Q2 2026 American Public Education Inc Earnings Call Transcript
Key Points
- Total revenue grew 5.5% year-over-year to $171.7 million, at the high end of guidance, with adjusted EBITDA up 36.8% to $20.7 million.
- Health+ segment revenue grew 11% with 7% enrollment growth, driven by strong demand for pre-licensure nursing education and successful fill-the-back-row strategy.
- Completed the institutional combination of American Public University System, Rasmussen University, and Hondros College of Nursing, lifting the last growth restriction on Rasmussen's total enrollment.
- Strong balance sheet with cash and short-term investments of $222.8 million, up 26.2% year-to-date, and year-to-date cash flows from operations up 45.6%.
- Raised full-year 2026 guidance for revenue, net income, adjusted EBITDA, and diluted EPS, reflecting confidence in the business trajectory.
- New AI-enabled student lifecycle platform with Salesforce expected to deliver operational efficiencies and financial benefits, with costs already included in the four-year plan.
- Military+ segment delivered 4.7% revenue growth and 150 basis points of adjusted EBITDA margin expansion, with veterans and military families registrations growing at mid-teens rates.
- New campus expansion strategy on track, with Orlando campus outpacing enrollment plans and Fort Lauderdale campus lease signed for 2027.
- Strong cash generation model with incremental margins on fill-the-back-row students approaching 50% and efficient campus expansion economics.
- Active share repurchase program with $45 million remaining under authorization, demonstrating commitment to returning capital to shareholders.
- Active duty channel challenged by ongoing Middle East conflict, with continued deployment of Navy, Air Force, and Marine service members impacting enrollments.
- Non-core student segments experiencing increased cost per lead, leading to lower enrollments in those segments.
- Third-quarter guidance includes a revenue timing shift of approximately $6 million in revenue and $4 million in adjusted EBITDA due to a September 7 start date.
- Health+ enrollment growth decelerating to 2.5% in Q3, primarily due to online non-healthcare programs facing higher marketing costs.
- Non-recurring expenses related to marketing optimization in the second half of the year will impact Q3 adjusted EBITDA.
- Mark Arnold, President of the Health+ Division, is leaving for personal reasons, creating leadership transition uncertainty.
- Military+ full-year guidance assumes continued headwinds from deployments, with only 1% to 3% growth in military registrations.
- Capital expenditures lowered to $25-$28 million, reflecting a more conservative investment approach despite growth plans.
- The company is still evaluating marketing efficiency with a third-party, with improvements not expected until Q4 2026.
- Potential increase in tuition assistance benefits from $250 to $350 per credit hour is still pending Senate and appropriations approval, creating uncertainty.
Thank you for standing by. My name is Jonathan, and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI's second-quarter 2026 earnings call. (Operator Instructions)
I would now like to turn the call over to Jack Landry, Investor Relations. Please go ahead.
Thank you and good afternoon, everyone. Welcome to American Public Education's conference call to discuss second-quarter 2026 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer of APEI and Chancellor of the American Public University System; Edward Codispoti, Executive Vice President and Chief Financial Officer; and Gary Janson, Chief Strategy and Growth Officer.
Materials for today's call, which is being webcast and is open to the public, 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 subsidiaries that are not historical facts may be
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