American Public Education, Inc.

Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI first quarter 2026 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 this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you, and 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 first quarter 2026 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer, Edward Kodispody, Executive Vice President and Chief Financial Officer, and Gary Jansen, Chief Strategy and Growth Officer. Materials for today's call, which is being webcast and open to the public, are available in the events and presentations section of the APEI 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 could cause actual results to differ materially from those expressed or implied by such statements, including risks related to potential impacts from government shutdowns or changing federal or state government policies, laws, practices, and actions, including impacts on revenue or the timing of receivables and other factors identified in our Form 10-K and Form 10-Q under the heading Risk Factors and Other SEC Filings. Forward-looking statements may sometimes be identified by words like believe, estimate, expect, may, plan, potentially, project, target, outlook, past position, on track, on pace, should, will, would, and similar or opposite words. Forward-looking statements include without limitations, statements regarding expectations for registration and enrollment, revenue, earnings, adjusted EBITDA, adjusted EBITDA margin, and other earnings guidance, our foundation for growth, strategic investments, capital allocation, and M&A, opportunities, operational milestones, and timelines, a planned combination of our institutions, including the benefit and timeline thereof, government, governmental, and regulatory actions, their impact, and our response to those actions, changing market demands, and our ability to satisfy such demands and other company initiatives. As Angie will discuss, beginning with the first quarter of 2026, We are reporting under two new segment structure, Military Plus and Health Plus, following the merger of the legal entities that owned our institutions on March 2, 2026. Our Form 10-Q for the first quarter reflects this change, and all prior period comparative figures have been recast to reflect the two-segment structure, rather than the historical three-segment structure of APUS, Rasmussen University, and Honduras College of Nursing. The call and the presentation contain reference to non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin. A reconciliation between each non-GAAP financial measure we use and the most directly comparable GAAP measure is located in the appendix to today's presentation and in the earnings release. Management believes that the presentation of non-GAAP financial information provides useful supplemental information to investors Shannon Washburn- Regarding its results of operations, it should only be considered in addition to and not a substitute for or superior to any measure of financial performance prepared in accordance with gap i'd now like to turn the call over to api's President and CEO Angela selden angie please go ahead.

Angela Selden, Thank you Shannon good afternoon, and thank you very much to each of you for joining us today. I'm very pleased to share American Public Education's first quarter 2026 results. Total revenue grew 6.2% year-over-year and at the top end of our guidance range. Notably, when we exclude graduate schools 2025 revenue from the prior year period, the business that we sold in mid 2025, APEI's revenue would have grown 8.7%. which we believe is more indicative of the underlying strengths of our business. Beyond revenue, we beat guidance on adjusted EBITDA, which grew to $29.2 million, which is a 37.5% improvement over 2025. The prior year period does include 2.2 million of graduate school losses And the 2026 period includes a one-time favorable impact from the tax treatment of our stock appreciation. Ed Kodaspody, APEI CFO, will discuss the details of these matters shortly. We also beat items on net income per diluted common share, which was 94 cents or 129% over the prior year period. Given the strength of our first quarter results and our visibility into the balance of the year, today we are raising our full year 2026 guidance on both revenue and adjusted EBITDA. Importantly, we are also raising our full year EPS guidance, which at the midpoint represents an 85% increase over 2025, which is in large part a reflection of the 2025 improvements we made to the balance sheet. With those headlines, I want to provide some additional details on our two newly constituted reportable segments and an update on our institutional combination. First, as we discussed on the last earnings call on March 2nd, 2026, we combined the legal entities that owned our three institutions into one. And beginning with this quarter, we report under two newly constituted reportable segments. Military Plus, no longer called APU Global, and Health Plus, no longer called RU Health Plus. Prior period results have been recast to reflect these changes. So let's start with Health Plus. Our Health Plus institutions continue to perform very well. Health Plus revenue grew 11%, consistent with our four-year plan. This was driven by both 8% enrollment growth, which we shared on the previous earnings call, and a modest price increase, demonstrating the durability of demand for pre-licensure nursing education. Our campus expansion plans continue with our new Rasmussen Orlando campus now enrolling students and building momentum in its first full quarter of operations. Additionally, we expect to complete the relocation of the Hondros College of Nursing Cincinnati campus in the back half of 2026 to a more attractive location and our Hondros College of Nursing New Detroit campus to be ready to enroll students in the first quarter of 2027. As we turn our attention to Q2 2026 Health Plus enrollment, we experienced enrollment growth of 7.1% led by campuses and online health at high single digits. Turning to Military Plus, Military Plus delivered another quarter of revenue growth and exceptional profitability. The 4% registration growth met guidance, highlighted by the continued high teams registration growth for both military families and veterans. The segment operated at an adjusted EBITDA margin of approximately 36% in the first quarter. While the EBITDA margin reflected a substantial increase above our long-range targets, a portion of this outperformance was due to shifts in marketing spend between Q1 and Q2, which is also reflected in our Q2 guidance. Growth in our active duty channel in the first quarter was mid-single digits. As we described on our last earnings call, Q1 Coast Guard, the smallest enrollment contributor of the armed services branches we educate, was affected by the then ongoing government shutdown and temporary suspension of the Department of Homeland Security funding. We had estimated that about 1 to 2% of total registrations were postponed. The good news is that DHS, and the corresponding education funds are now available as of April 30th. So we expect partial recovery in Q2, and we expect recovery of Coast Guard registration in Q3 and beyond. I was very proud to have participated in American Military University and American Public University's 30th annual commencement on Saturday, May 9th. Over 17,700 students including 23 doctoral students, and our Security and Global Studies program received diplomas. The oldest graduate is 78 years old, and the youngest is 16. Over 92% of our graduates are active duty military, veterans, military spouses, or family members. They represented all 50 states, 30 countries, and six territories. Congratulations to all AMU and APU graduates. As we turn our attention to Military Plus registration growth in Q2, we are experiencing growth in Army registrations, our largest enrollment branch. This momentum is being offset by a slowdown of registrations in Navy, Air Force, and Marines, which we are attributing to the nature of this war in the Middle East. which has deployed and put into combat Navy, Air Force, and Marine service members first. This has been signaled by our internal processes where our students have a mechanism to request a leave of absence accommodation and the ability to select deployment as the reason. We have seen an uptick in these requests for those three service branches. Offsetting this interruption, our veterans and family segments continue to demonstrate high teens registration growth in Q2 as well. So while Navy, Air Force, and Marine registrations are a headwind in the short term, we remain confident in our full-year guidance. Historically, when our active duty students are deployed or preparing to deploy, their educational progression can be delayed, but these students, for the most part, return. Additionally, with the performance of Army enrollments, we view this as a timing dynamic rather than a structural demand issue. Additionally, the Q2 adjusted EBITDA percentage reflects investments in incremental advertising of $2.2 million versus 2025 as we focus on mitigating the near-term impact of these deployments. Now let me turn to the positive progress on our institutional combination. On April 28th, we received approval from our accreditor, Higher Learning Commission, to consolidate our APUS, Rasmussen, and Hondros College of Nursing programs, locations, and operations into a single accredited institution, operating as the American Public University System, which we will refer to as the system in future communications. Now only one step remains with the Department of Education, which is the Department's approval of the combination and the completion of the OPEID merger. We are fully engaged with the Department and their process steps and continue to target an effective date for consummation of the combination at the beginning of the third quarter of 2026. Finally, as we turn our attention to full year 2026 performance, Given the strength of our first quarter results and our visibility into the balance of the year, today we are raising our full year 2026 guidance on revenue, adjusted EBITDA, and diluted EPS. I want to reinforce the message I delivered at the end of our last earnings call. The foundation is built. The business is simplified. The balance sheet is strong. And quarter after quarter, we are doing what we said we would do. Q126 is the first quarter of a four-year execution plan. We remain very confident about the significant runway ahead of us. We are just getting started. With that, I'll turn the call over to Ed to discuss our financial results and our updated 2026 guidance in detail.