Q3 2025 American Public Education Inc Earnings Call

Speaker #1: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI 3Q25 earnings call.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.

Speaker #1: If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Brian Prenovo, Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you. And good afternoon, everyone. Welcome to American Public Education's conference call to discuss third quarter 2025 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer; Edward Codespodi, Executive Vice President and Chief Financial Officer; Gary Jansen, Senior Vice President of Growth and Strategy; Rick Sunderland, Executive Advisor to APEI, is also on today's call and will be available for the Q&A session.

Speaker #2: Materials for the call today are available in the events and presentations section of APEI's website. Statements made during this conference call and any accompanying presentation regarding APEI and its subsidiaries that are not historical facts may be forward-looking statements based on current expectations, assumptions, estimates, and projections.

Speaker #2: 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 or changing federal or state government policies, practices, and laws including impacts on revenues or the timing of receivables.

Speaker #2: Forward-looking statements may sometimes be identified by words like anticipate, believe, seek, could, estimate, expect, can, may, plan, potentially, project, should, will, would, and similar or opposite words.

Speaker #2: Forward-looking statements include without limitation statements regarding expectations for registration and enrollments, revenue, earnings in adjusted EBITDA, and other earnings guidance. Our foundation for growth, the plan combination of our institutions, governmental and regulatory actions, their impact, and our response to those actions.

Speaker #2: Changing market demands and our ability to satisfy such demands and other company initiatives. This presentation contains references to non-GAAP financial information. It reconciliation between the non-GAAP financial measure we use in the most directly comparable GAAP measure is located in the appendix to today's presentation and in the earnings release.

Speaker #2: Management believes that the presentation of non-GAAP financial information provides useful supplemental information to investors regarding its results of operations, and should be 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.

Speaker #2: With that said, I'd like to turn the call over to APEI's President and CEO, Angela Selden. Angie, please go ahead.

Speaker #3: Thank you, Brian. Good afternoon, and thank you for joining American Public Education's third quarter 2025 earnings call. Before we begin with the third quarter results, I would like to take this moment to introduce Ed Codespodi, APEI's new Chief joined APEI on October 20th, 2025, and we're very excited to have him on board.

Speaker #3: Ed joins us from NV5, a leader in technology and engineering consulting solutions. Prior to NV5, Ed was CFO of Alumno Holdings, a higher education company providing learning platforms and technology solutions to universities in Latin America.

Speaker #3: I will let Ed introduce himself further before he provides the financial overview. I also want to take this opportunity to thank Rick Sunderland for his dedicated service.

Speaker #3: For over 12 years, he has been instrumental in building and shaping APEI. During Rick's tenure, APEI has navigated significant transformation across the enterprise, including the integration of new institutions and strengthening of the company's long-term position.

Speaker #3: Rick has been a steady hand, always steering APEI in the right direction through periods of growth and change, and his leadership has left a lasting positive impact on the organization.

Speaker #3: We appreciate that he has agreed to serve as an executive advisor over the next few months to facilitate a smooth transition. We will certainly miss him, while also wishing him the best during his next chapter.

Speaker #3: Moving on to the third quarter, we have four areas to highlight during today's call. First, I am very pleased with APEI's third quarter 2025 performance.

Speaker #3: As we have again exceeded our guidance ranges for all metrics, including revenue, net income, EPS, and adjusted EBITDA, through continued registration and enrollment momentum and expanding margins.

Speaker #3: Registration and enrollment growth has outpaced our forecasts and significantly contributed to the outperformance in our financial metrics. Registrations at APUS in the third quarter increased 8% as compared to three Q24.

Speaker #3: This also represents a sequential acceleration in the rate of growth from two Q25. Enrollments at Rasmussen increased 10% versus three Q24. This represents the fifth consecutive quarter of year-over-year enrollment growth.

Speaker #3: I am particularly pleased that on-ground enrollments at Rasmussen are accelerating, taking advantage of our existing capacity or what we call filling the back row.

Speaker #3: Enrollments at Hondros College of Nursing continued their strong momentum, increasing 18% as compared to three Q24. Second, as previously disclosed, we completed the sale of graduate school USA on July 25th, 2025.

Speaker #3: Early this year, as we prioritize the combination of our degree-granting institutions we determined that the graduate school training business was no longer a strategic fit within our future growth strategy.

Speaker #3: We were very pleased to find a new home for graduate school that is more aligned with its mission and market position, allowing us to focus on growing our core degree-granting businesses including the military, military-affiliated, veteran, nursing, and other healthcare communities.

Speaker #3: Third, as we continue our work to simplify the overall operational businesses at APEI, at the end of Q225, we received HLC approval and submitted our combination request to the Department of Education.

Speaker #3: In Q325, after dialogue with the Department of Education team newly assigned to our transaction, we were informed that we should follow a different process for the plan combination of our institutions rather than the one originally undertaken.

Speaker #3: As a result, in September, we were required to submit and completed the submission of a new application first to the HLC, which will be reviewed at their board meeting in February of 2026.

Speaker #3: This application contains substantially the same content as our prior submission. We have also provided to the Department of Education our expected timeline for the completion of this newly submitted combination plan to take effect in the beginning of the third quarter of 2026 for the 2026 student financial aid award year.

Speaker #3: Fourth, our simplification actions have also strengthened our balance sheet and should enable our subsidiary institutions to continue to produce improved financial results. With the Department of Education removing the restrictions on the 24.5 million dollar letter of credit, that dated before the close of our acquisition of Rasmussen, that cash now unrestricted on our balance sheet contributes to the unrestricted cash and equivalents totaling 193.1 million dollars as of September 30th, 2025.

Speaker #3: As a result of our recent redemption of our preferred equity at the end of the second quarter, we will save approximately $6 million annually from the elimination of the cash dividend payments.

Speaker #3: Also, the sale of graduate school eliminated a 28 million dollar lease liability, which will save us approximately 4 million in lease payments annually and also reduces our total liabilities.

Speaker #3: These changes have improved our cash position and will increase our cash flow by approximately 10 million dollars per year on a pre-tax basis. Which will meaningfully improve net income and earnings per share.

Speaker #3: We believe we are now positioned with more financial flexibility and an improved capital structure to more confidently pursue our growth initiatives. Moving now to more details about the third quarter 2025 results, starting first with APEI's nursing and healthcare institutions.

Speaker #3: Rasmussen continues to produce strong results. Rasmussen's enrollment increased by 10% in three Q25 and 9% in four Q25, representing the fifth and sixth consecutive quarters of year-over-year enrollment increases.

Speaker #3: As mentioned in previous calls, by leveraging its existing fixed cost structure, Rasmussen has been and will continue to experience increased operating leverage as enrollments continue to increase.

Speaker #3: Continued enrollment growth will also flow through to EBITDA margins. Importantly, we are carrying an additional 1,300 enrollments into four Q25 as compared to four Q24 that we will continue to build upon in 2026.

Speaker #3: With our current campus footprint, we believe our strategy that we call filling the back row by working to ensure each of our classes and sections is maxing out capacity at our current campuses has been successful with increasing enrollments and improving EBITDA flow-through on each incremental student.

Speaker #3: At Hondros College of Nursing, as previously reported, three Q25 enrollment was strong with 18% growth as compared to three Q24. Four Q25 enrollments continue a positive trend, increasing 9% year-over-year to 4,000 students off of a very strong prior year comp.

Speaker #3: We believe that the business combination of Rasmussen and Hondros College of Nursing will provide us with an improved platform to add programs, scale enrollment, and increase margins.

Speaker #3: Turning to APEI's online university educating our nation's military, veterans, and their families, in the third quarter, overall APUS net course registrations increased 8% year-over-year.

Speaker #3: Revenue at APUS also increased over 8%. Turning our attention to Q4, the government shutdown has muted military enrollments at APUS for October and November.

Speaker #3: We are, however, pleased that several of the military branches are now authorizing tuition assistance benefits through the use of the $100 million of tuition assistance funds that were authorized in the one big, beautiful bill act.

Speaker #3: Further, those branches have been selectively bringing back furloughed workers to help assist with those TA approvals. Additionally, last night's Senate vote test vote yielded enough votes for the amended CR to pass the Senate perhaps even today and head back to the House for consideration possible approval and passage to the President for signature perhaps as early as the end of this week.

Speaker #3: It is our understanding that upon presidential signature, workers would be called back from furlough and TA funds would again be available for use during the CR period.

Speaker #3: We remain confident that TA will continue to be a critical Department of Defense recruiting tool, as it is a benefit to service members in exchange for voluntary enlistment.

Speaker #3: It is also seen as a force-shaping tool because by offering these educational opportunities, the military can attract and develop human capital with a higher skill set thus strengthening our U.S.

Overall, across our 3 education units. We are so pleased with the resilience of our team especially given the government shutdown uncertainty

We've delivered consistent performance. That we've demonstrated over the last 18 months. We are confident in our ability to continue executing and taking advantage of the growth drivers that we believe will accelerate growth and profitability and provide more students with more educational opportunities.

We look forward to welcoming investors and analysts to our November 20th, 2025, Investor Day at the New York Athletic Club in New York City to provide a longer-term view of APIs, growth, strategies, and financial outlook.

API enable students to experience a valuable lifelong return on their educational investment.

Our vision remains to offer education, that transforms lives, advances, careers and improves communities by, providing online and campus-based post-secondary education to over 107,000 students.

Our mission is to power purpose, potential, and prosperity for those in service to others. This reflects our focus on a student population that is resilient in the face of AI transformation and potential threat.

Our nursing education. Prioritizes in-person bedside care. And our military service members continue to be critical active, participants to US military strategies.

Each of our education units is purpose-built to deliver accessible and affordable. Higher education across a diverse range of subjects.

I'd like to thank each of our employees and faculty who work tirelessly to make our mission a reality.

With that, I will now turn the call over to apis new Chief Financial Officer. Ed kotis bod

Thank you, Angie. I'm delighted to be on today's earnings call as I begin my fourth week with the company.

As Angie mentioned earlier, I came to API after serving as CFO of MB5 Global, focusing on engineering and technology solutions for.

And before that I was with alumni Holdings a company that owned universities and delivered Technology Solutions to higher education institutions across Latin America.

The CFO role at apei is an exciting opportunity to bring together. My experience in driving growth and advancing higher education while focusing on meaningful student outcomes.

I'd also like to say that I very much, appreciate working with Rick Sunderland, who has done such a great job as CFO of API for over 12 years.

The transition so far has been seamless.

I look forward to meeting with investors and analysts in the coming weeks and months.

Turning now to our quarterly results.

Total revenue in the third quarter was 163.2 Million, an increase of 10.1 million for 7% from the prior year period.

As you know, we sold graduate school USA in July.

If you exclude graduate school, USA, third quarter revenue of 800,000 and third quarter of Prior year revenue of 8.1 million. Our revenues would have been 5% higher or aggregate growth of 12%.

Total costs and expenses in the third quarter, were 153.5 million an increase of 4.5 million or 3% as compared to the third quarter of 2024.

The increase was primarily driven by a 3.9 million loss related to the sale of graduate school USA in July 2025, and a 2.5 million increase in advertising costs as we invest in student enrollments for growth.

5.6 million which was almost 7 times higher than net income of 700,000 in the prior year.

An EPS increased significantly to $0.30 per diluted share in the third quarter of 2025 versus $0.04 in the third quarter of last year.

Third quarter adjusted ibida. Increased 60% to 20 to 20.7 million as compared to the prior year period adjusted even though of 12.9 million driven by increased revenue and margin expansion of 424 basis points. This was above the top end of the guidance range and represented an adjusted ibida margin of 13% as compared to 8% in the prior year.

looking now at our segments,

At apis third quarter Revenue, increased 83.1 million, an 8% increase as compared to the prior year period.

The increase was driven by third quarter 2025 net course registrations which increased 8% as compared to the prior year period.

EBay for apis was 26.2 million for the quarter, a 19% increase over the prior year period.

At Rasmussen third quarter, Revenue was 60.8 Million, an increase of 16% as compared to the third quarter of last year.

The increase was fueled by a 12% increase in on ground enrollment and an 11% increase in online enrollment. This enrollment growth brings total Rasmus and student enrollment to 14,900, students, and contributed to our ibida of 825,000, which grew significantly from the ibida loss of 4.5 million in the prior year period.

At hondros College of Nursing. Third quarter Revenue was up 19% to 18.4 million as compared to the prior year period due to continued enrollment growth.

For the quarter Honors College of Nursing total enrollment increased 8%. I'm sorry, 18% to approximately 3,700 students. And third quarter. Evida was a loss of 336,000 compared to the loss of 259,000 in the prior year, period.

Our balance sheet and cash flows also improved when compared to the prior year period.

Cash flow from operations for the nine months ended September 30, 2025, increased 56% to $73.5 million.

Our free cash flow defined here as adjusted ibida. Les capex, nearly doubled for the 9-month period at 45.2 million.

As of September 30th 2025 total Cash Cash equivalents and restricted cash increased 22% to 193.1 million. An increase of 34.2 million from the year ended 2024

Subtracting our 96.4 million secured note, our net cash position, was 96.7 million at quarter end.

Additionally, as noted earlier, at the end of the second quarter, we redeemed, all our outstanding, preferred stock for 43.1 million. And completed. The sale of 2 corporate Administrative Office Buildings in Charlestown West, Virginia, for net, proceeds of 22.5 million,

On apis Term Loan at September. 30 was consistent with the prior quarter at 96.4 million, and our 20 million revolving credit facility remains fully available.

I believe this demonstrates the strength of our balance sheet which we believe positions as well for future growth.

Turning now to our fourth quarter and full year outlook, which covers forward-looking statements subject to the various risks noted earlier.

Before I discuss our guidance for fourth quarter, 2025 it would be helpful to refer to slide 12 of the presentation deck so that we can describe how we have Incorporated the government shutdown in our guidance.

Our original Revenue guidance for 4 year 2025 was within a range of 650 million dollars to 660 million.

Additionally, we sold Graduate School USA in 2025.

And its negative impact to the guidance, including its first half underperformance, was approximately $18 million.

If we assume that the shutdown would result in an impact to revenue between 20 million and 24 million are revised guidance for the year would be 640 million to 644 million.

For the fourth quarter, 2025 apis total. Net course registrations are expected to be between 65,000 to 74,400. Registrations representing a 33% to 23% decrease when compared to last year.

Impacted by the government shutdown.

At Rasmussen and hondros College of Nursing fourth quarter student, enrollments are actual, uh, because the quarterly starts are at these schools. Um, are are known at this time at Rasmus in fourth quarter, total on ground enrollment. Increased 13% to approximately 7,100, students and total online. Enrollment increased 6% to approximately 8,800 students for an aggregate enrollment of approximately 15,900 students. This represents a 9% increase when compared to the fourth quarter of 2024.

At hondros College of Nursing fourth quarter, total student enrollment increased 9% year-over-year to approximately 4,000 students.

In the fourth quarter of 2025, consolidated revenue is expected to be between $150 million and $153.5 million, again impacted by the government shutdown.

The company expects fourth quarter net income. Available to Common stockholders to be between a profit of 5.9 million and 8.3 million or between 32 cents and 45 cents per diluted share.

Fourth quarter, 2025, adjusted ibida is expected to be between 18.5 million and 222 million.

Therefore, for the full year 2025, we are changing our anticipated consolidated revenue to a range of $640 million to $644 million.

Our full year, 2025 adjusted. EBA guidance is between 75 million and 79 million. And our 4-year capex is expected to be between 15 million and 17 million.

Thank you. Ed. Great job on your first call in closing, we have spent much of it past your setting financial and operating goals and then delivering on those results.

Rasmussen and hondros College of Nursing are delivering consistent positive enrollment growth and profitability.

Apis with the exception of the market, anomaly of the government shutdown continues to deliver growth and high margins.

At the beginning of the year, we set expectations for redeeming our preferred equity, selling our corporate buildings, and simplifying our business structure. And we have delivered on these actions.

Our organization was purpose-built to deliver affordable and accessible educational opportunities in fields, which are in high demand.

We believe that our platform and the sector Tailwind set API up to accelerate growth and bring more educational opportunities to a greater audience across the country and across the world.

We are as optimistic today as we've ever been about the long-term potential of our company, and we look forward to sharing more details about that long-term potential on our November 20th investor day in New York City.

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

At this time, I would like to remind everyone in order to ask a question. Please press star. Followed by the number 1 on your telephone keypad.

Your first question comes from the line of Thomas White with D.A. Davidson.

Uh, great. Uh, thanks for taking my question. Uh, good evening. Uh, first off, nice results in the quarter guys. Congrats, uh, to you Ed on the new role and and good luck to Rick going forward. Um, I guess just on the tuition assistance disruption at apis. Um, was hoping Angie, maybe you could just talk a little bit about your plans for driving, kind of re-enrollment, for the students that were forced to be dropped and I don't know. Do you do you guys expect that there will be any sort of permanent demand you know kind of Destruction as a result of this or is it just temporary? Um and then I had to follow up

Okay, great, thanks Tom. Um, first I would say a couple things are happening, right? And I like to just emphasize a few. Uh, even though uh the CR is not yet been approved. We are so pleased that, uh, the the 3 largest branches Army Air Force and navy are using the um 1 big, beautiful Bill 1, 100 million dollars of tuition assistance funds to allow um, service members to register even without the approval of this of the Crescent. So we have, uh, seen more uh, registrations flowing in December than we had in October and November as a result. So we're very pleased, um, that we're starting to see demand come back already in December even without the, um, the passage of the, the CR, and inside the CR is the defense.

Appropriations bill. Um, we have

electronic marketing campaigns to every single student who was registered in October and November, and who got dropped for non-payment and, uh, we fully expect that those folks are going to continue their education. Um, this has only happened once, uh, in the last 12 years, which was the last time was in 2013. And at the, the results of that was no decrease in um, in our demand. So while we can't be certain about what our future um expectations for ta enrollments are going to be that data. Point tells us that uh this should be a a short-term matter. And not a long-term um decline in our expectations for ta enrollment.

Oh great, that's very helpful. Thanks and then just maybe 1 follow up, I could if I could on the kind of on the plan to integrate the 3 institutions, it sounds like maybe there's been a a minor speed bump there. Um, C, can you just maybe explain whether

The new processed, does it change it all? Kind of how you're thinking about the ultimate, you know benefits of of integrating the uh you know, the 3 institutions either from sort of an expense or Revenue Synergy standpoint. Thanks.

Sure, great question. Uh, we remain very committed to the combination of our 3 institutions and um and nothing has changed about our our conviction around that. Um, I would say that this is a procedural matter. Uh there's a different form that we needed to complete. Um and uh when we submitted to the hlc, the second time around, instead of 3600 pages of documentation, we submitted 4,000 pages of documentation to support the the change. But I would say substantially all of what we had in the first. Um submission was reused and and reorganized for the second submission. Um, when uh, when the Department of Education um was was reduced in Force, at the beginning of 2025, we received a new team assignment and That team assignment had a different view on which uh process we should follow than the team. We had been working with prior and

so with that, uh, we needed to recalibrate, we are

Completely in compliance with that new process and, um, are still on track uh, with dialogue that we've had uh, with the Department of Education for, um, the expectation of a 3 Q. Um, you know, third quarter 2026 implementation in time for the 2026 financial aid award year.

so we will, um,

we, you know, we will continue to brief people if, if something were to change there, but that's fully still the timeline we're operating against and this is Gary on on your second question about Synergy opportunities, we're moving ahead with with the opportunity to uh cross-pollinate. The revenue, you'll hear more about that on the investor day. So we're not sitting back and waiting for the combination to occur to move forward with our plans to, you know, expand our campus Footprints as well as you know cross-pollinate programs from uh Rasmus into hondros uh in the interim period. So we we don't see the time it is being an obstacle for that.

Thank you, Tom.

The next question comes from the line of Stephen Selden with William. Blair please go ahead

Hey, thanks for taking my questions and first, uh, congrats to you, Rick on a great run and, and really look forward to working with you, Ed. Um,

So maybe starting here on just the guide for the fourth quarter, just wanted to confirm that you're assuming effectively a 2-month Slowdown for AP US registrations here and then kind of more or less back to normal trajectory in the summer and in the 2026. So we we kind of thinking about that the right way,

Um, so I would say, definitely a Slowdown in October where I think we previously announced 1700 registrations of ta flow through which is a substantial Decline. And then about, you know, a 30% we were able to recoup for the November compared to the prior year about 5,000 registrations.

The low end of our guidance does contemplate some shortfall in December as we ramp up, not knowing the full, you know, timing for the CR. Um, but, you know, we'll see how that flows. If we can, you know, get the Crescent in place and we continue to see the flow through from the OBB BA, then obviously that would be towards the higher end of our guidance.

Got it, that's helpful. Um, and then on the cost savings side, I guess. Can you talk some about where you've been able to cut in your term spending? How much of that could be temporary reductions versus cost cutting that could be more permanent and be something that, you know, helps support profit and margin trends heading into 2026? Any detail there?

Not a lot. But I mean, we, we've previously said previously said what we thought we had opportunities and certainly we've dialed back our variable cost. So we think that we can manage through, we have taken the opportunity to, you know, streamline some operations at apis so that that, you know, is an important piece to this. But um for the most part which will be permanent knot which will be permanent that's a permanent reduction in force. Yeah. But we've also made sure that we don't affect the revenue side of the equation. So we we wanted to take the cost measures that we could that we thought were discreet and would not harm the business. Going forward things like not that over investing in mil military. Marketing is a good example where, you know, we could dial that back until we had some certainty as, as reopening. Um, but some will flow through to next year, but not a huge amount.

Got it. It's very helpful and then just 1 more. If I can sneak it in, just on the nursing side I guess. Can can you talk about how General demand to pursue nursing Pathways has changed and it seems like you're you've been putting up very strong growth here at both hondros and rasmusen um you know both 3Q and and into 4 q and generally. I think it's becoming even more attractive.

To learners, uh, to pursue nursing given the increasing shortage. Pay limited AI disruption risk will be relative to other industries. So, is that starting to play out here? Um, we've already seen any notable uptick in applications and just generally, what are you seeing in terms of the top-of-funnel demand trends on the nursing side?

Yeah, I'll start by saying we're seeing acceleration. Obviously, we reported that we have a 13%, um, enrollment growth on the campus side of of rasmusen in the fourth quarter, which were very pleased to see. Um, we, you know, reiterate that the the nurses that we primarily educate our first lensure, meaning that those folks are becoming nurses for the first time, as opposed to post-licensure where they already have a license and are trying to advance.

Degree RN to make 88. And so those are very meaningful, very meaningful, comp packages, uh, for a 40 year career, uh, for a single, um, educational degree and license. And so, it is attractive from an Roi perspective, especially with the price point of our programs. And, um, and you know, there are plenty of open positions for people to obtain jobs. So, um, we also believe that having in-house insourced our marketing and the last 18 months, we've really started to tighten those dials and and identify how to reach those students in the local markets effectively. And that is also driving the um, you know, quarter over quarter, year-over-year performance improvement in our campus space. Um, nursing program. So we're very pleased with with how that's performing.

Great to hear. Nice to work in the quarter. Thank you so much. Stephen.

Your next question comes from the line of Jasper Bib with Truist Securities.

Please go ahead.

Hey, good afternoon everyone. Um just on the filling the back row strategy. I'm not sure if maybe utilization is the perfect measure here but is there any way for you to frame for us? How much more room you have to drive enrollment into those existing programs and campuses at Rasmussen?

Great question, Jasper. We're going to talk about this uh, next week in our um, upcoming investor day where we're going to give you a multi-year view of the of the different, uh, capacity opportunities. We've, we've clustered our campuses into 3 segments, uh, because as we've talked in, um,

previous calls our smaller campuses have have arguably less, um, total seats available. Um, our, you know, basically single Market Campus. Um, opportunity is the area where we believe there's the biggest opportunity in terms of filling those campuses and then our our multi-campus uh, clusters in the single Market. Also have significant demand. So we we really look forward to to sharing that with you on November 20th.

Okay, well, uh, yeah, looking forward to hear more detail on that later this month. Um and then just last 1 for me, are you expecting the decline in the registrations at apis during the fourth quarter should give you a bit more cushion against 9010 and the 25 calculation, imagine from a mixed perspective that that might be helpful.

What we have seen is um interestingly a shift of our primarily of our graduate military students uh paying their uh shortfall with cash. So instead of sitting out on the sidelines and not uh using ta you know, waiting for ta to come back. We actually see, grad military paying cash,

Um, and so you know, for every cash payer, you can get one of those for every 9, uh, you know, or 8.9, um, TA or FSA users. So that certainly has, um, had a somewhat unusual way, had a positive impact on our 9010 calculation. Yes,

Got it. Thanks for taking the question.

Great question. Thanks.

Your next question comes from the line of Eric Martin music.

With Lake Street. Please go ahead.

Yeah, just curious to know the, uh, for the non-military. So the military affiliate and veteran, if those, uh, enroll the registration trends are on track for you, for those, uh, student segments.

Yeah. Actually Q3 in year to date is Gary. Um, we've seen very nice acceleration in the growth of both the extended family segments, as well as the veteran segments. Um, so

I would say a lot of the 8% growth that we saw in Q3 was attributable to those two segments, where in the military's I'll call it steady Eddie, you know, 3-4% growth. So, I think we're very pleased with the performance here to date and especially in Q3 of those two adjacencies.

Gotcha. And then uh, it was great to see the the Rasmus and on ground 13% enrollment growth. Is that something that you feel is sustainable that there's a, a, a tail end here macro wise

So we're we're focusing, um, a disproportionate amount of our marketing spend where it makes sense to, to make sure that we're continuing to deliver on that, um, enrollment momentum. So yes,

Okay, that's it for me. We'll keep our fingers crossed for great results. Thanks. Thank you, Eric. See you next week. Thank you.

Your next question comes from the line of Griffin box with B Riley. Please go ahead.

Hi, good evening, thanks for taking my questions and I appreciate all the call. You've you've got until so far. Um, just just 1 for me. I'm curious if you could dig in um, to you know, kind of where we should expect to see some of these cost saving initiatives implemented in the fourth quarter. Obviously it looks like you pushed out some capex spend um maybe the 2026 or or beyond that that that guidance came down a little bit. But in terms of the Opex, um, just curious, I mean are we going to see kind of a little bit more initiative on like the selling and promotional you know, marketing expenses or where? Where should we see? You know, kind of a

A relative uptick as a percentage of Revenue and some of these areas that that maybe you were not able to uh, to implement costing initiatives.

Yeah, I think we talked a little bit about this uh, um, previously, but but definitely S&P, there will be a little bit of savings there. We want to make sure, you know, obviously the timing of when everything comes back online will dictate that, um, we are looking at, you know, temporary,

And sometimes more permanent, you know, uh, staff reductions in non student facing functions. Um, and then I would say, we talked also about our variable comp that is tied to Performance and that is another lever. It's also important to note that, you know, given our variable cost model apis, which is on a per registration basis that while we may lose X number of registrations the variable cost for that will also come down. So, um, that there, there are 3, big buckets there, outside from the little things that you always look at like, external Consulting and, and, um, travel entertainment. Like so those are, those are, the major areas that are contributing to the cost savings.

Got it. Okay, thanks for the caller. Well, uh, great work navigating. Um, what is going to a top environment and look forward to to hearing more details next week at the investor day?

Super see you there, Griffin? Thank you.

Your next question comes from the line of Roz Sharma with Texas Capitol. Please go ahead.

Hi, uh, good afternoon. Thank you for taking my questions. Um, again solid performance and resilience in the face of...

Tough testing conditions. Um, I had a question on the, it was great that the 100 million, um, tuition assistance fund. Was you you're able to use that?

Um, any delays in payments from this, uh, to you?

Um, you know, Raza is a good question. We, yeah, we are. Um,

You know, we are going to build, you know, according to our state of policies. I think the um

The, uh, question is whether or not there are people working on the other end?

Too to actually push the button, but I'll turn it over to Rick. Who's on our call here today? Rick, do you want to say anything about that?

Uh yes. Um thank you. Um Raj it is impacted by.

Staffing at the various branches. Um, this is not there to process the, the invoices, um, but the good news is, is was highlighted on the call. I mean we've we've got a pretty substantial uh cash Reserve to to whether the very short term uh shut down. Um what feels long but is actually relatively short given though, you know, the month or 2 of processing, that would be otherwise. Processed

Got it. Um, thank you Rick. And then,

I wanted to understand that now that the government shut assuming when the government shutdown is over its business, is usual in the sense that they're likely isn't any medium-term uh, or

Permanent damage from this on the enrollment and then also any of these registrations that you weren't able to, you know, get in October and November are these for a loss. Is this loss revenue? Or is there a scenario where service Personnel might want to, you know, double their course load to make up.

Well, I would say that we are forecasting. Raj, that...

Purpose-built are.

Education model to allow students to take 1 course at a time, is because they don't often have time to do more than 1 at a time and, you know, our flexibility allows them to pause and then restart. So we may see some people who are, you know, gunning for a, um, promotion or something, who want to keep moving. Like we saw some of these Grand military, um, students who are paying cash to keep going. Um, but I think by and large, we're forecasting that we're basically going to just see those shift to uh, when the when everything restarts in earnest.

Um thank you. And then um on resolution side, the programs that are particularly showing really good momentum be on ground Healthcare, you know, up, 13% any specific programs, there that are doing really well. And, and you expect that.

Uh, enrollment environment to sort of continue.

Yeah. I I would say our Allied Health programs are are radtech and and our surgical tech programs are doing good. Although they're pretty caps right now that we're working on as part of our plans to expand that but it's really nursing. It's been the board predominantly in our 80n program at BSN. Um and it's it's also important to note that you know our growth of 13% includes the closure of 2 campuses in Wisconsin. Not that they were huge contributors to enrollment but it gives you a sense of

Of how our nursing programs are growing. So, we're really pleased with both our BSN and ADN programs, and to a little bit smaller extent, the LPN program, but it's across the board nursing.

Got it. Thank you. That's it. That's it for me. And I look forward to seeing you all um at the analyst day.

Great. See you next week. Raj thank you. Yeah absolutely thank you, take care.

Your next question comes from the line of Alex Harris with Barington Research. Please go ahead.

Hi guys. Thanks for taking my call and uh quick welcome to Ed. Look forward to working with you and uh a so long to Rick. I've enjoyed working with you.

Thank you.

Looking forward to looking forward to it.

Great. Um, and now I know how to pronounce your last name know that you have the

Perfect.

Um, just a few follow-ups. Uh, first question on the fourth quarter guidance, uh, on this overall revenue and and then apis registrations, uh,

what are the assumptions at the low end and the high end? Um, and a related question and just to be clear in October even though you had to, uh, uh, stopped out some students you still kept 1700 students under ta um, and then you should have that have been previously approved. And then in November, you said,

You're able to bring in 5,000 under the, uh, hundred million dollar O BBB.

Yeah, so I'll answer that scary. So, okay, if you think about November about 30% of, what was the prior Year's registrations made it through? So, your ta register, I a prior Year, ta registration. So we're we're modeling on the low end, that that's probably the same knowing that we've seen some improvement. That was, you know, obba literally. Um, those changes got enacted, the very end of the enrollment cycle. Some of the branches, did keep over open for continued enrollment for 7 days, so we expected to do better than that. So at the high end, we're obviously assuming that, that we're able to, um, improve upon that number. So we're trying to bracket it on what we saw in November on the low end and on the high end, what we would expect to see on, you know, normal pacing uh once once, either the CR goes through, or if the obba fund. Oh, bbba funding continues to flow.

And then what? Just to remind me, what was the October THA registration? As a percent of the prior year, it was like 40% lower. It was under there.

Oh, a lot know it was 1,700 registrations on what we normally would have. But I'm going to say this is exactly right. But 17,000 registrations, so it was probably 10%, so it's a very small number.

Made through, all right.

Uh, and then it improved you got 30% on a year-over-year basis. Improve, uh, you got 30% of what you had in the previous year as opposed to just 10% in the previous year.

And then in December, you're saying the low end would assume that same 30% of the year ago month. Uh,

And the high end would be something higher than that.

That's correct.

Question 2. Um,

well, that, that was question 1 and 2 actually um

Question. Uh, question 3, uh, The Graduate School USA loss, um, of 3.9 million was that a lot less than you had forecast. I thought on the last call you said to assume a 7 to 8 and a half million dollar loss.

On sale. Um, yeah Rick, do you want to answer that?

Yeah, yes, and the answer is yes. Alex in the prior call, we estimated 6.5 to 8. We came in at 3.9. The difference was uh, the resolution of the system accounting matter. The accumulated deficit that uh, existed on the books of graduate school, the separate company to eliminate the deficit. We had to record a credit which was an offset to the otherwise, you know, higher number. So that number came down

Thank you. And then the last question, again, at this point of clarification, uh, post-license or pre-licensure, um,

Uh, Hondros is all free, lingering, or, uh, all three and that.

and then, uh, Rasmussen has some post licensure

Yeah.

A small percentage.

Yeah, yeah. Okay, but not so. But the full-sized Ensure is...

currently categorized as our online business,

Right? Because that's all delivered without a need for a campus. Yeah.

Great. Well, thank you very much. I'll take the rest of my questions offline.

Okay. Thanks. Alex.

And next question comes from. The next question comes from the line of Luke Horton with Northland Capital markets.

Please go ahead.

Yeah. Hey guys, uh, congrats on the nice quarter. I know we've, uh, kind of answered most of the questions here, but I just wanted to kind of touch back on the strong enrollment trends at Rasmussen, um, specifically on ground. Are you seeing a change in student demographic at all with, uh, the students that you're gaining here? And is this simply just a function of more efficient marketing and macro demand, or is there?

Just anything else you can provide there would be great.

Yeah, great question. Um, nice to hear from you, Luke. We

Um, are really trying to expand our marketing reach to not just, uh, enroll ADN or the 2-year degree RN students. But also, the BSN, the 4 year 3 and a half year degree, um, RN students. And so we are seeing momentum in both, but we are seeing, um, a, an acceleration in our BSN students, which we're really pleased about, um, has a longer tale of Revenue. Um, you know, often stronger and collects, uh, results. So we love that. We are expanding our pool of BSN students at Rasmussen

Okay, I got it. And then just one more, I guess.

On the Campus based enrollment, I mean, are you seeing anything from a geographical standpoint? I know you're mainly Midwest at Rasmussen but I'm in Florida to Kansas. Like are you seeing any specific campuses outperforming on on new stance or new students starts at all?

Or is it pretty much broad broad base? I was going to say it's a good question, but I would say we're we're its broad. I think we're especially pleased with the the I call it Minnesota. Where, as you recall, we we ceased enrolling in our ADM program and do what. And you just said, the BSN has been a nice lift their butt. No, it's been across the board. I mean, it, it's been nice to see in in Kansas and Illinois um, at Minnesota's

Okay, great. Awesome. Well, thank you guys for taking the questions, and congrats again on the quarter.

Thank you, Luke.

Yeah, no more questions at this time.

I would now like to turn the call back over to Angela Selden for closing remarks. Please go ahead.

Thank you, Eric.

I'd like to thank each of you for joining our earnings conference call today.

We look forward to continuing to update you on our ongoing progress and growth. As we continue our rapid pace of.

Enrollment growth, revenue growth, and margin expansion.

We also look forward to welcoming many of you to New York City next week for our 2025 API Investor Day Conference.

Speaker #2: together. So back to you, operator.

Together.

So, back to you, operator.

Ladies and gentlemen, this concludes today's call. Thank you all for joining, and we now disconnect.