Ed releasing that letter of credit. So 24 and a half million, that 22 million coming in from the sale of the administrative buildings and then the 6 million dollars in saving you guys are etting from, cleaning up the preferred.

What were the stock repurchases in Q2.

We didn't do any in Q2.

Speaker #2: Maybe how would you rank maybe investment going forward in 2025 in terms of the company?

Hum.

We have with them.

Can we have an opening our questions. Yes, we have an open authorization, but we have not done that remember we just just in may that the LCD was released and we're looking at our strategy. We're doing that work now and more of that will come in November.

Speaker #4: Yeah. That's a, thank you for that question. So let e, let me rank them in, Angie, can you correct my ranking if she doesn't agree.

Speaker #4: first of all, and 've been saying this, you know, we intend to invest in our growth initiatives. So that would be healthcare expansion, which we've talked about.

The priority with the redemption of the preferred.

Speaker #4: And technology. And we, we, introduced, a change in, the technology structure at, h, API. we're interested in, tuck-in acquisitions, and I, I would generally characterize that as, campus singular, you know, small campus type acquisitions.

We got the preferred redemptions.

Awesome guys. Thanks for taking my questions. Thank.

Thank you very much.

Yes, Thanks, Max and our next question comes from the line of Stephen Sheldon with William Blair Stevens. Please go ahead.

18, you have Matt <unk> on for Stephen Sheldon Great work this quarter and thank you for taking my questions.

Speaker #4: you all know we have to keep a minimum amount of cash for regulatory compliance. And we do pay, attention to our leverage ratio. And last on my list would be, stock repurchases and/or dividends.

When you are able to consolidate the educational units into one platform can you talk about some of the revenue and cost synergies that provides for the business.

Speaker #2: What were the stock repurchases in Q2?

You bet.

Speaker #4: We didn't do any in Q2.

We will be able to give you more precise numbers and expectations on that and then November.

Speaker #2: Not in Q2?

Speaker #1: We have a, we have an.

Speaker #4: Are we an open on questions?

Speaker #2: Yeah. Yeah. We have an open authorization, but we have not done that. remember, it's just, just in May that the LC was released. And we're looking at our strategy.

That's your meeting but.

Directionally.

When you think about the full ladder of nursing curriculum that Rasmussen offers will be able to transfer access to that curriculum directly to all of the 100 to 800 campuses and the.

Speaker #2: We're doing that work now. and more of that will come, in November.

Speaker #1: The priority was the redemption of the preferred.

Excuse me 3700 students and 6000 alumni.

Speaker #4: Yeah. We, we, we got the preferred redemption done.

That can benefit from the advancement of post licensure nursing education, that's available from Rasmussen. Additionally, the combination will allow our campus based.

Speaker #2: Awesome, guys. Thanks for taking my questions.

Speaker #1: Thank you very much.

Speaker #3: Yes. Thanks, Max. And our next question comes from the line of Steven Sheldon with William Blair. Steven, please go head.

Students and and their friends and family to have access to the entire course catalog from Aps.

Speaker #4: Hey, team. Yeah. I have Matt Filek on for Steven Sheldon. Great work this quarter. And, thank you for taking my questions. when you're able to consolidate the educational units into one platform, can you talk about some of the revenue and cost synergies that provides for the business?

And of course catalog from Rasmussen. So today as we've spoken in the past <unk> has two programs. It offers.

<unk> offers 200 programs Rasmussen offers over 60 programs and so from any place a student may find an API school. So the marketing dollar we spend whether they land they.

Speaker #1: You bet. and Matt, you know, we'll be le to give ou, more precise numbers and expectations on that, in the November, investor meeting. But, directionally, when you think the full ladder of nursing curriculum that Rasmussen offers, we'll be able to transfer access to that curriculum directly to all the Hondros, the eight Hondros campuses, and the, cuse me, 3,700 students and 6,000 alumni.

They land at Honduras are they land at Rasmussen they'll now have access to over 250 different choices for educational opportunities for themselves certainly does pre licensure nursing is much more geographically oriented but for those people who are interested in online education.

Speaker #1: That, can benefit from the, advancement of post-licensure nursing education, that's available from Rasmussen. Additionally, the combination will allow our campus-based, students and, and their friends and family to have access to the entire course catalog from APUS.

Are there going to have a very robust portfolio of of choices.

Great. That's Super helpful. Andrew and then I just had a quick follow up for Rick.

You guys have done a really nice job showing up the balance sheet and Rick appreciate the.

Speaker #1: And the course catalog from Rasmussen. So today, as we've spoken in the past, Hondros has two programs it offers. APUS offers 200 programs. Rasmussen offers over 60 programs.

Additional.

Detail on.

The capital deployment outlook from here, but was wondering if you could maybe just remind us how much cash do you feel you need on hand to run the business and then what this pro forma cash look like after the sale of graduate School USA.

Speaker #1: And so, from any place, a student may find an APEI school. So the marketing dollar we spend, whether they land at APUS, they land at Hondros, or they land at Rasmussen, they'll now have access to over 250 different choices for, educational opportunities for themselves.

The answer to the question about how much cash to run the business it depends on how we're going to.

Use of cash right.

Alright, and Thats, all part of the multiyear planning process that we're going through.

When I say, how we use the cash we want to maintain our composite score above.

Speaker #1: Certainly, the pre-licensure nursing is much more, geographically oriented. But for those people who are interested in online education, they're gonna have very robust portfolio of, of choices.

Above the one five.

Different users have different impacts on that composite score.

But we do feel.

Confident that the amount of cash we have now will allow for the types of activities that I spoke about a few minutes ago.

Speaker #4: Great. That's super helpful, Angie. And then, I just had a quick follow-up for Rick. you guys have done a really nice job showing up the balance sheet and Rick appreciates the additional, detail, on, the capital deployment outlook from here.

The second I'm, sorry, what was the second question.

Yeah, just wondering on what pro forma.

Great.

Yes.

Thanks for the question, it's really interesting as we said.

Speaker #4: But was wondering if you could maybe just remind us how much cash do ou feel you need on hand to run the business? And then what does pro forma cash look like after the sale of graduate school USA?

Theres a loss associated with the sale some of that is actually cash.

As a cash loss in the sense of pace in closing costs, but what we really did focus on the balance sheet as we had a present value of $28 million of lease liability associated with the facility in Washington DC.

Speaker #2: the answer to the question about how much cash do you need to run the business, depends on how we're onna use the cash. Right?

Speaker #2: And that's all part of the multi-year planning process that we're going through. When I say how we use the cash, we wanna maintain our composite score above the 1.5.

And with the sale of graduate school that liability conveyed to the buyer.

And so when we talk about cleaning up the balance sheet.

There is an element to that which is.

Speaker #2: And different uses have different impacts on that composite score. But we do feel confident that the amount of cash we have now will allow for the types of activities that I spoke about a few, a few minutes ago.

Releasing.

Relieving ourselves of a very large.

The ability for a facility in Washington D C.

Got it yeah that makes sense. Thanks for the added color there. Thank you team and again nice work this quarter.

Thank you Matt.

Speaker #2: the second, I'm ry. What was the second question?

Thanks, Matt.

Speaker #3: Yeah. Just wondering on what pro forma cash looks like as proposed. Yeah. Great.

And our next question comes from the line of Luke Horton with Northland Securities. Please go ahead.

Speaker #2: Well, it's a, 's, it's a, it's a, it's a real thank you for the question. It's really interesting. As we said, there's a loss associated with the sale.

Yeah, Hey, guys. Thanks for taking the questions and congrats on the great quarter.

Just wanted to clarify on the <unk>.

Speaker #2: Some of that is actually cash, is a cash loss in the sense of paying some closing costs. But what we really did, and we, when we focused on the balance sheet, is we had a present value 28 million dollar lease liability associated with the facility in Washington, DC.

USA sale so.

Your revenue guidance for the year was reiterated but thats, excluding if we call it kind of $7 million of revs that they've done in the GSE USA has done in the first half of the year and annualize that.

Speaker #2: And with the sale of graduate school, that liability conveyed to the buyer. And so we, when we talk about cleaning up the balance sheet, there's an element to that, which is, releasing our, you ow, relieving ourselves of a very large lease liability for a facility in Washington, DC.

It's really like a kind of a revenue raised guidance just wanted to clarify that wasn't initially part of.

The range.

Yeah. That's correct we had when we gave the original guidance we had no buyer for graduate school. So we gave our full year guidance that included a full year revenue for graduate school. So now we are reiterating guidance and we are eliminating the five remaining months August through December.

Speaker #4: Got it. Yep. That makes sense. Thanks for the added color there. Thank you, team. And again, nice work this quarter.

Speaker #1: Thank ou, Matt.

Of revenue that we would have otherwise collected from from graduate school. If we had still owned them. So you're correct about what you said.

Speaker #3: Thanks, Matt. And our next question comes from the line of Luke Horton with Northland Securities. Luke, please go head.

Okay Awesome and then just on.

Speaker #4: Yeah. Hey, guys. Thanks for taking the questions and congrats on the great quarter. I just wanted to clarify on the GSUSA sale. So your revenue guidance for the year was reiterated, but that's excluding if we call it kind of 7 million, revs that they've done in the, the GSUSA has done in the first half of the year and annualize that.

On the institution consolidation.

Just wanted to check timeline still remain intact here.

Effective.

It's done by <unk> effective by year end, and then I guess specific to that on the marketing channel.

How does that kind of streamline the marketing and user or.

Student acquisition.

Speaker #4: It's really like a kind of a revenue raise guidance. Just wanna clarify that wasn't initially part , the range.

Being under one umbrella and being able to offer those courses are the broad catalog of courses to all students.

Yeah, Great question, so timeline wise.

Speaker #1: That, that's correct. We had, when we gave the original guidance, we had no buyer for graduate school. So we gave a full year guidance that included a full year of revenue for graduate school.

But really happy that we've got all the approvals lined up right we've got.

<unk> a predator approvals, we've got our state approvals.

We have been in active dialogue with our credit or HFC and the department of education, I'm trying to finalize the timeline and frankly the department is very busy right now and have fewer people to do the work than they are.

Speaker #1: So now we are reiterating guidance and we are eliminating the five remaining months, August through December, of revenue that we would have otherwise collected from, from graduate school, if we had still owned them.

Speaker #1: So you're rect about what you said.

Enjoyed in the past and so theyre trying to find a timeline that works for ALC for API and for the department. So we're waiting on a combination of a timeline from Ed.

Speaker #4: Okay. Awesome. And then just on the, the institution consolidation, just wanna check timelines still remain intact here. kind of effective I guess done by 3Q effective by year end.

And then to answer your question on the.

What happens in the future system.

Speaker #4: And then that on the marketing channel, I guess how does that kind of streamline the marketing and user or, student acquisition, being under one umbrella and being able to offer those courses or the broad catalog of courses to all students?

What we're excited about is that we will have a system landing page will have a place where people who might be interested in knowing more about our university system can go we will have places for them to explore each of the different divisions, which will be apus global our military business and our health care business.

Speaker #1: Yeah. Great question. So timeline-wise, we're ally happy that we've got all the approvals lined up, right? We've got our, accreditor approvals. We've got our state approvals.

And so you are right that they'll be able to see from that single.

Speaker #1: we have

Single landing page all the different choices that they can consider.

Certainly as it relates to our campus based nursing programs, we expect that they will not be coming in at the high level Apus landing page, but instead they'll be coming in at the local market nursing brands. So they'll come in at the Raz nursing brand or the Honduras nursing brand, we're not changing those brands.

Speaker #1: the Department of guess specific to Education on trying to finalize the timeline. frankly, the department is very busy right now. And have fewer people to do the work than they've enjoyed in the past.

Speaker #1: And so they're trying to find a timeline that works for HLC for APEI and for the department. So we're waiting on a confirmation of a timeline from Ed.

Because that'll be much more of a local market.

Speaker #1: and then to answer your question on the, what, what happens in the future system, what we're excited about is that we'll have a system landing page.

Kind of boots on the ground marketing approach and so where we are.

Going to we're going to have the opportunity to market to students either way either at the top of our brands.

Speaker #1: We'll have a place where people who might be interested in knowing more about our university system can go. We'll have places for them to explore each of the different divisions, which will be APUS Global, our military business, and our healthcare business.

Tree or at the bottom where you.

Do you know where the campuses will be.

Visible with the name brands that they'll see in the local markets.

Yes, I would add marketing is already a shared service right and so we do experience the <unk>.

Speaker #1: and so you're right that they'll be able to see from that single, that single landing page all the different choices that they can consider.

<unk> of that cost across the enterprise, but everything as you said is correct, but we don't really share the leads today right.

Speaker #1: certainly, as it relates to our campus-based nursing programs, we expect that they will not be coming in at the high-level APUS landing page. But instead, they'll be coming in at the local market nursing brand.

Sure Yeah.

Sure the expertise, but we don't share that leads as you were describing that okay.

Okay got it got it yeah. That's helpful definitely appreciate the context, there and congratulations on another great quarter. Thank.

Speaker #1: So they'll come in at the RAS nursing brand or the Hondros nursing brand. We're not changing those brands. because that'll be much more of a local market, kind of boots-on-the-ground marketing approach.

Thank you so much great to hear from you.

Great. Thanks, Luc and our final question today comes from the line of Jasper Bibb with Truth Securities Jesper. Please go ahead.

Speaker #1: And so we're, we're going to, we're going to have the opportunity to market to students either way, either at the top of our brand, tree or at the bottom where, you know, where the campuses will be, visible with the name brands that they'll see in the local markets.

Hey, good afternoon, everyone. Just one for me Tonight I joined a little late so apologies. If this has already covered the third remarks, but if not just hoping you could comment on the big beautiful Bill.

Just curious if you see any exposure to new accountability standards, there across any of your portfolio schools or any other potential applications. We can build a highlight for us.

Speaker #2: Yeah. Yeah. I would add marketing is already a shared service, right? And so we do experience, the efficiency of, of that cost. Across the enterprise.

Yeah. Thanks Jasper.

Are very pleased with the the minimal impact that the big vehicle Bill It has on our business.

Speaker #2: But everything Angie said is correct.

Speaker #1: But we don't really share the leads today. Right?

Speaker #2: Yeah. That's what you're saying is.

Speaker #1: The shared leads. Yeah.

The positive if you did.

Speaker #2: We share. We, we, we ha share the expertise, but we don't share the leads as you were.

Didn't hear a commentary on.

The question from Raj.

Speaker #1: That's right. That's

Speaker #2: Traffic.

Speaker #1: right.

There was additional funding put into ta of $100 million that came through the bill that we believe will flow through and widens the Tam make a bigger tam for our active duty.

Speaker #4: Okay. Got it. Got it. Yeah. That's helpful. Definitely appreciate the context there and, and congratulations on another great quarter.

Speaker #1: Thank you so much. Great to hear from you.

Speaker #3: Great. Thanks, Luke. And our final question today comes, from the line of Jasper Bibb with Truest Securities. Jasper, please go head.

Military students. So we believe that that is a benefit to us.

And the other.

Speaker #5: Hey. Good afternoon, everyone. just one for me tonight. I, I joined a little late, so apologies if this is already covered in the third remarks.

The other components of the Big Beautiful Bell, we don't see as having a negative impact on our students are on our business and I'll turn it over to Ray.

Speaker #5: But, if not, just hoping you could comment on the big, beautiful bill. Just curious if you see any exposure to the new accountability standards there across any of your portfolio schools or any other potential implications from the bill to highlight for us.

Yeah, you mentioned the accountability standards racing here, though sort of the prior the legacy gainful employment metrics, which we've always done very well with when you build universities that deliver good outcomes high quality at a very affordable price.

Speaker #1: Yeah. thanks, Jasper. We, are very pleased with the, the minimal impact that the big, beautiful bill has on our business. the positives, if you, didn't hear our commentary, on the, the question from Raj, there was additional funding put into TA of 100 million dollars that came through the bill that we believe will flow through and, and widen the TAM, make a bigger TAM for our active duty, military students.

And very relevant.

Degrees.

And growing.

Industries like nursing Youre going to do well against gainful employment. So you don't see much impact there.

The other impacts that get get some.

Discussion has to do with the.

The lifetime caps on various loan categories.

And when you run universities that are very affordable your students are borrowing that at the levels were.

There should be significantly impacted by that I'm sure that they are probably a few but it's really not an important element to our business.

Speaker #1: So we believe that that is a benefit to us. and the other, the other components of the big, autiful bill, we don't see as having a negative impact on our students or on our business.

Okay, great well I figured that was the case. Thank you for taking the questions and looking forward to the Investor day.

Speaker #1: And I'll turn over to Rick. If anything

Speaker #4: Got it.

Super and looking forward to seeing you to ask Bert Thanks for the question.

Speaker #1: goes beyond.

Speaker #2: You mentioned the accountability standards, right? They mirror the sort of the prior, the legacy gainful employment, metrics. Which we've always done very well with.

Thank you Jennifer.

That does conclude our question and answer session I would now like to turn the call back to Andrew for closing remarks, Andrew.

Speaker #2: When you build universities that deliver good outcomes, high quality in a very affordable price, and in very, you know, relevant, degrees, and growing, you know, industries like nursing, you're gonna do well against gainful employment.

You bet. Thank you very much Greg and thank you to all of you who have joined the call today.

We really look forward to seeing all of you in New York City on November 20th for our first Investor Day.

Speaker #2: So we don't see much impact there. the other impacts that gets, gets some, discussion have to do with the, the lifetime caps on various loan categories.

What we're going to share with you updates on our progress.

I'll focus on our growth, but certainly a multi year view of how we intend to grow topline and bottom line results for our business. So we hope that you'll join us for that Investor Day in New York City and if there are questions. You have that we didn't answer for you today always feel free to reach out to <unk>.

Speaker #2: and when ou run, you know, universities that very affordable, your students aren't borrowing debt at the levels where they should be significantly impacted by that.

Speaker #2: I'm sure they're, they're probably a few, but it's really not an important element to our business.

Group, Brian kind of those on our call here today, and they're our IR firm and there'll be more than happy to get you connected with any of us Gary Rick or angi in order to be able to be sure that we can answer your question. So.

Speaker #5: Okay. Great. Well, I figured that was the case. Thanks for taking the estions and looking forward to the investor there.

Speaker #1: Super. Looking forward to seeing you, Jasper. Thanks for the estion.

Speaker #3: Yeah. Thank ou, Jasper. And that does conclude our question and answer session. I'd now like to turn the call back to Angie for closing remarks.

Thank you so much for the time today, we look forward to speaking with you very soon.

Speaker #3: Angie?

Great, Thanks, Andrew and ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may now disconnect. Your lines at this time I have a wonderful day.

Speaker #1: You bet. thank you very much. Greg and, thank you to all of you who have joined the call today. we really look forward to seeing all of you in New York City on November 20th for our first investor day.

Speaker #1: where we're ing to share with you updates on our progress. focus on our growth, but certainly a multi-year view of how we intend to grow top line and bottom line results, for our business.

Speaker #1: So we hope that you'll join us for that investor day in New York City. And if there are questions you have that we didn't answer for you today, always, feel free reach out to the MZ group, Ryan Pranavos on our call here today.

Speaker #1: there are IR firm and they'll be more than happy to get you connected with any of us, Gary, Rick, or Angie in order be able to be sure that we can answer your questions.

Speaker #1: So, thank you so much for the time today. we look forward to speaking with you very soon.

Speaker #3: Great. Thanks, Angie. And ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines at this time.