American Public Education at 45th Annual William Blair: Strategic Growth in Focus

On Thursday, 05 June 2025, American Public Education Inc. (NASDAQ:APEI) presented at the 45th Annual William Blair Growth Stock Conference. The company highlighted its strategic efforts to provide accessible education in high-demand fields, such as nursing and education for military personnel. While celebrating positive momentum in its nursing platform and financial growth, APEI acknowledged challenges in its Graduate School segment amid changing federal training initiatives.

Key Takeaways

• APEI leads in educating active-duty military and veterans, twice the size of its nearest competitor.
• The company is the top producer of ADN and LPN nurses in the U.S., with operations in nine states.
• Positive financial outlook with expected Q1 2025 revenue of $164 million and net income of $7.5 million.
• Strategic simplification by combining APUS, Rasmussen, and Hondros into a single system.
• Emphasis on campus expansion and addressing the nursing supply-demand gap.

Financial Results

• Trailing twelve-month revenue stands at $635 million, with an adjusted EBITDA of $76.5 million.
• A robust balance sheet shows $188 million in cash.
• Q1 2025 projections include $164 million in revenue, $7.5 million in net income, and earnings per share of $0.41.
• A 25% year-over-year improvement in adjusted EBITDA is anticipated, reaching $21.2 million.
• Free cash flow for the year is projected at $51 million.

Operational Updates

• Rasmussen’s growth restrictions have been lifted, paving the way for new campuses and programs.
• Hondros has achieved 21 consecutive quarters of enrollment growth, with four new campuses in the last five years.
• The strategy to combine APUS, Rasmussen, and Hondros aims to enhance capital allocation and regulatory compliance, with benefits expected in 2026.
• Underperforming campuses, including two in Wisconsin, are set to close.
• 40% of APUS students are referred, and 30% return for a second degree.

Future Outlook

• Positive EBITDA margins are expected for Rasmussen and Hondros.
• Synergy benefits from business simplification are anticipated in 2026 and beyond.
• Campus expansion plans for Rasmussen and Hondros target existing and adjacent states, expected by Q4 2025.
• The company is closely monitoring the nursing supply-demand gap and military recruitment trends.
• Efforts are underway to improve profitability in the Graduate School.

Q&A Highlights

• APEI focuses on ADN and LPN programs to meet hospital demands for bedside care nurses.
• Continuous dialogue with the Department of Education is maintained to address strategic matters.

For a deeper understanding of American Public Education’s strategic initiatives and financial outlook, readers are encouraged to refer to the full conference call transcript.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Steven Sheldon, Analyst, William Blair: All right. Well, that’s loud. Good morning, everyone. Thanks for joining early on the last day here at the conference for the APEI session. I’m Steven Sheldon.

I’m an analyst in the tech group of William Blair covering the education space, including American public education. Please go to our website at williamblair dot com for a complete list of research disclosures and potential conflicts of interest. So yeah, it’s great to have the API time team back at our conference again this year. As most probably know, the company is the leading provider of education in a few key and attractive buckets of the market, including educating military personnel, and and I think what’s really interesting, the the creating of new supply of nurses, which is, I think, most probably now going to be a very strong secular growth area. So we upgraded the stock earlier earlier this year on the back of improving execution and just a generally better growth outlook, so we continue to think it’s a really good time to be looking at the story.

So from the company today, we have CEO Angela Seldon. We also have Steve Summers, runs strategy and corp dev here in the audience. But with that quick intro, I’ll turn it over to Angela.

Angela Seldon, CEO, APEI: Great. Good morning. Okay. Before you all ask me questions, my question to you is how many of you went to the event last night? Okay, that’s why you’re in the room, right?

Because those that did are not here, right? So thanks for joining it. I know you did, and thank you for showing up at eight a. M. I appreciate that.

So, it’s great to be here today. Thank you very much for your interest in APEI. I’m really excited to introduce you to our story. How many of you have any familiarity with APEI? Hands?

Okay, a few. Great, excellent. Hopefully my colleagues at William Blair would raise their hands too. So, off we go. Just a quick overview of who we are, and Steven did a beautiful job of introducing one of the things that create distinction for us.

So, today we are four institutions. Three of them are degree granting, one of them is a training institution, all unified by this idea that we create accessible and affordable education in high demand fields. We see much of our education as AI proof, because we’re training people to be nurses, we’re training people to advance their careers in the military, we are giving veterans an off ramp from their military experience, and so many of the degree programs we offer give people access to careers they may not otherwise have access to, if not through the educational platforms that we create. Industry is very interesting, and it’s growing, and in particular the for profit education space has gotten a lot of tailwind right now as a result of the new administration. We believe this industry is poised to grow, but today it is a hundred billion dollar market, and it is growing.

As Steven mentioned, we are the number one educator of active duty military by a mile. We are twice the size of the next closest competitor, which is a state school University of Maryland global campus. We are also the number one educator of veterans, and we are the number one creator of new ADN, which is the two year degree RN nurses and LPNs in The United States. And we do that in a footprint of only nine states. We are very pleased with the momentum we are seeing in our nursing platform.

We acquired Rasmussen at the end of twenty one, have been working to stabilize and improve the performance of that business. We delivered positive year over year enrollment in the back half of ’24, and positive EBITDA, and the trajectory for that business, as we described in our most recent earnings call, is positive, and the momentum is building there. Overall, our financial performance includes a trailing twelve month revenue of $635,000,000 the adjusted EBITDA of $76,500,000 Free cash flow is produced in many ways by our our fully online institution, American Public University System, which we’ll talk about in a little bit more detail in just a moment, and we have a very strong balance sheet with $188,000,000 of cash on the balance sheet. What drives us and what is the unifying theme is our mission. Our mission is to power purpose and potential and prosperity, importantly for those who are in service to others.

We educate people who serve others, nurses, active duty military, veterans, etcetera, and we believe our education transforms lives, advances careers, and improves communities. Here’s those states that I talked about, 9,400 enrolled nursing students. We have 26 campuses in eight states, and we have a ninth state that we’re exiting, which is Wisconsin, and so that’s the ninth state I mentioned, and we have 23 nursing and allied health programs that we offer to students today. Why does that matter? Because the Bureau of Labor Statistics says each year, for the next ten years, there will be a shortage of 200,000 nurses.

We are the number one producer of ADN and LPN nurses today, and our graduating students will fill less than 5% of that shortage. So, there’s a significant tailwind in nursing that we believe we are poised to help support and fill. The second part of our platform is our public service platform, which includes American Public University System, which is the fully online institution educating active duty military and veterans. And importantly, in 2024, we also discovered an important adjacent segment, which is that families of active duty military and veterans have a deep affinity for the brand. They trust our brand, and we have seen significant growth in the families of active duty military and veteran families in 2024, and graduate school, which is the number two educator of the federal workforce, with over 100 federal agencies as customers, and 25,000 students educated last year alone.

So, our momentum is measured different ways, all right? So, if you follow our story or intend to follow our story, it’s important to create this distinction. American Public University was purpose built to educate military thirty two years ago, and the dilemma was that those serving the country could not get themselves to a campus. So, the online education platform was created to make education accessible. It was also an acknowledgment that they would not have time in their schedule to do more than one class at a time.

So, as a result, a student we don’t measure student count at APUS because one student might be taking six or eight classes a year, and another student might be taking two. You may say, well, how how many students graduate? Right? Graduation rates are a big deal. I was just telling Steven I was proud to participate in the recent American Public University System, APUS graduation.

We had over 17,000 students graduate in 2024. And my niece graduated from Penn State with about the same number of students. So, if you want to think about what kind of impact we’re having on that population of The United States, it is significant, and I’m very, very proud of what we do in not just educating students, but allowing them to obtain their degrees. The last statistic I’ll share with you is almost thirty percent of all students who take a who complete a degree or a certificate at APUS come back for a second degree. So if you want a measurement of quality, quality is measured not by what we tell you, but by how the students vote with their time and their pocketbook.

And so, we’re very proud of that statistic. At Rasmussen and at Hondros, those are cohort based programs. Those are students who are taking a very regimented set of courses, and so we measure by students. We measure by enrollments in those two institutions, because most of our students are being educated on campuses. In the case of Hondros, fully educated in campuses, Hondros only offers nursing degrees.

So, that’s the difference between the 381,000 net course registrations and the enrollment numbers that we use for our nursing schools, Rasmussen and Hondros. Okay, there is an up and to the right growing trend at APUS. As I mentioned, of this education is online. There are 137 degree programs people can choose from, and 111 certificates. One of the things that attracts students to our offering is that we are accredited by the same accreditor that accredits Notre Dame, the University of Chicago, Michigan, Arizona State, they put their stamp of approval on our educational experience and our quality of our curriculum and teaching in the same way as all those schools, but the price point for our degree programs is often 30% lower than in state tuition, not including room and board, just for the tuition alone.

So, you get access to education when you want it at a price point that you can afford, and you will graduate as 17,000 people demonstrated that they can do in this past 2024 graduation. You can see up into the right trailing twelve month enrollment increases, this again measured by we really are excited about the prospects of what APUS has to offer in the future. These are our two nursing schools. Now, just to be clear, Rasmussen is not fully a nursing school. About half of Rasmussen’s revenue comes from both campus based nursing, as well as online post licensure nursing programs, and the other half has degree programs very similar to what APUS offers, so business degrees, technology, etcetera.

So, those Rasmussen degrees, 47 of them, include a mix of programs. The enrollments you can see have significantly improved, and the breaking news, and part of the reason why we filed our eight ks this morning with this presentation, is that Rasmussen has gone through two changes of control. We were the second, they had been purchased private equity to private equity before us, and had been under campus and program growth restrictions, meaning no new campuses, no new programs, for the last six years. Those growth restrictions were lifted two weeks ago. And so, we are very excited.

So, the growth that you’re seeing here at Rasmussen is coming from same store sales. It is not, you know, a result of new programs, so you can’t sell, no new product, and it’s not coming from new campuses or new locations. So, we’ve now had those restrictions lifted, and we anticipate that we will see good results from that. Could be as early as Q4 of twenty twenty five. As it relates to Hondros, continuing to beat and continue to outpace prior year enrollment growth.

It’s the twenty first consecutive quarter of year over year enrollment growth that we’ve seen at Hondros. We’ve added four campuses there since I joined five years ago, and Hondros continues to drive enrollment momentum. So, let’s just talk about financials for a minute. This is what we shared in our most recent earnings call, where we have put $164,000,000 of revenue on the books for 1Q, that’s the expectation. Net income, 7,500,000.0.

Earnings per share at 41¢, notably as compared to a minus six last year, $21,200,000 of adjusted EBITDA, which is a 25% improvement over last year’s Q1 adjusted EBITDA. Many of these things we’ve already covered, but I will say that Rasmussen’s improvement in 2H24 continues as we have described here in 1H25 and beyond. This is the revenue expectations for each of our three large higher education institutions. You can see in each case, we are outpacing the prior year quarter, and we’re very proud of the results that we’re producing at each one of these institutions. Also, profitability continues to outpace prior year.

You can see the root cause of each of those at APUS, both in terms of registration growth at APUS three point five percent, and margin in 1Q is anticipated at 30% EBITDA margins, generating a very nice return on eighty three point five million dollars of revenue. We’ve talked a lot about Rasmussen here. Hondros enrollment continues to grow at high single or low double digits in the last ten quarters specifically, and we are seeing a little bit of headwind at graduate school as a result of the Doge initiatives that are not just taking out federal workers who might be eligible for training, but also limiting the amount of dollars that are being allocated in agencies to spend on training. So, graduate school is the area that we are turning our attention to in terms of improving profitability. This is an eye chart, but it’s in the deck, you can take a look at it, but you can certainly see that as it relates to APUS, on an annual basis delivering 30% margins.

Rasmussen delivered the 10% improvement in the fourth quarter, which averaged out to a minus three last year, but we expect positive EBITDA margins at Rasmussen, at Hondros, and these headwinds are creating some challenges for graduate school. Happy to dive into any of that if you have any questions on that. The second breaking news item for our eight ks filing is that another one of the long standing obstacles we had with the Department of Education was during our change of control with Rasmussen, which occurred in 2021, we had a $25,000,000 letter of credit. All right? The money was sitting in escrow, we couldn’t use it.

They had been holding onto it for two full years of audited financials, which we completed at the end of twenty three and submitted in early twenty four. So now, one year later, they’ve released our $25,000,000 so we no longer have to have that set aside waiting for Department of Ed to approve its release. So, we’re really excited about the positive relationship that we’re building with the Department of Education, which signals their support and confidence for the type of education we’re delivering to our students. So, in summary, we operate in a high quality way, in an affordable and an accessible way, in a very large addressable market. And the nursing business in particular has significant tailwinds as we described, and importantly, our military business is a place where we are by far the number one educator, 2x the next largest competitor.

We are measured by a third party. There’s a Georgetown study of workforce and education, which looks at return on educational investment, which is a big deal for us. Right? Half of our students are first generation, they are looking to transform the trajectory of their lives and the lives of their families. And so, for us, return on educational investment is the most important focus, and we are very proud that APUS is in the top 11% of 4,500 institutions for return on educational investment.

That is a measure of both what is the cost, but also what is your lifetime earning potential. And so, if we were a low cost provider with degrees that didn’t offer long term earnings potential, you still wouldn’t fare very well on that ratio. So you have to really have the balance of both, and we’re very proud to have met that threshold as measured by a research study done by Georgetown. We’ve talked about the nursing demand and the fact that there’s this really nice tailwind there. We see the continuing performance of Rasmussen to be improving in our nursing platform, and boosting Hondros’ performance as well.

One of the things that we announced in our March earnings call is that we are in the process of simplification of our business, and that’s taking many forms. We are closing underperforming campuses. I mentioned we have two campuses in Wisconsin. I grew up there, so it’s not that we don’t love Wisconsin, but the TAMs are very small. We were in Green Bay and Wausau, and so we had educated the population of students who were going to become nurses in those two small TAMs, and we’re looking for other ways to actually educate the students in Wisconsin.

We are also, importantly, combining our three higher education institutions, which is APUS, Rasmussen, and Hondros, into a single system, and that’s going to allow us to do a handful of things. One, it’s going to allow us to provide the capital for campus expansion more easily to our Rasmussen and Hondros divisions. It’s also going to allow us to create this healthcare platform by bringing Hondros and Rasmussen into a single healthcare platform, and it’s allowing us to make sure that we continue to stay in good standing on all of the regulatory measures that the Department of Ed holds all of us in for profit education accountable for. We believe that there will be synergy benefits from this, which we will not see in ’24, but expect to, excuse me, in ’25, but expect to see in ’26 and beyond. And finally, this is a business that has a very strong free cash flow, which this year alone will produce $51,000,000 of free cash.

So with that, I’ll turn it back to Steven, and let’s see if we have any questions.

Steven Sheldon, Analyst, William Blair: Thanks Angie, that was great. I’ve been waiting a long time I think to ask you Rasmussen campus expansion. So maybe talk some about that process, what that’ll look like, and, you know, I think you mentioned you might we might see some as soon as the fourth quarter. So talk about the process and and how aggressive you plan to be on that front. Is it going to be more about adding capacity in current states, new states?

Just talk about how you’re thinking about it.

Angela Seldon, CEO, APEI: Yeah, it’s a great question. You know, when you think about a campus based business, there are many ways to unlock top line and bottom line growth. You want to make sure for the campuses you own that you’re filling them up effectively so that you’re wringing out the most profitability out of the campuses that you already operate. We’re doing that today, And that’s part of the result that you’re seeing from Rasmussen is the filling up of the campuses that we currently own, or closing those campuses, the two I mentioned in Wisconsin, who don’t have the ability to be operating at that capacity. The second thing you want to be able to do is open campuses, and that’s the question you’re asking about.

At Hondros, we’ve opened four campuses in the last five years, and the most recent campus that we opened was in a new state in Michigan, and that campus has gone from about two fifty students to now four fifty students in a very short period of time. And we found that in the area of Michigan where we are operating, a very significant gap in access to new nurses, and so it’s created a really wonderful opportunity for us there. Michigan was a great case study for us, and it was an adjacent state to Ohio. So the Michigan Board of Nursing allowed students who were Michigan residents taking our program in Ohio, we had students driving back and forth ninety minutes to our Toledo campus, to be used as a case study of the quality of the education. So, that’s an example where you can move more quickly in a state that’s adjacent, because the state says, the State Board of Nursing says, we can see you’ve offered quality education to our residents, And so what would have normally been a three year process for Michigan was a one year process for us.

So that so adding states that are adjacent are a really important part of our growth strategy. Additionally, if you look at the map that we have in Florida, we’re concentrated in the Central part of Florida. We’re in Tampa, we’re in Ocala, we’re in Orlando, we’re not in Jacksonville, we’re not in Dade Broward, Palm Beach. Right? So that’s an example where the time to opening campuses is much quicker, because you don’t need the Board of Nursing to actually give you your first stamp of approval.

What you need to do is make sure you have a facility with faculty, and the main thing is to make sure you have the proper clinicals available so that the students can get that hands on education they need as part of the overall experience. So we’re looking at both. We’re looking at states that have great supply demand gaps, where we have a reputation, where we can use the students that have already been educated by us to demonstrate efficacy, and we’re also looking at our existing states where we believe we still have opportunity to grow, you know, in the states in which we operate. So it’s exciting times, and we look forward to sharing more with you when we have more details.

Steven Sheldon, Analyst, William Blair: That’s great. I’ll ask one more and then we can open up to the audience. I wanted to ask about, you know, the macro trends and I guess how it might impact your business. I think higher education typically you see a pickup in enrollments I think, when when there’s macro pressure, when unemployment rises. You know, unemployment’s been up a little bit, and and but I guess how are you thinking about how the business, you know, could, you know, play in that environment if unemployment does continue to rise?

I would think it, you know, on the military side may not have as much of an impact, but there’s a lot of other areas where it might. So maybe just talk about what you would see, what you would expect to see if that plays out.

Angela Seldon, CEO, APEI: Sure. So I think, you know, that rising tide lifts all boats, Right? And certainly as people start to feel pressure about access to jobs, they’re going to turn to education as a way to improve their lives, generally speaking. We look at two different trends, I think. And in particular, what I’m very pleased to share is that the Army this year, who has had difficulty recruiting to fill their slots in the last couple of years, has filled their filled their target recruiting class four months earlier than they had expected.

And we see that when you think about what are the impacts of the administration on higher education. There’s a lot of turmoil that’s going on right now, and it’s hard to point to this is the good pile, this is the not good pile. But one of the things that is beneficial to us is that there is a renewed interest in serving the country from a military perspective by, in particular, young men. And so, and that’s a disproportionate number of our APUS students are male, whereas our Ras and Hondros students are primarily female. And so, in that case, the filling of that, of those ranks earlier gives us enthusiasm about the prospects of the students that we will see entering the, you know, the education at APUS in the future.

So, that’s a good sign. And then the fact that that nursing supply demand gap isn’t closing is something that we continue to pay attention to. So both are trends that we think are making a big difference for us.

Steven Sheldon, Analyst, William Blair: All right. Any questions from the audience? I think we’ve got probably time for one or two here. Anyone’s got one? Otherwise, yep.

Go ahead.

Angela Seldon, CEO, APEI: You guys are right behind each other, so yeah go ahead and then you next. Yeah. Can you introduce yourself? Okay. Hi.

Yeah, it’s a great question. In nursing at a simple level sounds like a business that’s easy to understand, but there are really important differences. Pre licensure, post licensure, and then we’ll talk about the different ways that you can become a first licensure nurse. What we’re seeing from the conversations we’re having with the largest health systems in the country is that the four year degree nurse, which some of the larger competitors offer, the BSN, is an expensive nurse to hire. And it’s a nurse that perhaps has less interest, generally speaking, to provide bedside care.

So you’re going to pay more, they’re going to want to have more administrative and strategic responsibilities. So we are finding significant interest and demand from employers around our two year degree RN nurses and our LPN nurses, because those are nurses who Our students are from the community, intend to stay in the community, are often English as a second language, so they have familiarity with the patients they are serving culturally, from a language perspective, and are willing to provide bedside care. So, we are different from most of the other pre licensure nursing educators, because our predominant degree offering is LPN and the two year degree, which is the associate’s degree or ADN nurse. Still leads to the same RN license as a BSN, which is the bachelor’s degree nurse, but hospitals are finding that they can create a better mix of their workforce by having across that ladder LPN, ADNRNs, and then the BSNRN. Sure, yes.

That covered my question. Okay, super, great. Any other questions? Yes. Can you introduce yourself?

Forty percent of our APUS students come from referrals. So we see that as a significant advantage. Reduces our marketing cost and because as I mentioned 30% of our students at APUS are with us for a second degree, our reputation allows us again to reduce our marketing costs and have those repeat customers, which isn’t often the case in higher education. So, the reputation means everything to us at APUS, yes. Yes, got to introduce yourself.

I had the good fortune of meeting with the Department of Education three weeks ago when we asked for our consideration of our growth restrictions, the consideration of the $25,000,000 they had been holding onto for over three and a half years, and a third matter that we still are working on with the department. And we within a matter of weeks got those two two of the three matters attended to, and we are in constant email and conversational dialogue with Ed on the third matter. So, we see an openness for people who are in good standing with the department to be treated fairly. We’re not asking to be treated differently. We’re just asking to be treated fairly.

And so, one data point doesn’t make a trend, but I’m very pleased to say that within three weeks two of our three requests have been met, and the third one is under deep consideration.

Steven Sheldon, Analyst, William Blair: Out of time. Angie, thank you so much. The breakout is going to be upstairs in Jennie A, so hopefully

Angela Seldon, CEO, APEI: Always a pleasure. Thanks to thanks to you all for hosting us. We really appreciate it. William Blair team, thank you. Nice to see all of you.

Hope to see you upstairs. This presentation has now finished. Please check back shortly for the archive.

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