American Public Education, Inc.

Thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI 4Q 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star then the number one on your telephone keypad. Thank you. I would now like to turn the call over to Shannon Devine, Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to American Public Education's conference call to discuss fourth quarter and full year 2025 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer, Edward Kodaspati, Executive Vice President and Chief Financial Officer, and Gary Jansen, Chief Strategy and Growth Officer. Materials for today's call are available in the Events and Presentations section of APEI's website. Statements made during this call and in the accompanying presentation regarding APEI and its subsidiaries that are not historical facts may be forward-looking statements that are based on management's current expectations, assumptions, estimates, and projections. Forward-looking statements are subject to risks and insurgencies that can 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. 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. Forward-looking statements include, without limitation, statements regarding expectations for registration and enrollment, revenue, earnings, and adjusted EBITDA and other earnings guidance, our foundation for growth, the planned combination of our institutions, governmental and regulatory actions, their impacts, and our response to those actions, changing market demands, and our ability to satisfy such demands in other company initiatives. The call and the presentation contain references to non-GAAP financial information, a reconciliation between each non-GAAP financial measure we use and the most direct Directly comparable GAAP measure is located in the appendix in 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 substitute for or superior to any measure of financial performance prepared in accordance with GAAP. I'd now like to turn the call over to APEI's President and CEO, Angela Selden. Angie, please go ahead.

Thank you, Shannon, and good afternoon. And thank you all for joining today's call about American Public Education's fourth quarter and full year 2025 performance. At the beginning of 2025, we set out to simplify and strengthen APEI. Today, I am very pleased to share the following results and highlight how our 2025 achievements create a strong jumping off point for our four-year growth strategy, which we introduced at our recent investor day. First, APUS delivered full-year 2025 revenue growth, even with the fourth quarter registration interruption. APUS's student base, including veterans, extended military families, and military service members across all branches demonstrated demand in line with our expectations. The underlying business is strong and the numbers reflect that. Second, our nursing and healthcare institutions both had outstanding years. Rasmussen's full year 2025 revenue increased 14% and Hondros' full year revenue increased 11%. Third, APEI's full-year consolidated revenue grew 4% to $649 million versus 2024. That growth was achieved even with the mid-year sale of Graduate School USA, the announced closure of two Rouseson campuses in Wisconsin, and a registration interruption at APUS in the fourth quarter that affected TA registrations for 43 days. For context, by excluding graduate school from both 2024 and 2025, consolidated revenue would have increased about 7% when compared to the prior year. These results reinforce the strength of our diversified portfolio. Fourth, APEI's full year adjusted EBITDA reached $85.7 million. up 19% as compared to 2024, beating not only our revised guidance, but also beating the top end of our initial 2025 guidance. We trimmed costs across the enterprise, specifically at APUS and in APEI technology, and these savings have reset the cost baseline for 2026 and beyond. Finally, We did what we said we were going to do. At the beginning of 2025, we committed to redeeming our preferred equity, selling some corporate buildings, and having the Department of Education lift the $25 million letter of credit and lift the six years of growth restrictions that prevented new campuses and new programs at Rasmussen before APEI's acquisition. Achievement of these commitments has simplified and strengthened our business for 2026 and beyond, and we delivered on these commitments while simultaneously growing enrollment, expanding margins, and strengthening our balance sheet. Our teams demonstrated resilience, tenacity, and confidence in overcoming obstacles and delivering remarkable results. So now let's turn our attention to APEI's fourth quarter 2025 consolidated revenue. We delivered $158.3 million, and we exceeded our most recently stated guidance across all key financial metrics, including revenue, net income, available to common stockholders, EPS, and adjusted EBITDA. Our nursing and healthcare institutions demonstrated significant strength during 4Q25. Rasmussen grew 16% and enrollments increased 9% year over year to approximately 15,900 students, representing our sixth consecutive quarter of year over year enrollment growth. What's particularly exciting is that our fill the back row strategy of maximizing capacity utilization is working. Our nursing programs continue to show broad-based strengths with particularly strong performance in our nursing programs. Our allied health programs, including surgical tech and radiological tech, are also performing well. The most are at capacity, which creates opportunities for our planned expansion initiatives. By maximizing capacity utilization at our existing campuses, we are driving significant operating leverage and demonstrating impressive margin expansion. Hondros continues to deliver strong results with fourth quarter 2025 enrollment of 4,000 students, a nearly 10% year-over-year revenue increase, and 9% year-over-year enrollment growth. This performance demonstrates the durability of demand for pre-licensure nursing and our ability to effectively reach students in our local markets. In fourth quarter 2025, APUS successfully navigated the 43-day federal government shutdown, which created an active duty military student registration interruption. As we have previously shared, it has been 12 years since the defense appropriations bill, which funds military tuition assistance, or TA, had remained unsigned by October 1st, the beginning of the federal government's fiscal year. With the defense appropriations bill still unsigned by our November start, all four major military branches began utilizing their portion of the $100 million of tuition assistance funds authorized under the One Big Beautiful Bill Act to enable active duty military students to continue their education. Importantly, once the government reopened in December, we saw a 41% increase in TA registrations as compared to December 2024, which demonstrates resiliency in demand for education from our military students, even in the face of funding disruptions. Because most APUS students take one course at a time, this simply delayed their progression rather than stopping their progression entirely. Additionally, an important bright spot in APUS's fourth quarter performance was the continued momentum in both our veteran and military families channels where we continue to see high teen registration growth. Now let's turn our attention towards 2026. I want to highlight two key first half 2026 developments. First, we are making important progress on our institutional combination. In late February, the Higher Learning Commission approved a key step in our institutional combination, and on March 2nd, we combined the three institutions' legal entities into one. Now, we are working with the Department of Education and HLC to complete the remaining steps to combine our three institutions into one system with one OPEID. We are targeting an expected effective date in the beginning of the third quarter of 2026 to become effective for the 2026 financial aid award year. In addition, today we are formally announcing that we have two reporting segments, APU Global and RU Health Plus. for fiscal year 2026 and beyond. Second, we are launching two campuses in 2026, one Rasmussen campus in Orlando, which is already enrolling students for QQ26, and one Hondros campus in Detroit, which we anticipate will be prepared to enroll students in Q127. Both represent important expansion into markets that have already demonstrated strong demand for our program. In our next earnings call, we'll provide more details and progress on these first half 26 developments. As we look to 2026 overall, we believe we have clear visibility into our revenue growth and our margin expansion drivers, including continued enrollment momentum at Rasmussen and Hondros to build on 2025 strong performance and our fill the back row and leverage the ladder initiatives. We will anticipate revenue synergies we gain from the Rasmussen and Hondros integration process. We plan for growth acceleration at APUS as government funding normalizes and marketing flexibility increases for military and veteran enrollment post combination. And we believe we will anticipate and experience improved profitability and cash flow due to the new refinancing of our debt and the cost savings associated with that. In view of these and other factors, we are providing full year 2026 guidance as follows. APEI 2026 revenue will be between $685 million and $695 million. Adjusted EBITDA will be between $91.5 million and $100.5 million. And as for Q1 2026 guidance, Because of where we are in the quarter this year, the timing of this earnings call gives us full visibility to all university enrollments. As a result, APEI revenue will be between $173 million and $175 million. And please note that the 1Q25 comparable period includes $3.7 million of graduate school revenue which obviously is not included in 2026 due to its sale in July of 2025. And adjusted EBITDA will be $25.5 million to $27.0 million. Ed Kodespody, our CFO, will provide more details in his remarks, including Q1 enrollment and registration results, the refinancing of our debt, and authorization of a new $50 million share repurchase program. We are very clear about what the next four years require. It is all about execution. The foundation is built, our business is simplified, and we are operating with a strong balance sheet. We've developed a strategy, we are strengthening the team, and now it's about doing what we say we're going to do quarter after quarter. That's what you experienced in 2025, and that's what you should expect going forward. With that, I'll turn the call over to Ed to discuss our financial results and 2026 guidance in detail.