American Public Education Q3 operating income falls to $7.9M
Nine-month revenue, net income and operating cash flow were higher year over year, while third-quarter operating income and margin declined.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
American Public Education, Inc. (APEI) reported third-quarter 2026 revenue of $169.1 million, up from $163.2 million, and net income of $5.9 million, versus $5.6 million. Income from operations before interest and income taxes declined to $7.9 million from $9.7 million, and operating margin fell to 4.7% from 5.9%.
For the first nine months of 2026, revenue rose 5.1% to $515.6 million from $490.5 million, net income was $33.4 million versus $18.9 million, and operating cash flow was $87.3 million versus $73.5 million. Health+ revenue increased 9.0% in the quarter and 10.3% for nine months.
On August 4, 2026, the U.S. Department of Education approved and APEI completed combining APUS, Rasmussen University and Hondros College of Nursing into one Higher Learning Commission-accredited institution. A $90.0 million term loan and cash on hand were used to repay approximately $96.4 million of prior term-loan principal; total debt was $86.2 million as of September 30, 2026. Its academic units received 340 borrower-defense claims seeking discharge of approximately $7.2 million in loans; APEI said it cannot predict whether ED will grant relief or seek recoupment.
4 points · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue increased 5.1% to $515.6 million.
- Moderate pointNine-month net income was $33.4 million, versus $18.9 million.
- Moderate pointNine-month operating cash flow rose to $87.3 million from $73.5 million.
- Minor pointThird-quarter net income increased to $5.9 million from $5.6 million.
Negative
- Moderate pointThird-quarter operating income fell to $7.9 million from $9.7 million.
Filing Explained
The credit agreement provides for a
Key Figures
Third-quarter revenue: $169.1 million vs. $163.2 million
Third-quarter net income: $5.9 million vs. $5.6 million
Third-quarter income from operations before interest and income taxes: $7.9 million vs. $9.7 million
+5 more
8 metrics
Third-quarter revenue
$169.1 million vs. $163.2 million
Three months ended September 30, 2026, compared with 2025
Third-quarter net income
$5.9 million vs. $5.6 million
Three months ended September 30, 2026, compared with 2025
Third-quarter income from operations before interest and income taxes
$7.9 million vs. $9.7 million
Three months ended September 30, 2026, compared with 2025
Nine-month revenue
$515.6 million vs. $490.5 million
Nine months ended September 30, 2026, compared with 2025
Nine-month net income
$33.4 million vs. $18.9 million
Nine months ended September 30, 2026, compared with 2025
Net cash provided by operating activities
$87.3 million vs. $73.5 million
Nine months ended September 30, 2026, compared with 2025
Senior secured term loan
$90.0 million
Provided under the 2026 Credit Agreement
Borrower-defense claims
340 claims seeking discharge of approximately $7.2 million in loans
Received August 1 through October 31, 2026
Key Terms
Secured Overnight Financing Rate, cohort default rate, Title IV programs, Borrower Defense to Repayment, +1 more
5 terms
Secured Overnight Financing Rate financial
"a Secured Overnight Financing Rate, or SOFR rate, plus a margin"
A secured overnight financing rate (SOFR) is a daily benchmark interest rate that reflects the cost of borrowing cash overnight using U.S. Treasury securities as collateral. Think of it as the market price to “rent” cash for a day with a very safe pledge, similar to paying a short-term rental fee for money backed by government bonds. Investors track SOFR because it underpins pricing for loans, bonds and derivatives, so movements change borrowing costs, interest income and the valuation of interest-rate–linked positions.
cohort default rate regulatory
"ED reported a 0.4% cohort default rate for APUS"
Title IV programs regulatory
"certified by ED to participate in student financial aid programs"
Title IV programs are the U.S. federal student financial aid programs authorized by Title IV of the Higher Education Act, including federal grants, loans and work-study that help students pay for college. For investors, a school’s access to these funds is like its steady paycheck from government-supported customers: losing eligibility can sharply reduce enrollment and revenue, while stable access supports predictable cash flow and growth prospects.
Borrower Defense to Repayment regulatory
"Borrower Defense to Repayment Claims"
available-for-sale securities financial
"considered its short-term investments in investment grade commercial paper and U.S. Treasury securities as available-for-sale securities"
Available-for-sale securities are investments in stocks, bonds or similar instruments that a company does not intend to trade frequently but may sell before they mature. They matter to investors because changes in the market value of these holdings show up as paper gains or losses on the company's balance sheet rather than immediately in profit, so they can affect reported net worth and the timing of income without changing day-to-day earnings. Think of them like items on a household shelf you might sell later: their value moves with the market even if you haven’t cashed out.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did APEI perform in the third quarter of 2026?
APEI reported $169.1 million in revenue and $5.9 million in net income for the three months ended September 30, 2026. Revenue was $163.2 million and net income was $5.6 million in the prior-year quarter; income from operations before interest and income taxes was $7.9 million, compared with $9.7 million.
What were APEI's revenue and net income for the first nine months of 2026?
APEI reported $515.6 million in revenue and $33.4 million in net income for the nine months ended September 30, 2026, compared with $490.5 million and $18.9 million, respectively, in the prior-year period. Net cash provided by operating activities was $87.3 million, versus $73.5 million.
What are the terms of APEI's 2026 credit facilities?
The 2026 Credit Agreement provides a $90.0 million senior secured term loan and a senior secured revolving credit facility of up to $40.0 million, scheduled to mature on March 9, 2031. The revolver includes a $25.0 million letter-of-credit capacity and a $5.0 million swing-line subfacility. Borrowings bear interest at the SOFR rate plus a margin ranging from 1.75% to 2.75%.
When does APEI plan to close the Moorhead nursing program?
Rasmussen University informed the Minnesota Board of Nursing that it intends to close the Moorhead, Minnesota Associate Degree in Nursing program effective December 31, 2027. Current enrollment is approximately 85 students, or less than 1% of Health+'s current total enrollment; internal degree-completion pathways will be made available to students whose expected completion dates extend beyond that date.
How many borrower-defense claims did APEI report?
APEI's academic units received 340 claims between August 1, 2026, and October 31, 2026, seeking discharge of approximately $7.2 million in loans. APEI said it cannot predict whether the U.S. Department of Education will grant relief or seek recoupment.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | ||||||||
| SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended September 30, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | ||||||||
| SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from ______ to ______
Commission File Number: 001-33810
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
(304 ) 724-3700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||||||||
| Emerging growth company | |||||||||||||||||
If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The total number of shares of common stock outstanding as of November 5, 2026, was 18,203,277 .
AMERICAN PUBLIC EDUCATION, INC.
FORM 10-Q
INDEX
| Page | |||||
PART I – FINANCIAL INFORMATION | |||||
Item 1. Financial Statements | 3 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 | ||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 37 | ||||
Item 4. Controls and Procedures | 37 | ||||
PART II – OTHER INFORMATION | |||||
Item 1. Legal Proceedings | 38 | ||||
Item 1A. Risk Factors | 38 | ||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 39 | ||||
Item 3. Defaults Upon Senior Securities | 39 | ||||
Item 4. Mine Safety Disclosures | 39 | ||||
Item 5. Other Information | 39 | ||||
Item 6. Exhibits | 40 | ||||
SIGNATURES | 41 | ||||
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
| As of September 30, 2026 | As of December 31, 2025 | ||||||||||
| ASSETS | (Unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash, cash equivalents, and restricted cash (Note 2) | $ | $ | |||||||||
| Short-term investments (Note 3) | |||||||||||
Accounts receivable, net of allowance of $ | |||||||||||
| Prepaid expenses | |||||||||||
| Income tax receivable | |||||||||||
| Assets held for sale (Note 2) | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease assets, net (Note 5) | |||||||||||
| Deferred income taxes | |||||||||||
| Intangible assets, net (Note 6) | |||||||||||
| Goodwill (Note 6) | |||||||||||
| Other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued compensation and benefits | |||||||||||
| Accrued liabilities | |||||||||||
| Deferred revenue and student deposits | |||||||||||
| Lease liabilities, current (Note 5) | |||||||||||
| Long-term debt, current (Note 8) | |||||||||||
| Total current liabilities | |||||||||||
| Lease liabilities, long-term (Note 5) | |||||||||||
| Long-term debt, net (Note 8) | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 10) | |||||||||||
| Stockholders’ equity: | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Retained earnings (deficit) | ( | ||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
3
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Income
(In thousands, except per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Instructional costs and services | |||||||||||||||||||||||
| Selling and promotional | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Loss on assets held for sale (Note 2) | |||||||||||||||||||||||
| Loss on sale of subsidiary (Note 2) | |||||||||||||||||||||||
| Loss on leases (Note 5) | |||||||||||||||||||||||
| Loss on disposals of long-lived assets | |||||||||||||||||||||||
| Total costs and expenses | |||||||||||||||||||||||
| Income from operations before interest and income taxes | |||||||||||||||||||||||
| Loss on extinguishment of debt (Note 8) | ( | ||||||||||||||||||||||
| Interest income (expense), net | ( | ( | |||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Loss on redemption of preferred stock | |||||||||||||||||||||||
| Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Income per common share (Note 7): | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average number of common shares: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) gain, net of tax: | |||||||||||||||||||||||
| Unrealized loss on short-term investments, net of taxes | ( | ( | |||||||||||||||||||||
| Unrealized gain (loss) on hedging derivatives, net of taxes | ( | ||||||||||||||||||||||
| Unrealized (loss) gain, net of taxes | ( | ( | ( | ||||||||||||||||||||
| Reclassification of gain to net income, net of taxes | |||||||||||||||||||||||
| Total other comprehensive (loss) gain | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, except share amounts)
| Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings (Deficit) | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee benefit plans | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||
| Deemed repurchased shares of common and restricted stock for tax withholding | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Repurchased and retired shares of common stock | — | — | ( | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee benefit plans | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Deemed repurchased shares of common and restricted stock for tax withholding | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Repurchased and retired shares of common stock | — | — | ( | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee benefit plans | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||
| Deemed repurchased shares of common and restricted stock for tax withholding | — | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Repurchased and retired shares of common stock | — | — | ( | ( | — | — | ( | ( | |||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Stockholders’ Equity (Unaudited)
(In thousands, except share amounts)
| Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings (Deficit) | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee benefit plans | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||
| Deemed repurchased shares of common and restricted stock for tax withholding | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||
| Redemption of preferred stock | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee benefit plans | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Deemed repurchased shares of common and restricted stock for tax withholding | — | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock under employee benefit plans | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||
| Deemed repurchased shares of common and restricted stock for tax withholding | — | — | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
7
AMERICAN PUBLIC EDUCATION, INC.
Consolidated Statements of Cash Flows
(In thousands)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Loss on extinguishment of debt | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Stock-based compensation | |||||||||||
| Accretion of investment discounts | ( | ||||||||||
| Deferred income taxes | |||||||||||
| Loss on assets held for sale | |||||||||||
| Loss on sale of subsidiary | |||||||||||
| Loss on disposals of long-lived assets | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable, net of allowance for bad debt | |||||||||||
| Prepaid expenses | ( | ( | |||||||||
| Income tax receivable | ( | ( | |||||||||
| Operating leases, net | ( | ||||||||||
| Other assets | ( | ||||||||||
| Accounts payable | |||||||||||
| Accrued compensation and benefits | |||||||||||
| Accrued liabilities | |||||||||||
| Deferred revenue and student deposits | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Cash outlay from the sale of subsidiary | ( | ||||||||||
| Purchases of short-term investments | ( | ||||||||||
| Maturities of short-term investments | |||||||||||
| Proceeds from the sale of real property | |||||||||||
| Net cash (used in) provided by investing activities | ( | ||||||||||
| Financing activities | |||||||||||
| Cash paid for repurchase of common stock | ( | ( | |||||||||
| Cash received from exercise of stock options | |||||||||||
| Preferred stock dividends paid | ( | ||||||||||
| Cash paid for redemption of preferred stock | ( | ||||||||||
| Cash paid for principal on borrowings and finance leases | ( | ( | |||||||||
| Cash received from borrowings | |||||||||||
| Cash paid for debt issuance costs | ( | ||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | ( | ||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information | |||||||||||
| Interest paid | $ | $ | |||||||||
| Income taxes paid | $ | $ | |||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
8
AMERICAN PUBLIC EDUCATION, INC.
Notes to Consolidated Financial Statements
Note 1. Nature of the Business
American Public Education, Inc., or APEI, or the Company (including its subsidiary), is a provider of online and campus-based postsecondary education to students. Effective March 2, 2026, the Company completed the merger of the legal entities that owned and operated the Company’s three institutions at the time, American Public University System, or APUS, Rasmussen University, or RU, and Hondros College of Nursing, or HCN, with American Public University System, Inc. surviving the merger. On August 4, 2026, the U.S. Department of Education, or ED, approved, and we completed, the combination of APUS, RU, and HCN into one Higher Learning Commission, or HLC, accredited institution, or the Combination, named American Public University System, or the System.
The Company provides education services through the following reportable segments:
•Military+ Segment, formerly the APUS Segment, provides online postsecondary education directed primarily at the needs of the military, veterans, extended military and veteran families, and other public service and service-minded communities through American Military University, or AMU, and American Public University, or APU.
•Health+ Segment, consisting of the businesses that formerly comprised the RU Segment and the HCN Segment, provides nursing- and health sciences-focused education and other postsecondary education, including business, technology, and education, to students through RU and HCN.
The System is licensed or otherwise authorized by state authorities to offer education programs to the extent it believes such licenses or authorizations are required, and the System is certified by ED to participate in student financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, or Title IV programs.
The accompanying Consolidated Financial Statements reflect the operations of American Public Training LLC, which is referred to herein as Graduate School USA, or GSUSA, through July 25, 2025, or the GSUSA Sale Date.
Adjustments to reconcile segment results to the Consolidated Financial Statements are included in Corporate and Other. These adjustments include unallocated corporate activity and eliminations, and, prior to the GSUSA Sale Date, the operational activities of GSUSA. Prior period segment disclosures have been recast to conform to the current period presentation.
Note 2. Summary of Significant Accounting Policies
A summary of the Company’s significant accounting policies follows:
Basis of Presentation and Accounting
The Company has prepared the accompanying unaudited interim Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America, or GAAP.
Business Combinations
The Company accounts for business combinations in accordance with Financial Accounting Standards Board Accounting Standards Codification 805, Business Combinations, or FASB ASC 805, which requires companies to use the acquisition method for all business combinations. Under ASC 805, the assets and liabilities of an acquired company are reported at fair value, including the fair value of acquired intangible assets at the date of acquisition. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the identifiable assets acquired, including intangible assets, and liabilities assumed.
Business Divestitures
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The Company accounts for business divestitures in accordance with FASB ASC 810, Consolidation. On the GSUSA Sale Date, APEI completed the sale of its membership interest in its wholly owned subsidiary, GSUSA, for $0.5 million, subject to customary adjustments, including for net working capital and cash, and recorded a $3.9 million loss on sale of subsidiary. Subsequent to the GSUSA Sale Date, APEI had no continuing involvement in GSUSA.
Principles of Consolidation
The accompanying unaudited interim Consolidated Financial Statements reflect the accounts of APEI and its wholly owned subsidiary. All material intercompany transactions and balances have been eliminated in consolidation.
The Company’s reportable segments are determined in accordance with FASB ASC 280, Segment Reporting, and are based upon how the chief operating decision maker, or CODM, analyzes performance and makes decisions. The Company organizes its business across two reportable segments: Military+ and Health+. Each segment represents an educational division that provides a variety of postsecondary academic programs.
Unaudited Interim Consolidated Financial Information
The unaudited interim Consolidated Financial Statements do not include all the information and notes required by GAAP for audited annual financial statement presentations. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s financial position, results of operations, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for future periods, including the year ending December 31, 2026. This Quarterly Report on Form 10-Q, or this Quarterly Report, should be read in conjunction with the Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or the Annual Report.
Use of Estimates
In preparing financial statements in conformity with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates these estimates and assumptions on an ongoing basis and bases its estimates on experience, current and expected future conditions and various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions, and the impact of such differences may be material to the Consolidated Financial Statements.
Cash and Cash Equivalents
The Company considers all short-term highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of demand deposits with financial institutions, money market funds, and U.S. Treasury bills. Cash and cash equivalents are Level 1 assets in the fair value reporting hierarchy.
Restricted Cash
Short-Term Investments
Investments with original maturities ranging from three months to one year are classified as short-term investments. As of September 30, 2026, the Company considered its short-term investments in investment grade commercial paper and U.S. Treasury securities as available-for-sale securities based on the Company’s intent for the respective securities. Available-for-sale securities are carried at fair value on the accompanying Consolidated Balance Sheets, determined using Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets. Unrealized investment gains and losses, net of tax, are reported as a separate component of other comprehensive income. Accretion of discounts and interest are included in interest income (expense), net. Realized gains and losses, if any, are included in gain (loss) on investments.
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Assets Held for Sale
Assets held for sale represent excess real property located in Charles Town, West Virginia within the Company’s Military+ Segment. The Company classifies long-lived assets as held for sale when the assets are expected to be sold within the next 12 months and meet the other relevant held for sale criteria. As such, the properties are recorded at the lower of the carrying value or fair value, less costs to sell, until such time the assets are sold.
In the third quarter of 2026, APUS entered into an agreement to sell a building located in Charles Town, West Virginia, and designated it as held for sale as of September 30, 2026. The Company estimated the fair value of the building and land to be approximately $0.7 million, which, after reduction for the estimated cost to sell, resulted in a non-cash loss of $0.5 million. The loss was included in loss on assets held for sale in the accompanying Consolidated Statements of Income for the three and nine months ended September 30, 2026. The sale is expected to close during the fourth quarter of 2026.
In the first quarter of 2025, APUS entered into an agreement to sell a building classified in assets held for sale as of December 31, 2024, for $7.0 million, and recorded a non-cash loss of $1.5 million, based on the contract amount less estimated costs to sell of $0.4 million. The loss was included in loss on assets held for sale in the accompanying Consolidated Statements of Income for the nine months ended September 30, 2025. The sale was completed in June 2025 for net sales proceeds of $6.6 million.
In the first quarter of 2025, APUS completed the sale of an undeveloped parcel of land classified in assets held for sale as of December 31, 2024, for net sales proceeds of $0.5 million.
In the second quarter of 2025, APUS completed the sale of a building classified in assets held for sale as of December 31, 2024, for net sales proceeds of $15.9 million.
Total cash received from the sale of assets held for sale for the nine months ended September 30, 2025, was $23.0 million. There were no assets held for sale as of December 31, 2025.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed, and the fair value of acquired intangible assets at the date of acquisition. Goodwill is not amortized. The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles – Goodwill and Other, and Accounting Standards Update, or ASU, 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The Company’s goodwill and intangible assets are deductible for tax purposes.
The Company annually assesses goodwill for impairment, or more frequently if events or circumstances indicate that goodwill might be impaired. Goodwill impairment testing consists of an optional qualitative assessment as well as a quantitative test. The quantitative test compares the fair value of a reporting unit to its carrying value. If the carrying value of the reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment. If the carrying value is greater than the fair value, the difference between the two values is recorded as an impairment.
Indefinite-lived and finite-lived intangible assets acquired in business combinations are recorded at fair value on the acquisition date. Finite-lived intangible assets are amortized on a straight-line basis over the estimated useful life of the asset.
The Company reviews its indefinite-lived and finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amount of the assets exceeds the fair value of the assets.
For additional details regarding goodwill and intangible assets, please refer to “Note 6. Goodwill and Intangible Assets” to the Consolidated Financial Statements.
Series A Senior Preferred Stock
The Company redeemed all 400 outstanding shares of the Series A Senior Preferred Stock in June 2025. The loss on redemption of $3.5 million was recorded as a reduction to net income available to common stockholders for the nine months ended September 30, 2025, and was calculated as the difference between the consideration paid, excluding dividends, and the
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book value of the Series A Senior Preferred Stock of $39.6 million. Accordingly, there were no 2.8 million.
Fair Value Measurements
The Company measures certain financial assets at fair value for disclosure purposes, as well as on a nonrecurring basis when they are deemed to be other-than-temporary impairments.
Fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:
Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities;
Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly; or
Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities.
Stock-based Compensation
The Company accounts for stock-based compensation in accordance with FASB ASC 718, Stock Compensation, which requires companies to expense share-based compensation based on fair value, and ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. Stock-based payments may include incentive stock options or non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance shares, performance units, cash-based awards, other stock-based awards, including unrestricted shares, or any combination of the foregoing.
Stock-based compensation cost is recognized as an expense generally over a three-year vesting period using the straight-line method for employees and the graded-vesting method for members of the Company’s Board of Directors or the Board, and is measured using the Company’s closing stock price on the date of the grant. An accelerated one-year period is used to recognize stock-based compensation cost for employees who have reached certain service and retirement eligibility criteria on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model that uses certain assumptions. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of the Company’s common stock. In addition, the Company determines the risk-free interest rate by selecting the U.S. Treasury constant maturity for the same maturity as the estimated life of the option quoted on an investment basis in effect at the time of grant for that business day.
Estimating the percentage of share-based awards that are expected to vest, and in the case of performance stock units, the level of performance that will be achieved and the number of shares that will be earned, requires judgment. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. If actual results differ significantly from these estimates, stock-based compensation expense could be higher or lower and have a material impact on the accompanying Consolidated Financial Statements. Estimates of fair value are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made under ASC 718.
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Stock-based compensation expense for the three and nine months ended September 30, 2026, and 2025, was as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Instructional costs and services | $ | $ | $ | $ | |||||||||||||||||||
| Selling and promotional | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Incentive-based Compensation
The Company provides incentive-based compensation opportunities to certain employees through cash incentive and equity awards. The expense associated with these awards is reflected within the Company’s operating expenses. For the years ending December 31, 2026, and 2025, the Management Development and Compensation Committee of the Board approved annual incentive arrangements for senior management employees. The aggregate amount of awards payable, if any, is dependent upon the achievement of certain Company financial and operational goals and the satisfaction of individual performance goals. Given that the awards are generally contingent upon achieving annual objectives, final determination of the current year incentive awards cannot be made until after the results for the year are finalized. The Company recognizes the estimated fair value of performance-based restricted stock units by assuming the satisfaction of any performance-based objectives at the “target” level, which is the most probable outcome determined for accounting purposes at the time of grant and multiplying the corresponding number of shares earned based upon such achievement by the closing price of the Company’s stock on the date of grant. To the extent performance goals are not met, compensation cost is not ultimately recognized against the goals and, to the extent previously recognized, compensation cost is reversed. Amounts accrued are subject to change in future interim periods if actual future financial results or operational performance are better or worse than expected. During the three and nine months ended September 30, 2026, the Company recognized an aggregate incentive-based compensation expense of $1.5 million and $6.4 million, respectively, compared to an aggregate expense of $2.3 million and $7.3 million for the three and nine months ended September 30, 2025, respectively.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC 740, Accounting for Income Taxes. The Company determines its interim tax provision by applying the estimated income tax rate expected for the full calendar year to income before income taxes for the period adjusted for discrete items.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all ASUs issued by the FASB. All ASUs issued subsequent to the filing of the Annual Report on March 12, 2026, were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s consolidated financial position and/or results of operations.
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Note 3. Short-Term Investments
During the second quarter of 2026, the Company began investing in short‑term investments, with original maturities ranging from three months to one year. Short-term investments consist of the following as of September 30, 2026 (dollars in thousands):
| As of September 30, 2026 | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Short-term investments | Amortized Cost | Unrealized Gain | Unrealized (Loss) | Fair Value | |||||||||||||||||||
| Commercial paper | $ | $ | $ | $ | |||||||||||||||||||
| U.S. Treasury securities | ( | ||||||||||||||||||||||
| Total short-term investments | $ | $ | $ | ( | $ | ||||||||||||||||||
There were no 2.0 million and $5.4 million for the three and nine months ended September 30, 2026, respectively.
Note 4. Revenue
Disaggregation of Revenue
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Military+ | Health+ | Corporate and Other | Consolidated | ||||||||||||||||||||
| Instructional services, net of grants and scholarships | $ | $ | $ | ( | $ | ||||||||||||||||||
| Graduation fees | |||||||||||||||||||||||
| Textbook and other course materials | |||||||||||||||||||||||
| Other fees | |||||||||||||||||||||||
| Total Revenue | $ | $ | $ | ( | $ | ||||||||||||||||||
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| Three Months Ended September 30, 2025 | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Military+ | Health+ | Corporate and Other | Consolidated | ||||||||||||||||||||
| Instructional services, net of grants and scholarships | $ | $ | $ | $ | |||||||||||||||||||
| Graduation fees | |||||||||||||||||||||||
| Textbook and other course materials | |||||||||||||||||||||||
| Other fees | |||||||||||||||||||||||
| Total Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Military+ | Health+ | Corporate and Other | Consolidated | ||||||||||||||||||||
| Instructional services, net of grants and scholarships | $ | $ | $ | ( | $ | ||||||||||||||||||
| Graduation fees | |||||||||||||||||||||||
| Textbook and other course materials | |||||||||||||||||||||||
| Other fees | |||||||||||||||||||||||
| Total Revenue | $ | $ | $ | ( | $ | ||||||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Military+ | Health+ | Corporate and Other | Consolidated | ||||||||||||||||||||
| Instructional services, net of grants and scholarships | $ | $ | $ | $ | |||||||||||||||||||
| Graduation fees | |||||||||||||||||||||||
| Textbook and other course materials | |||||||||||||||||||||||
| Other fees | |||||||||||||||||||||||
| Total Revenue | $ | $ | $ | $ | |||||||||||||||||||
For the three and nine months ended September 30, 2026, Corporate and Other includes the elimination of intersegment revenue for courses taken by employees of APEI at a reportable segment or by employees of one reportable segment at the other reportable segment.
For the three and nine months ended September 30, 2025, Corporate and Other includes tuition and contract training revenue earned by GSUSA and the elimination of intersegment revenue for courses taken by employees of APEI at a reportable segment or by employees of one reportable segment at the other reportable segment.
Contract Balances and Performance Obligations
The Company had no
The Company recognizes a contract liability, or deferred revenue, when a student begins a course or starts a term. Deferred revenue at September 30, 2026, was $30.7 million and includes $21.3 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $9.5 million in consideration received in advance for future courses or terms, or student deposits. Deferred revenue represents the Company’s performance obligation to transfer future instructional services to students. Deferred revenue at December 31, 2025, was $23.0 million and includes $15.0 million in future revenue that had not yet been earned for courses and terms that were in progress, as well as $8.0 million in student deposits.
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The Company has elected, as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with students that have an expected duration of one year or less.
When the Company begins satisfying its performance obligations, a contract receivable is created, resulting in accounts receivable on the accompanying Consolidated Balance Sheets. The Company uses the portfolio approach, a practical expedient, to evaluate if a contract exists and to assess collectability at the time of contract inception based on historical experience. Contracts are subsequently reviewed for collectability if significant events or circumstances indicate a change.
The allowance for doubtful accounts is based on management’s evaluation of the status of existing accounts receivable. Among other factors, management considers the age of the receivable, the anticipated source of payment, and historical allowance considerations. Consideration is also given to any specific known risk areas among the existing accounts receivable balances. Recoveries of receivables previously written off are recorded when received. AMU, APU, and RU do not charge interest on past due accounts receivable. HCN charges interest on payment plans when a student graduates or otherwise exits the program. Interest charged by HCN on payment plans was not material for the periods presented.
Note 5. Leases
The Company has operating leases for office space and campus facilities and finance leases for certain copiers and printers. Leases are classified as operating leases unless they meet any of the criteria below to be classified as a finance lease:
•the lease transfers ownership of the asset at the end of the lease;
•the lease grants an option to purchase the asset that the lessee is expected to exercise;
•the lease term reflects a major part of the asset’s economic life;
•the present value of the lease payments equals or exceeds the fair value of the asset; or
•the asset is specialized with no alternative use to the lessor at the end of the term.
Operating Leases
The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Company leases corporate office space in Florida under an operating lease that expires in January 2029. The Company leases 27 campuses located in eight states for the Health+ Segment under operating leases that expire through January 2037. Prior to the GSUSA Sale Date, GSUSA leased classroom and administrative office space in Washington, D.C. and Honolulu, Hawaii.
Operating lease assets are right-of-use assets, or ROU assets, which represent the right to use an underlying asset for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in the Operating lease assets, net, and Operating lease liabilities, current and long-term, on the accompanying Consolidated Balance Sheets. These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments. The ROU asset includes all lease payments and excludes lease incentives.
Lease expense for operating leases is recognized on a straight-line basis over the lease term. There are no variable lease payments. Lease expense for the three and nine months ended September 30, 2026, was $3.4 million and $10.2 million, respectively, compared to $3.9 million and $13.3 million for the three and nine months ended September 30, 2025, respectively. Lease expense for the three and nine months ended September 30, 2025, included lease expense for leased classroom and administrative office space leased by GSUSA prior to the GSUSA Sale Date. These costs are primarily related to long-term operating leases but also include amounts for short-term leases with terms greater than 30 days that are not material. Cash paid for amounts included in the present value of operating lease liabilities during the three and nine months ended September 30, 2026, was $3.7 million and $10.3 million, respectively, compared to $4.3 million and $13.8 million for the three and nine months ended September 30, 2025, respectively, and is included in operating cash flows.
Loss on Leases
In the third quarter of 2025, the Company recorded a lease impairment of $0.1 million related to the voluntary closure of two Wisconsin campuses. The total loss on leases was $0.1
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Finance Leases
The Company leases copiers and printers pursuant to leases that are classified as finance leases and that expire in 2027. The Company pledged the assets financed to secure the outstanding leases. As of September 30, 2026, the total finance lease liability was $0.1 million, with an average interest rate of 7.00 %. The ROU assets are recorded within Property and equipment, net on the accompanying Consolidated Balance Sheets. Lease amortization expense associated with the Company’s finance leases was $0.1
The following tables present information about the amount and timing of cash flows arising from the Company’s operating and finance leases as of September 30, 2026 (in thousands):
| Maturity of Lease Liabilities (Unaudited) | Operating Leases | Finance Leases | ||||||
| 2026 (remaining) | $ | $ | ||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | ||||||||
| 2032 and beyond | ||||||||
| Total future minimum lease payments | $ | $ | ||||||
| Less: imputed interest | ( | ( | ||||||
| Present value of operating lease liabilities | $ | $ | ||||||
| Less: lease liabilities, current | ( | ( | ||||||
| Lease liabilities, long-term | $ | $ | ||||||
| Balance Sheet Classification (Unaudited) | |||||
| Current: | |||||
| $ | |||||
| Long-term: | |||||
| Total lease liabilities | $ | ||||
| Other Information (Unaudited) | |||||
| Weighted average remaining lease term (in years): | |||||
| Operating leases | |||||
| Finance leases | |||||
| Weighted average discount rate: | |||||
| Operating leases | % | ||||
| Finance leases | % | ||||
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Note 6. Goodwill and Intangible Assets
During the three months ended September 30, 2026, the Company performed a routine qualitative assessment of the Company’s Health+ Segment goodwill and indefinite-lived intangible assets recorded. As part of the assessment, the Company considered the events and circumstances expressly required by ASC 350, in addition to other entity-specific factors. Factors considered included financial and enrollment performance against internal targets, economic factors, and the continued favorable growth outlook for nursing education. After completing the qualitative review of goodwill and indefinite-lived intangible assets, the Company concluded it was more likely than not that the fair value of the Company’s Health+ Segment was more than its carrying value, and therefore, no quantitative impairment test and no impairment charge was necessary.
Note 7. Income Per Common Share
Income per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net income available to common stockholders is net income adjusted for preferred stock dividends declared and loss on redemptions of preferred stock. Diluted income per common share is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding, increased by the shares used in the per share calculation by the dilutive effects of restricted stock and option awards. The table below reflects the calculation of income per common share and the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted income per common share (in thousands, except per share amounts).
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Income per common share | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Preferred stock dividend | |||||||||||||||||||||||
| Loss on redemption of preferred stock | |||||||||||||||||||||||
| Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Income per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted income per common share | |||||||||||||||||||||||
| Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Effect of dilutive restricted stock and options | |||||||||||||||||||||||
| Diluted weighted average shares outstanding | |||||||||||||||||||||||
| Diluted income per common share | $ | $ | $ | $ | |||||||||||||||||||
There were no 4,000 and 29,000 anti-dilutive stock options, respectively, excluded from the calculation of diluted earnings per share.
For the three and nine months ended September 30, 2026, there were 8,000 zero and 25,000 anti-dilutive restricted shares, respectively, excluded from the calculation of diluted earnings per share.
Note 8. Long-Term Debt
On March 9, 2026, the Company entered into a Credit Agreement with PNC Bank, National Association, as administrative agent, or the Agent, and a syndicate of lenders, or the 2026 Credit Agreement. The 2026 Credit Agreement
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provides for (i) a $90.0 million senior secured term loan, or the 2026 Term Loan, and (ii) a senior secured revolving credit facility in an aggregate principal amount of up to $40.0 million, or the 2026 Revolving Credit Facility, or, together with the 2026 Term Loan, the 2026 Facilities, $25.0 million of which may be utilized for the issuance of letters of credit. The 2026 Revolving Credit Facility also includes a $5.0 million subfacility for swing line loans. The 2026 Facilities are scheduled to mature on March 9, 2031, or the Maturity Date.
The 2026 Credit Agreement replaces that certain Credit Agreement dated as of September 1, 2021, as amended, by and among the Company, as borrower, the lenders from time to time party thereto, and Macquarie Capital Funding, LLC, as administrative agent and collateral agent, or the Prior Credit Agreement. The 2026 Revolving Credit Facility replaces the Company’s prior $20.0 million senior secured revolving credit facility under the Prior Credit Agreement, and the proceeds of the 2026 Term Loan, together with cash on hand, were used to repay the approximately $96.4 million principal amount outstanding under the Company’s prior $175.0 million term loan under the Prior Credit Agreement. In connection with this extinguishment of debt, the Company recorded a loss on extinguishment of debt of $1.7 million, primarily related to the write-off of unamortized deferred financing costs. The loss is included in loss on extinguishment of debt in the accompanying Consolidated Statements of Income for the nine months ended September 30, 2026.
Under the 2026 Credit Agreement, outstanding borrowings under the 2026 Facilities bear interest at a rate per annum (subject to increase during an event of default) of a Secured Overnight Financing Rate, or SOFR rate, plus a margin ranging from 1.75 % to 2.75 %, depending on the Company’s Consolidated Total Net Leverage Ratio (as defined in the 2026 Credit Agreement). A commitment fee ranging from 0.20 % to 0.35 %, also depending on the Company’s Consolidated Total Net Leverage Ratio, is payable quarterly in arrears based on the average daily unused amount of the commitments under the 2026 Revolving Credit Facility. The Consolidated Total Net Leverage Ratio reflects a ratio of consolidated total indebtedness, net of unrestricted cash and cash equivalents up to $100.0 million, to consolidated EBITDA. As of September 30, 2026, the interest rate applicable to the 2026 Facilities was 5.44 %.
Interest expense related to the Company’s credit agreements was $1.3 million and $5.0 million for the three and nine months ended September 30, 2026, respectively, compared to $2.5 million and $7.3 million for the three and nine months ended September 30, 2025, respectively.
The Company is required to make principal payments of the 2026 Term Loan on the last day of each quarter, which commenced with the quarter ended June 30, 2026, in an amount equal to approximately $1.1 million for the first three quarterly payments, approximately $1.7 million for the following eight quarterly payments and approximately $2.3 million for the final eight quarterly payments prior to the Maturity Date. Quarterly principal payments of the 2026 Term Loan will continue until the Maturity Date, on which date (i) the outstanding principal amount of the 2026 Term Loan, together with accrued and unpaid interest thereon and other amounts owed under the 2026 Credit Agreement, will be required to be paid in full and (ii) the outstanding principal amount of any borrowings under the 2026 Revolving Credit Facility, together with accrued and unpaid interest thereon and any other amounts owed under the 2026 Revolving Credit Facility, will be required to be paid in full. Subject to certain exceptions, the Company is also required to make mandatory prepayments of the 2026 Term Loan with the proceeds of asset sales, casualty and condemnation events, and unpermitted debt issuances. The Company may make voluntary prepayments of the borrowings under the 2026 Facilities at any time without premium or penalty. There were no borrowings outstanding under the 2026 Revolving Credit Facility as of September 30, 2026.
The 2026 Facilities are and will be guaranteed by APUS and certain of the Company’s future subsidiaries that are required to become a party thereto as guarantors, or Guarantors. The obligations of the Company and the Guarantors under the 2026 Credit Agreement are secured by a pledge of substantially all of their respective assets, pursuant to the terms of the Security and Pledge Agreement dated as of March 9, 2026, by and among the Agent, the Company, and the Guarantors from time to time party thereto.
The 2026 Credit Agreement contains customary affirmative and negative covenants, including limitations on the Company’s and its subsidiaries’ ability, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions, make capital expenditures, and enter into affiliate transactions, in each case, subject to certain exceptions, as well as customary representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the 2026 Facilities. In addition, the 2026 Credit Agreement contains financial covenants that require the Company to (i) maintain a Consolidated Total Net Leverage Ratio of no greater than 2.50 to 1.00, (ii) maintain a Consolidated Interest Coverage Ratio of no less than 2.50 to 1.00, and (iii) maintain a minimum balance of domestic unrestricted cash and cash equivalents of $40.0 million. As of September 30, 2026, the Company was in compliance with all financial covenants.
Long-term debt consists of the following as of September 30, 2026, and December 31, 2025 (in thousands):
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| As of September 30, 2026 | As of December 31, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Credit agreement | $ | $ | |||||||||
| Less: Deferred financing fees | ( | ( | |||||||||
| Total debt | |||||||||||
| Less: Current portion | ( | ||||||||||
| Long-Term Debt | $ | $ | |||||||||
Scheduled maturities of long-term debt as of September 30, 2026, are as follows (in thousands):
| Maturities of Long-Term Debt (Unaudited) | Loan Payments | ||||
| 2026 (remaining) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| Total | $ | ||||
Note 9. Segment Information
The Company’s Chief Executive Officer, as the CODM, organizes the Company, manages resource allocations, and measures performance among the Company’s reportable segments. The Company has two reportable segments: Military+ Segment and Health+ Segment. The Company has recast its historical results to reflect this change. For additional details, please refer to “Note 1. Nature of the Business” to the accompanying Consolidated Financial Statements.
Corporate and Other includes unallocated corporate activity and eliminations to reconcile segment results to the Consolidated Financial Statements, and, prior to the GSUSA Sale Date, included GSUSA revenue and expenses. GSUSA did not meet the quantitative thresholds to qualify as a reportable segment.
The CODM reviews information about each reportable segment’s revenue and categorized expenses, and allocates resources to, and measures the performance of, each reportable segment using reportable segment operating income (loss). The CODM does not evaluate reportable segment asset or liability information.
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A summary of financial information by reportable segment is as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Unaudited | Unaudited | ||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||
| Military+ Segment | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Instructional costs and services | |||||||||||||||||||||||
| Selling and promotional | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Other (1) | |||||||||||||||||||||||
| Income from operations before interest and income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Health+ Segment | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Instructional costs and services | |||||||||||||||||||||||
| Selling and promotional | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Other (2) | |||||||||||||||||||||||
| Loss from operations before interest and income taxes | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Corporate and Other | |||||||||||||||||||||||
Revenue (4) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Instructional costs and services | ( | ( | |||||||||||||||||||||
| Selling and promotional | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
Other (3) | |||||||||||||||||||||||
| Loss from operations before interest and income taxes | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Total reportable segment revenue | $ | $ | $ | $ | |||||||||||||||||||
Corporate and Other revenue (4) | ( | ( | |||||||||||||||||||||
| Total consolidated revenue | $ | $ | $ | $ | |||||||||||||||||||
| Total reportable segment income from operations before interest and income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Corporate and Other (loss) from operations before interest and income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Total consolidated income from operations before interest and income taxes | $ | $ | $ | $ | |||||||||||||||||||
| (1) | Includes loss on assets held for sale, loss on disposals of long-lived assets, and depreciation and amortization expense. | ||||
| (2) | Includes loss on disposals of long-lived assets and depreciation and amortization expense. | ||||
| (3) | Includes depreciation and amortization expense. | ||||
| (4) | Includes the elimination of intersegment revenue for courses taken by employees of APEI at a reportable segment or by employees of one reportable segment at the other reportable segment. | ||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Unaudited | Unaudited | ||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Military+ Segment | $ | $ | $ | $ | |||||||||||||||||||
| Health+ Segment | |||||||||||||||||||||||
| Total reportable segment depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
| Corporate and Other | |||||||||||||||||||||||
| Total consolidated depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
| Interest income (expense), net | |||||||||||||||||||||||
| Military+ Segment | $ | $ | $ | $ | |||||||||||||||||||
| Health+ Segment | |||||||||||||||||||||||
| Total reportable segment interest income (expense), net | $ | $ | $ | $ | |||||||||||||||||||
| Corporate and Other | ( | ( | ( | ||||||||||||||||||||
| Total consolidated interest income (expense), net | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Income tax expense (benefit) | |||||||||||||||||||||||
| Military+ Segment | $ | $ | $ | $ | |||||||||||||||||||
| Health+ Segment | ( | ( | ( | ( | |||||||||||||||||||
| Total reportable segment income tax expense | $ | $ | $ | $ | |||||||||||||||||||
| Corporate and Other | ( | ( | ( | ( | |||||||||||||||||||
| Total consolidated income tax expense | $ | $ | $ | $ | |||||||||||||||||||
Note 10. Contingencies
The Company accrues for costs associated with contingencies, including, but not limited to, regulatory compliance and legal matters, when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses associated with any such contingency. From time to time, the Company is involved in legal matters in the normal course of its business.
Note 11. Concentration
The Company’s students utilize various payment sources and programs to finance their education expenses, including funds from: the U.S. Department of War, or DoW, tuition assistance programs; education benefit programs administered by the U.S. Department of Veterans Affairs, or VA; federal student aid from Title IV programs; and cash and other sources.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| DoW tuition assistance programs | % | % | |||||||||||||||||||||
| VA education benefits | % | % | |||||||||||||||||||||
| Title IV programs | % | % | |||||||||||||||||||||
| Cash and other sources | % | % | |||||||||||||||||||||
A summary of Health+ Segment revenue, by academic unit and primary funding source, is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| RU | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Title IV programs | % | % | |||||||||||||||||||||
| Cash and other sources | % | % | |||||||||||||||||||||
| VA education benefits | % | % | |||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| HCN | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Title IV programs | % | % | |||||||||||||||||||||
| Cash and other sources | % | % | |||||||||||||||||||||
| VA education benefits | % | % | |||||||||||||||||||||
HCN's Title IV funding as a percentage of revenue declined to 77 % for the three months ended September 30, 2026, from 84 % in the prior year period, primarily due to timing of Title IV program fund disbursements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this Quarterly Report on Form 10-Q, or this Quarterly Report, “we,” “our,” “us,” the “Company” and similar terms refer to American Public Education, Inc., or APEI, and its subsidiary brands collectively unless the context indicates otherwise. All quarterly information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations is unaudited. The following discussion of our historical results of operations and our liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements and related notes that appear elsewhere in this Quarterly Report and the audited financial information and related notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations and other disclosures, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or our Annual Report.
Forward-Looking Statements
This Quarterly Report contains forward-looking statements intended to be covered by the safe harbor provisions for forward-looking statements in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “will,” or “may,” or other words or expressions that convey future events, conditions, circumstances, or outcomes to identify these forward-looking statements. Forward-looking statements in this Quarterly Report include, without limitation, statements regarding:
•changes in and our efforts and ability to comply with the extensive regulatory framework applicable to our industry, including the 90/10 Rule and financial responsibility standards, as well as state law and regulations and accrediting agency requirements, and the expected impacts of our efforts to comply and any non-compliance;
•federal appropriations and other budgetary matters, including government shutdowns, and the estimated impact of such matters on us and our prospective and current students, and our efforts to mitigate impacts;
•actions by the U.S. Department of Education, or ED, institutional and programmatic accreditors, and state authorizing agencies and expectations regarding the effects of those actions;
•our ability to manage, grow, and diversify our business and execute our business initiatives and strategy;
•legislative and regulatory changes, shifts in regulatory priorities, restrictions on the function, operations, and budgets of federal agencies, including ED, as a result of U.S. presidential and administration transitions and presidential directives regarding governmental actions;
•our ability to maintain, develop, and grow our technology infrastructure, including with respect to any current or planned use of artificial intelligence, or transform our technology infrastructure and realize the benefits of any such transformation;
•our cash needs and expectations regarding cash flow from operations, including the impacts of our debt service;
•our ability to undertake initiatives to improve the learning experience, attract students who are likely to persist, and improve student outcomes;
•changes to and expectations regarding our student enrollment, net course registrations, and the composition of our student body, including the pace of such changes;
•our conversion of prospective students to enrolled students and our retention of active students;
•our ability to update and expand the content of existing programs and develop new programs to meet emerging student needs and marketplace demands, and our ability to do so in a cost-effective manner or on a timely basis;
•our branding and marketing of our academic units;
•our ability to leverage our investments in support of our initiatives, students, and academic units;
•our maintenance and expansion of our relationships and partnerships and the development of new relationships and partnerships;
•actions by the Department of War, or DoW, or branches of the U.S. Armed Forces, including actions related to participating in DoW tuition assistance, or TA, programs, our responses to those actions, and expectations regarding the effects of those actions and responses;
•changes in enrollment in postsecondary degree-granting institutions and workforce needs;
•the competitive environment in which we operate;
•our ability to achieve the intended benefits of our cost savings initiatives and revenue-generating efforts;
•the expected benefits of insourcing and outsourcing information technology services to our operations and third-party vendors, respectively;
•the expected impact on our students and our business from campus closures and consolidations;
•our financial performance generally; and
•our expectations and estimates regarding tax and accounting matters.
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Forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance, taking into account information currently available to us, and are not guarantees of future results. There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. Risks and uncertainties involved in the forward-looking statements include, among others:
•potential changes to the ED’s and other federal government agencies’ structure, policies, priorities, and oversight, including as a result of federal elections and the Trump administration’s stated intention and actions to dismantle ED;
•any adverse impacts of government shutdowns on APUS’s net course registrations and our results of operations, and our inability to realize the intended benefits of any efforts to mitigate any such impacts;
•our dependence on the effectiveness of our ability to attract students who persist in our programs;
•our inability to effectively market our programs or expand into new markets;
•the loss of our and our students’ ability to receive funds under TA programs, the reduction, elimination, or suspension of TA, or disruptions due to systems used to request TA;
•our inability to maintain enrollments from military students, including due to changes in military activity and deployments, budgets, and government shutdowns;
•our inability to predict whether ED will grant borrower defense to repayment, or BDTR, claims;
•adverse effects of changes our academic units make to improve the student experience and enhance each unit’s ability to identify and enroll students who are likely to succeed;
•our failure to successfully adjust to future market demands;
•risks associated with the recent combination of American Public University System, or APUS, Rasmussen University, or RU, and Hondros College of Nursing, or HCN, into one consolidated institution encompassing all APUS, RU, and HCN programs, campuses, and operations, or the Combination;
•our failure to comply with regulatory and accrediting agency requirements or to maintain institutional accreditation, the consequences thereof, and risks related to any actions we may take to prevent or correct such failure;
•our failure to meet applicable National Council Licensure Examination, or NCLEX, pass rates and other NCLEX standards, and the consequences thereof;
•our failure to comply with the 90/10 Rule;
•our loss of eligibility to participate in student financial aid programs authorized under Title IV, or Title IV programs, of the Higher Education Act of 1965, as amended, or the HEA, or ability to process Title IV financial aid;
•our inability to recognize the intended benefits of our cost savings and reduction and revenue-generating efforts;
•economic and market conditions in the United States and abroad and changes in interest rates;
•risks related to business combinations, acquisitions, divestitures, and other strategic transactions, including, as applicable, integration challenges, business disruption, dilution of stockholder value, financial charges, and diversion of management attention;
•risks related to our indebtedness; and
•our dependence on and need to continue to invest in our technology infrastructure.
Forward-looking statements should be considered in light of these factors and the factors described elsewhere in this Quarterly Report, in the “Risk Factors” section of this Quarterly Report and our Annual Report, and elsewhere in our various filings with the Securities and Exchange Commission, or the SEC. It is important that you read these factors and the other cautionary statements made in this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance, or achievements may vary materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. You should also read the more detailed description of our business in our Annual Report when considering forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date of this Quarterly Report. We undertake no obligation to publicly update any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, or otherwise, except as required by law.
Overview
Background
We are a provider of online and campus-based postsecondary education to approximately 106,600 students through our subsidiary, American Public University System, Inc., which currently operates American Public University System, or the System. The System offers purpose-built education programs designed to prepare individuals for productive contributions to their professions and society and opportunities designed to advance students in their current professions or to help them prepare for their next career. The System is accredited and licensed or otherwise authorized by state authorities to offer postsecondary education programs, to the extent it believes such licenses or authorizations are required and is certified by ED to participate in
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Title IV programs.
In January 2025, we announced the Combination, a process that after two steps resulted in the System, a combined Higher Learning Commission, or HLC, accredited institution. Effective March 2, 2026, or the Merger Date, we completed the first step of the Combination, the merger of the legal entities that owned and operated APUS, RU, and HCN, with American Public University System, Inc. surviving the merger, or the Legal Merger, and we subsequently notified ED that the Legal Merger occurred. On August 4, 2026, ED approved, and we completed, the second step of the Combination, the combination of APUS, RU, and HCN into one HLC-accredited institution, or the Institutional Combination.
We previously provided our educational services through three reportable segments: the APUS Segment, the RU Segment, and the HCN Segment. Beginning in fiscal 2026, in connection with the Combination, we now provide our educational services through the following two reportable segments:
•Our Military+ Segment, which was formerly the APUS Segment, provides online postsecondary education to approximately 87,500 adult learners, directed primarily at the needs of the military, veterans, extended military and veteran families, and other public service and service-minded communities through two brands: American Military University, and American Public University. As of September 30, 2026, approximately 61% of Military+ Segment students self-reported that they served in the military on active duty at the time of initial enrollment.
•Our Health+ Segment, consisting of the businesses that formerly comprised the RU Segment and the HCN Segment, provides nursing- and health sciences-focused and other postsecondary education, including business, technology, and education. Health+ Segment provides these education services to approximately 19,100 students at 27 campuses in eight states and online through RU and HCN. As of September 30, 2026, on-ground enrollment was approximately 11,100, and online enrollment was approximately 8,000 students.
Adjustments to reconcile segment results to the Consolidated Financial Statements are included in Corporate and Other. These adjustments include unallocated corporate activity and eliminations, and, prior to July 25, 2025, or the GSUSA Sale Date, the operational activities of Graduate School USA, or GSUSA. Prior period segment disclosures have been recast to conform to the current period presentation.
Legislative and Regulatory Activity
The Combination of APUS, RU, and HCN
We were required to obtain HLC approval prior to effectuating the Combination, and pursuant to ED’s requirements, undertook the Combination in two steps: (i) the Legal Merger and (ii) the Institutional Combination. In February 2026, HLC approved the continuation of accreditation of APUS and RU after the Legal Merger and acknowledged our intent to consolidate the three institutions into one HLC accreditation. On April 24, 2026, HLC approved the continuation of accreditation following the Institutional Combination, and on June 12, 2026, and July 10, 2026, HLC reaffirmed that approval. On August 4, 2026, ED approved, and we completed, the Institutional Combination. HLC performed a site visit on August 18, 2026, in connection with the Legal Merger and the Institutional Combination. In connection with the Institutional Combination, HCN voluntarily relinquished its Accrediting Bureau of Health Education Schools institutional accreditation, effective August 7, 2026.
For additional details regarding regulatory treatment of the Combination, see the Regulatory Environment in our Annual Report captioned “Regulatory Environment – Accreditation – Institutional Accreditation” and “Regulatory Environment – Accreditation – The Planned Combination of APUS, RU, and HCN”, and for additional information regarding risks related to the Combination, see the Risk Factor in our Annual Report with the caption beginning “The planned combination of APUS, RU, and HCN...”.
Rasmussen University
In June 2025, the Minnesota Board of Nursing, or MBN, issued a stipulation and consent order requiring RU’s Moorhead, Minnesota Associate Degree in Nursing, or ADN program to, among other things, reach applicable NCLEX pass rate standards by June 30, 2026. The program was not anticipated to reach the standards by that date, and so on June 1, 2026, RU informed MBN that it intends to voluntarily close the program effective December 31, 2027. Current enrollment in the Moorhead, Minnesota ADN program is approximately 85 students, or less than 1% of Health+’s current total enrollment. Most current students enrolled in the Moorhead, Minnesota ADN program currently have expected graduation dates on or before the
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date RU intends to close the program. Internal degree completion pathways will be made available to those Moorhead, Minnesota ADN students whose expected completion dates extend beyond December 31, 2027.
In February 2026, ED's Office of Inspector General, or ED OIG, notified RU that it would conduct an inspection of RU's process to address unusual enrollment history flags for the 2024-2025 award year. In August 2026, ED OIG completed the inspection and issued a formal report stating that the inspection resulted in no findings.
Borrower Defense to Repayment Claims
Between August 1, 2026 and October 31, 2026, our academic units received 340 BDTR claims from ED, seeking in the aggregate a discharge of approximately $7.2 million in loans. Our academic units dispute the validity of these claims and have filed responses to them with ED. We are unable to predict whether ED will grant BDTR relief for the claims, or if so, whether it will seek recoupment from us. For additional information regarding risks related to BDTR claims, see the Risk Factor in our Annual Report captioned “ED rules related to BDTR claims may create significant liability that could have an adverse effect on our business and results of operations”.
The One Big Beautiful Bill Act
On May 1, 2026, ED published a rule, effective July 1, 2026, relating to student loan provisions in the One Big Beautiful Bill Act, or OBBBA. The rule modifies the definition of “professional degree” programs and makes other changes to the federal student loan programs, including changes to federal loan limits. The loan changes could reduce student enrollment, increase student reliance on private loans, reduce funding for enrolled students, and increase administrative burdens. On June 24, 2026, pending resolution of a court challenge, a U.S. district court preliminarily stayed a portion of the rule’s “professional degree” definition that, among other things, excludes certain advanced nursing degrees. On June 29, 2026, ED issued guidance that identifies certain advanced nursing degrees as “professional degree” programs during the stay, and it announced its continued defense of the rule’s definition. There is no assurance as to the stay’s duration or any responsive actions ED may take to the court challenge.
On July 1, 2026, ED published a rule for the OBBBA accountability framework, the Student Tuition and Transparency System, or STATS, and Earnings Accountability framework, generally effective July 1, 2027, with certain reporting changes effective July 1, 2026. Under the rule, for programs to remain eligible for Direct Loans, median annual earnings of program graduates must meet specified earnings thresholds. Programs failing to meet the standard for two of three consecutive years will lose eligibility for Direct Loans, and institutions will also lose other Title IV eligibility for programs failing to satisfy the measure if at least half their Title IV recipients or half their Title IV funds come from failing programs. Institutions will be required to warn students enrolled in or seeking to enroll in failing programs.
State Authorization/Licensure
The State of Illinois enacted legislation effective January 2024 that temporarily removed all nursing programs, including RU’s Illinois ADN program, from probationary status until September 2026, or the probationary status moratorium. On July 10, 2026, the State of Illinois enacted legislation regarding measurement of NCLEX pass rates and of nursing education programs that fail to satisfy the requisite pass rate following expiry of the probationary status moratorium. The legislation prevents programs from being placed on probation until calendar year 2026 NCLEX results can be measured and provides that any program with a calendar year 2026 pass rate below the 75% threshold will receive a written warning of noncompliance from the Illinois Department of Financial and Professional Regulation, or IDFPR, rather than being placed on probationary status. The IDFPR has publicly reported that RU’s Illinois ADN program has not met the required NCLEX pass rate for the prior six years. RU’s Illinois ADN program is currently approved; however, there can be no assurance that IDFPR will not seek to impose different or additional requirements as a result of failures to satisfy the required NCLEX pass rate for consecutive years.
Cohort Default Rate
To remain eligible to participate in Title IV programs, an educational institution’s student loan cohort default rates must remain below certain levels. Pursuant to HEA requirements, if the cohort default rate in any single year exceeds 40%, or is 30% or greater for three consecutive years, an institution loses eligibility to participate in Title IV programs. If an institution’s cohort default rate is equal to or greater than 30% in any single year, it must establish a default prevention task force.
In September 2026, ED released final official cohort default rates for institutions for federal fiscal year 2023. ED reported a 0.4% cohort default rate for APUS, a 0.2% cohort default rate for RU, and a 0.5% cohort default rate for HCN. The
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rates were favorably impacted by regulatory relief provided in connection with the COVID-19 pandemic. The end of COVID-19 pandemic-related regulatory relief may lead to higher official cohort default rates in future fiscal years. As a result of the Combination, ED will calculate and publish in future years a single cohort default rate for the System that will include all applicable borrowers from APUS, RU, and HCN rather than separate rates for each academic unit. Each of the reported cohort default rates above predates and does not take into account the Combination.
Tuition Assistance Programs
A significant portion of our revenue is derived from the System’s participation in the DoW’s TA programs. The versions of the National Defense Authorization Act, or NDAA, passed by the U.S. House of Representatives and under consideration by the U.S. Senate both address an increase in the limit for reimbursement under the TA programs, though the ultimate passage of the NDAA and whether language will be included on the TA programs is uncertain. We understand that DoW is also currently evaluating potential changes to the TA programs, which, among other things, could include higher or lower reimbursement levels based on new classifications of TA-eligible programs. At this time, we do not know if the DoW will make any changes to the TA programs, and if they make any changes what they would be, and therefore we cannot estimate what the impact would be on our results of operations if any such changes are made.
Summary of Results
Consolidated revenue for the three months ended September 30, 2026, increased to $169.1 million from $163.2 million, or by 3.6%, as compared to the prior year period. The growth was primarily driven by increased enrollment in our Health+ Segment, which was partially offset by the absence of revenue from GSUSA due to its sale in July 2025. Our net income for the three months ended September 30, 2026, was $5.9 million, compared to $5.6 million in the prior year period, an increase of $0.3 million. The increase in net income for the three months ended September 30, 2026, was primarily related to the increase in revenue of $5.9 million and an increase in net interest income of $1.5 million, partially offset by an increase in operating expenses of $7.7 million, as compared to the prior year period. Our operating margin declined to 4.7% for the three months ended September 30, 2026, as compared to 5.9% in the prior year period.
Consolidated revenue for the nine months ended September 30, 2026, increased to $515.6 million from $490.5 million, or by 5.1%, as compared to the prior year period. The growth was primarily driven by increased enrollment in our Health+ Segment and higher net course registrations in our Military+ Segment, partially offset by the absence of revenue from GSUSA due to its sale in July 2025. Our net income for the nine months ended September 30, 2026, was $33.4 million, compared to $18.9 million in the prior year period, an increase of $14.4 million. The increase in net income for the nine months ended September 30, 2026, was primarily related to the increase in revenue of $25.1 million, partially offset by an increase in operating expenses of $11.0 million and the extinguishment of debt of $1.7 million, as compared to the prior year period. Our operating margin improved to 8.4% for the nine months ended September 30, 2026, as compared to 5.8% in the prior year period.
Military+ Segment net course registrations for the three months ended September 30, 2026, increased to approximately 103,800 from approximately 100,000, an increase of 3,800, or 3.8%, as compared to the prior year period. Military+ Segment revenue for the three months ended September 30, 2026, decreased to $82.7 million from $83.1 million, or by 0.5%, as compared to the prior year period. Tuition revenue varies from period to period based on the number of students enrolled at our academic units, the number of and types of courses that students take, student payor source, the mix of programs students attend, the number of students starting courses each month during the period, and the timing of course starts each month or term. Military+ Segment revenue for the three months ended September 30, 2026 decreased primarily as a result of the timing of course starts in the three months ended September 30, 2026, when compared to the prior period. Military+ Segment net course registrations for the nine months ended September 30, 2026, increased to approximately 308,600 from approximately 298,800, an increase of 9,800, or 3.3%, as compared to the prior year period. Military+ Segment revenue for the nine months ended September 30, 2026, increased to $257.7 million from $248.8 million, or by 3.6%, as compared to the prior year period. Military+ Segment operating margin declined to 25.9% for the three months ended September 30, 2026, from 30.4% in the prior year period, and increased to 29.4% for the nine months ended September 30, 2026, from 28.5% in the prior year period.
Health+ Segment enrollment for the three months ended September 30, 2026, increased to approximately 19,100 from approximately 18,600, an increase of 500, or 2.5%, as compared to the prior year period. Health+ Segment revenue for the three months ended September 30, 2026, increased to $86.4 million from $79.3 million, or by 9.0%, as compared to the prior year period. Health+ Segment enrollment for the nine months ended September 30, 2026, increased approximately 5.5%, as compared to the prior year period. Health+ Segment revenue for the nine months ended September 30, 2026, increased to $258.0 million from $233.9 million, or by 10.3%, as compared to the prior year period. Health+ Segment operating margin improved to negative 2.2% for the three months ended September 30, 2026, from negative 2.7% in the prior year period, and improved to negative 0.4% for the nine months ended September 30, 2026, from negative 2.3% in the prior year period.
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Our financial results for the three and nine months ended September 30, 2025, reflect the financial results of GSUSA in Corporate and Other.
Critical Accounting Estimates
Goodwill and indefinite-lived intangible assets. Goodwill is the excess of the purchase price of an acquired business over the fair value of the assets acquired and liabilities assumed, including identifiable intangible assets. Goodwill is not amortized. Goodwill is reported at the reporting unit level that we have defined as our reportable segments. Before the Merger Date, in connection with our acquisitions of RU and HCN, we recorded $217.4 million and $38.6 million of goodwill, respectively, in our Health+ Segment. We later recorded non-cash impairment charges reducing the carrying value of Health+ Segment goodwill to $33.0 million and $26.6 million for RU and HCN, respectively. No goodwill was recorded in our Military+ Segment.
In addition to goodwill, before the Merger Date, in connection with the acquisitions of RU and HCN, we recorded identified intangible assets with an indefinite useful life in the aggregate amount of $51.0 million and $3.7 million, respectively, in our Health+ Segment, which included intangible assets related to trade name, accreditation, licensing, and Title IV, and affiliate agreements. We later recorded non-cash impairment charges reducing the carrying value of RU indefinite-lived identified intangible assets to $24.5 million. There were no indefinite-lived intangible assets in our Military+ Segment.
We recorded $35.5 million and $4.4 million of identified intangible assets with a definite useful life in connection with the acquisitions of RU and HCN, respectively. There were no definite-lived intangible assets in our Military+ Segment.
We test goodwill and indefinite-lived intangible assets for impairment at least annually, and more frequently if events and circumstances exist that would more likely than not reduce the fair value of the reporting unit below its carrying amount. The process of evaluating goodwill and indefinite-lived intangible assets for impairment is subjective and requires significant judgment and estimates. When performing an optional qualitative analysis, we consider many factors, including general economic conditions, industry and market conditions, certain cost factors, financial performance and key business drivers (for example, student enrollment), long-term operating plans, and potential changes to significant assumptions and estimates used in the most recent fair value analysis. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions and estimates. Actual results may differ and have a material impact on our results of operations and financial position, and subsequent events are not necessarily indicative of the reasonableness of the original assumptions or estimates.
We estimate fair value in our quantitative analysis by weighting the results from two different valuation approaches. They are: (i) discounted cash flow and (ii) guideline public company. Under the discounted cash flow method, we determined fair value by discounting the estimated future cash flows of our Health+ Segment at their estimated weighted-average cost of capital. We incorporate the use of projected financial information and a discount rate that are developed using market participant-based assumptions. The cash-flow projections are based on three-year financial forecasts developed by management that include revenue projections, capital spending trends, and investment in working capital to support anticipated revenue growth, which are updated at least annually and approved by management. Under the guideline public company method, we used pricing multiples from other public companies in the public higher education market to determine the fair value of the reporting unit. Values derived under the two valuation methods are then weighted to estimate the reporting unit enterprise value. If we determine that the carrying amount of a reporting unit exceeds its fair value, we then calculate the implied fair value of the reporting unit goodwill as compared to its carrying amount to determine the appropriate impairment charge. Although we believe our assumptions are reasonable, actual results may vary significantly and may expose us to material impairment charges in the future. Our methodology for determining fair values remained consistent for the periods presented.
In connection with the Combination, we reassessed the reporting unit structure. As a result, RU and HCN reporting units were combined into a single reporting unit, Health+. The change did not result in a reallocation of goodwill and had no impact on the total carrying amount of goodwill.
During the three months ended September 30, 2026, in connection with the preparation of this Quarterly Report, we performed a routine qualitative assessment of our Health+ Segment goodwill and indefinite-lived intangible assets. As part of the assessment, we considered the events and circumstances expressly required by ASC 350, in addition to other entity-specific factors. Factors considered included financial and enrollment performance against internal targets, economic factors, and the continued favorable growth outlook for nursing education. After completing the qualitative review of goodwill and indefinite-lived intangible assets, the Company concluded it was more likely than not that the fair value of our Health+ Segment was more than its carrying value, and therefore, no quantitative impairment test and no impairment charge was necessary.
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Significant assumptions inherent to valuation methodologies for goodwill and indefinite-lived intangible assets include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in the higher education market. Future changes, including minor changes in significant assumptions or other factors, including revenue, operating income, valuation multiples, and other inputs to the valuation process may result in future impairment charges, and those charges could be material.
For more information regarding our Critical Accounting Policies and Use of Estimates, see the “Critical Accounting Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
Results of Operations
Below we have included a discussion of our operating results and material changes in our operating results during the three and nine months ended September 30, 2026, compared to the three and nine months ended September 30, 2025. Our revenue and operating results normally fluctuate as a result of seasonal or other variations in our enrollments and the level of expenses in our reportable segments. Our student population varies as a result of new enrollments, graduations, student attrition, the success of our marketing programs, and other reasons that we cannot always anticipate. We expect quarterly fluctuations in operating results to continue as a result of various enrollment patterns and changes in revenue and expenses.
Military+ Segment net course registrations for the three months ended September 30, 2026, increased to approximately 103,800 from approximately 100,000, an increase of 3,800, or 3.8%, as compared to the prior year period primarily due to increases in military registrations from students utilizing TA and increases in students utilizing financial aid. Military+ Segment net course registrations for the nine months ended September 30, 2026, increased to approximately 308,600 from approximately 298,800, an increase of 9,800, or 3.3%, as compared to the prior year period primarily due to increases in military registrations from students utilizing TA, students utilizing financial aid, and military-affiliated students utilizing education benefit programs administered by the U.S. Department of Veterans Affairs, or VA. Operating margin decreased to 25.9% for the three months ended September 30, 2026, from 30.4% in the prior year period and increased to 29.4% for the nine months ended September 30, 2026, from 28.5% in the prior year period. Operating margin for the three months ended September 30, 2026, decreased primarily due to an increase of $2.1 million in advertising costs, as compared to the prior year period. Operating margin for the nine months ended September 30, 2026, increased primarily due to the $8.9 million increase in revenue, a $3.7 million decrease in employee compensation costs, and a $1.0 million decrease in loss on assets held for sale, partially offset by an increase of $5.3 million in advertising costs, as compared to the prior year period.
Health+ Segment total enrollment for the three months ended September 30, 2026, increased to approximately 19,100 from approximately 18,600, an increase of 500, or 2.5%, as compared to the prior year period, driven by a 6.8% increase in on-ground enrollment partially offset by a 2.9% decrease in online enrollment. Health+ Segment total enrollment for the nine months ended September 30, 2026, increased approximately 5.5%, as compared to the prior year period, driven by a 8.2% increase in on-ground enrollment and a 2.1% increase in online enrollment. Health+ Segment operating margin improved to a negative 2.2% for the three months ended September 30, 2026, from negative 2.7%, in the prior year period. The improvement in the operating margin for the three months ended September 30, 2026, was primarily due to the $7.2 million revenue increase, partially offset by increases of $2.6 million in bad debt expense caused by higher student receivable balances resulting from delays in Title IV financial aid processing due to delays in ED’s effectuation of changes in its system to reflect the Combination and to a lesser degree by changes a vendor made to its systems to mitigate a cybersecurity risk, $2.3 million in advertising costs, and $2.3 million in employee compensation costs, as compared to the prior year period. Health+ Segment operating margin improved to a negative 0.4% for the nine months ended September 30, 2026, from negative 2.3% in the prior year period. The improvement in the operating margin for the nine months ended September 30, 2026, was primarily due to the $24.2 million revenue increase, a $1.2 million decrease in occupancy costs, partially offset by increases of $7.2 million in advertising costs, $4.7 million in employee compensation costs, $3.9 million in bad debt expense, and $3.1 million in classroom and course materials costs, as compared to the prior year period.
For a more detailed discussion of our results by reportable segment, refer to “Analysis of Operating Results by Reportable Segment” below.
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Analysis of Consolidated Statements of Income
The following table sets forth statements of income data as a percentage of revenue for the period indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Instructional costs and services | 44.3 | 45.8 | 43.9 | 46.5 | |||||||||||||||||||
| Selling and promotional | 24.7 | 22.1 | 23.2 | 21.7 | |||||||||||||||||||
| General and administrative | 23.2 | 21.3 | 21.9 | 22.3 | |||||||||||||||||||
| Depreciation and amortization | 2.3 | 2.4 | 2.3 | 2.5 | |||||||||||||||||||
| Loss on sale of subsidiary | — | 2.4 | — | 0.8 | |||||||||||||||||||
| Loss on assets held for sale | 0.3 | — | 0.1 | 0.3 | |||||||||||||||||||
| Loss on disposals of long-lived assets | 0.4 | 0.1 | 0.2 | 0.1 | |||||||||||||||||||
| Total costs and expenses | 95.3 | 94.1 | 91.6 | 94.2 | |||||||||||||||||||
| Income from operations before interest and income taxes | 4.7 | 5.9 | 8.4 | 5.8 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | (0.3) | — | |||||||||||||||||||
| Interest income (expense), net | 0.3 | (0.7) | 0.1 | (0.6) | |||||||||||||||||||
| Income from operations before income taxes | 5.0 | 5.3 | 8.2 | 5.2 | |||||||||||||||||||
| Income tax expense | 1.6 | 1.9 | 1.7 | 1.4 | |||||||||||||||||||
| Net income | 3.5 | 3.4 | 6.5 | 3.8 | |||||||||||||||||||
| Preferred stock dividend | — | — | — | 0.6 | |||||||||||||||||||
| Loss on redemption of preferred stock | — | — | — | 0.7 | |||||||||||||||||||
| Net income available to common stockholders | 3.5 | % | 3.4 | % | 6.5 | % | 2.5 | % | |||||||||||||||
Three Months Ended September 30, 2026, Compared to Three Months Ended September 30, 2025
Revenue. Our consolidated revenue for the three months ended September 30, 2026, was $169.1 million, an increase of $5.9 million, or 3.6%, compared to $163.2 million for the three months ended September 30, 2025. Revenue increased primarily due to a $7.2 million, or 9.0%, increase in revenue in our Health+ Segment, partially offset by a $0.8 million decrease in GSUSA revenue included in Corporate and Other for the period prior to the GSUSA Sale Date, and a $0.4 million, or 0.5%, decrease in revenue in our Military+ Segment. Our Health+ Segment revenue increase was primarily due to a 2.5% increase in total student enrollment and the impact of tuition increases in the second half of 2025. Our Military+ Segment revenue decrease was primarily due to the timing of course starts in the three months ended September 30, 2026, when compared to the prior year period.
Costs and expenses. Costs and expenses for the three months ended September 30, 2026, were $161.2 million, an increase of $7.7 million, or 5.0%, compared to $153.5 million for the three months ended September 30, 2025. Costs and expenses for the three months ended September 30, 2026, include $1.5 million in severance costs across both segments, $0.9 million in professional fees related to the Combination in Corporate and Other, and a $0.5 million non-cash loss on assets held for sale in our Military+ Segment. The results in the prior year period included a $3.9 million loss on sale of subsidiary in Corporate and Other related to the sale of GSUSA, $0.8 million in professional fees in Corporate and Other relating to the Combination and the sale of GSUSA, $0.6 million in severance costs in our Health+ Segment and Corporate and Other, and a $0.1 million loss on leases in our Health+ Segment. Costs and expenses for the three months ended September 30, 2026, as compared to the prior year period, excluding the items noted above, increased $10.2 million, or 6.9%, primarily due to increases of $4.4 million in advertising costs across both segments to drive increases in registrations and enrollment, $2.6 million in bad debt expense in our Health+ Segment caused by higher student receivable balances resulting from delays in Title IV financial aid processing due to delays in ED’s effectuation of changes in its system to reflect the Combination and to a lesser degree by changes a vendor made to its systems to mitigate a cybersecurity risk, $1.9 million in professional services costs primarily in Corporate
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and Other, and $1.7 million in other employee compensation costs primarily in our Health+ Segment, partially offset by a decrease of $1.7 million in Corporate and Other due to the sale of GSUSA in 2025. Costs and expenses as a percentage of revenue increased to 95.3% for the three months ended September 30, 2026, from 94.1% for the three months ended September 30, 2025.
Instructional costs and services expenses. Our instructional costs and services expenses for the three months ended September 30, 2026, were $74.9 million, an increase of $0.2 million, or 0.3%, compared to $74.7 million for the three months ended September 30, 2025. Instructional costs and services expenses increased primarily due to a $2.4 million increase in employee compensation costs in our Health+ Segment related to increased enrollment and severance costs, partially offset by the $0.9 million decrease in Corporate and Other due to the sale of GSUSA in 2025 and a $0.6 million decrease in employee compensation costs in our Military+ Segment primarily due to a change in its part-time faculty compensation plan. Instructional costs and services expenses as a percentage of revenue decreased to 44.3% for the three months ended September 30, 2026, from 45.8% for the three months ended September 30, 2025.
Selling and promotional expenses. Our selling and promotional expenses for the three months ended September 30, 2026, were $41.8 million, an increase of $5.7 million, or 15.7%, compared to $36.1 million for the three months ended September 30, 2025. Selling and promotional expenses increased primarily due to an increase of $4.4 million in total advertising costs across both segments to further drive enrollment. Selling and promotional expenses as a percentage of revenue increased to 24.7% for the three months ended September 30, 2026, from 22.1% for the three months ended September 30, 2025.
General and administrative expenses. Our general and administrative expenses for the three months ended September 30, 2026, were $39.3 million, an increase of $4.6 million, or 13.3%, compared to $34.7 million for the three months ended September 30, 2025. For the three months ended September 30, 2026, and 2025, general and administrative expenses included $0.9 million and $0.8 million, respectively, in professional fees relating to the Combination in Corporate and Other. General and administrative expenses increased primarily due to increases of $2.3 million in professional services costs primarily in Corporate and Other and $2.2 million in bad debt expense primarily in our Health+ Segment, partially offset by the $0.5 million decrease in Corporate and Other due to the sale of GSUSA in 2025. Consolidated bad debt expense for the three months ended September 30, 2026, was $7.7 million, or 4.6% of revenue, compared to $5.6 million, or 3.4% of revenue in the prior year period, which is primarily due to higher student receivable balances resulting from delays in Title IV financial aid processing due to delays in ED’s effectuation of changes in its system to reflect the Combination and to a lesser degree due to changes a vendor made to its systems to mitigate a cybersecurity risk. General and administrative expenses as a percentage of revenue increased to 23.2% for the three months ended September 30, 2026, from 21.3% for the three months ended September 30, 2025. As we continue to evaluate enhancements to our business capabilities, we may incur additional costs, and our general and administrative expenses will vary from time to time.
Depreciation and amortization expenses. Depreciation and amortization expenses were $4.0 million for the three months ended September 30, 2026, compared to $3.9 million in the prior year period, an increase of $0.1 million. Depreciation and amortization expenses as a percentage of revenue were 2.3% and 2.4% for the three months ended September 30, 2026, and 2025, respectively.
Loss on assets held for sale. For the three months ended September 30, 2026, the $0.5 million non-cash loss on assets held for sale is for real property located in Charles Town, West Virginia in our Military+ Segment. There was no loss on assets held for sale in the prior year.
Loss on disposals of long-lived assets. The loss on disposals of long-lived assets was $0.7 million for the three months ended September 30, 2026, as compared to $0.1 million for the three months ended September 30, 2025.
Stock-based compensation expenses. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expenses were $2.1 million and $1.6 million for the three months ended September 30, 2026, and 2025, respectively. Stock-based compensation costs included accelerated expense for retirement-eligible employees and performance stock unit incentive costs.
Interest income (expense), net. Interest income, net of interest expense and other income, was $0.5 million for the three months ended September 30, 2026, compared to interest expense, net of interest income and other income of $1.1 million in the prior year period. The increase in net interest income in the three months ended September 30, 2026, as compared to the prior year period, was primarily due to a decrease in interest expense due to the refinance of corporate debt and an increase in interest income earned on investment securities, for the comparable periods.
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Income tax expense. We recognized income tax expense of $2.5 million and $3.1 million for the three months ended September 30, 2026, and 2025, respectively, or an effective tax rate of 29.6% in 2026 and 35.6% in 2025. The effective tax rate was negatively impacted by higher non-deductible compensation expenses in relation to pretax income in the prior period.
Net income. Our net income was $5.9 million and $5.6 million for the three months ended September 30, 2026, and 2025, respectively, an increase of $0.3 million. This increase was due to the factors discussed above.
Net income (loss) available to common stockholders. The net income available to common stockholders was $5.9 million for the three months ended September 30, 2026, compared to net income available to common stockholders of $5.6 million for the three months ended September 30, 2025, an improvement of $0.3 million. This improvement was due to the factors discussed above.
Nine Months Ended September 30, 2026, Compared to Nine Months Ended September 30, 2025
Revenue. Our consolidated revenue for the nine months ended September 30, 2026, was $515.6 million, an increase of $25.1 million, or 5.1%, compared to $490.5 million for the nine months ended September 30, 2025. Revenue increased primarily due to a $24.2 million, or 10.3%, increase in revenue in our Health+ Segment, and an $8.9 million, or 3.6%, increase in revenue in our Military+ Segment, partially offset by an $8.0 million decrease in GSUSA revenue included in Corporate and Other for the period prior to the GSUSA Sale Date. Our Health+ Segment revenue increase was primarily due to a 5.5% increase in total student enrollment and the impact of tuition increases in the second half of 2025. Our Military+ Segment revenue increase was primarily due to a 3.3% increase in net course registrations, as compared to the prior year period.
Costs and expenses. Costs and expenses for the nine months ended September 30, 2026, were $472.5 million, an increase of $11.0 million, or 2.4%, compared to $461.6 million for the nine months ended September 30, 2025. Costs and expenses for the nine months ended September 30, 2026, include $2.8 million in professional fees related to the Combination in Corporate and Other, $1.5 million in severance costs in both segments, and a $0.5 million non-cash loss on assets held for sale in our Military+ Segment. The results in the prior year period included a $3.9 million loss on sale of subsidiary in Corporate and Other relating to the sale of GSUSA, $3.5 million in professional fees in Corporate and Other relating to the Combination and the sale of GSUSA, a $1.5 million non-cash loss on assets held for sale in our Military+ Segment, $0.6 million in severance costs in our Health+ Segment and Corporate and Other, and a $0.1 million loss on leases in our Health+ Segment. Costs and expenses for the nine months ended September 30, 2026, as compared to the prior year period, excluding the items noted above, increased $15.8 million, or 3.5%, primarily due to increases of $12.5 million in advertising costs across both segments to further drive enrollment, $4.8 million in bad debt expense in both segments, $3.3 million in other employee compensation costs primarily in our Health+ Segment related to increased enrollment, $2.8 million in classroom and course materials costs due to increased vendor costs and enrollment, and $1.8 million in professional services costs, partially offset by a decrease of $13.7 million in Corporate and Other due to the sale of GSUSA in 2025. Costs and expenses as a percentage of revenue decreased to 91.6% for the nine months ended September 30, 2026, from 94.2% for the nine months ended September 30, 2025.
Instructional costs and services expenses. Our instructional costs and services expenses for the nine months ended September 30, 2026, were $226.2 million, a decrease of $1.9 million, or 0.8%, compared to $228.1 million for the nine months ended September 30, 2025. Instructional costs and services expenses decreased primarily due to the $7.1 million decrease in Corporate and Other due to the sale of GSUSA in 2025 and a $2.9 million decrease in employee compensation costs in our Military+ Segment primarily due to a change in its part-time faculty compensation plan, partially offset by increases of $5.3 million in employee compensation costs in our Health+ Segment related to increased enrollment and $3.1 million in classroom and course materials costs in our Health+ Segment due to increased vendor costs and enrollment. Instructional costs and services expenses as a percentage of revenue decreased to 43.9% for the nine months ended September 30, 2026, from 46.5% for the nine months ended September 30, 2025.
Selling and promotional expenses. Our selling and promotional expenses for the nine months ended September 30, 2026, were $119.8 million, an increase of $13.4 million, or 12.6%, compared to $106.4 million for the nine months ended September 30, 2025. Selling and promotional expenses increased primarily due to increases of $12.5 million in advertising costs across both segments to further drive enrollment and $1.1 million in marketing and promotional support materials in our Health+ Segment, partially offset by a decrease of $2.3 million in Corporate and Other due to the sale of GSUSA in 2025. Selling and promotional expenses as a percentage of revenue increased to 23.2% for the nine months ended September 30, 2026, from 21.7% for the nine months ended September 30, 2025.
General and administrative expenses. Our general and administrative expenses for the nine months ended September 30, 2026, were $113.1 million, an increase of $3.9 million, or 3.5%, compared to $109.2 million for the nine months ended September 30, 2025. For the nine months ended September 30, 2026, general and administrative expenses included $2.8 million in professional fees relating to the Combination in Corporate and Other. For the nine months ended September 30, 2025,
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general and administrative expenses included $3.5 million in professional fees relating to the Combination in Corporate and Other and the sale of GSUSA. General and administrative expenses increased primarily due to increases of $4.8 million in bad debt expense in both segments, and $2.2 million in professional services costs primarily in Corporate and Other, partially offset by a $4.0 million decrease in Corporate and Other due to the sale of GSUSA in 2025. Consolidated bad debt expense for the nine months ended September 30, 2026, was $19.9 million, or 3.9% of revenue, compared to $15.4 million, or 3.1% of revenue in the prior year period. General and administrative expenses as a percentage of revenue decreased to 21.9% for the nine months ended September 30, 2026, from 22.3% for the nine months ended September 30, 2025. As we continue to evaluate enhancements to our business capabilities, we may incur additional costs, and our general and administrative expenses will vary from time to time.
Depreciation and amortization expenses. Depreciation and amortization expenses were $12.1 million and $12.0 million for the nine months ended September 30, 2026, and 2025, respectively. Depreciation and amortization expenses as a percentage of revenue were 2.3% for the nine months ended September 30, 2026, as compared to 2.5% for the nine months ended September 30, 2025.
Loss on assets held for sale. We recognized $0.5 million and $1.5 million in non-cash losses on assets held for sale for real property located in Charles Town, West Virginia in our Military+ Segment, for the nine months ended September 30, 2026, and 2025, respectively.
Loss on disposals of long-lived assets. The loss on disposals of long-lived assets was $0.8 million for the nine months ended September 30, 2026, as compared to $0.4 million for the nine months ended September 30, 2025.
Loss on extinguishment of debt. For the nine months ended September 30, 2026, we recorded a $1.7 million loss on extinguishment of debt related to the refinance of our corporate debt. There was no loss on extinguishment of debt in the prior year.
Stock-based compensation expenses. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expenses were $6.6 million for the nine months ended September 30, 2026, as compared to $6.1 million for the nine months ended September 30, 2025. Stock-based compensation costs included accelerated expense for retirement-eligible employees and performance stock unit incentive costs.
Interest income (expense), net. Interest income, net of interest expense and other income, was $0.4 million for the nine months ended September 30, 2026, compared to interest expense, net of interest income and other income of $3.1 million in the prior year period. The increase in net interest income in the nine months ended September 30, 2026, as compared to the prior year period, was primarily due to a decrease in interest expense due to the refinance of corporate debt and an increase in interest income earned on investment securities, for the comparable periods.
Income tax expense. We recognized income tax expense of $8.4 million and $7.0 million for the nine months ended September 30, 2026, and 2025, respectively, or an effective tax rate of 20.1% in 2026 and 26.8% in 2025. The effective tax rate in both periods was positively impacted by excess tax benefits related to stock compensation. The impact in 2026 was more significant due to the increase in share price, compared to the prior period.
Net income. Our net income was $33.4 million and $18.9 million for the nine months ended September 30, 2026, and 2025, respectively, an increase of $14.4 million. This increase was due to the factors discussed above.
Preferred stock dividends. There were no preferred stock dividends for the nine months ended September 30, 2026 due to the redemption of all outstanding shares of Series A Senior Preferred Stock in June 2025. Preferred stock dividends for the nine months ended September 30, 2025 were $2.8 million.
Loss on redemption of preferred stock. In June 2025, we redeemed all outstanding shares of Series A Senior Preferred Stock for $43.1 million, excluding unpaid and accrued dividends of $1.4 million, resulting in a loss of $3.5 million related to the redemption premium and fees.
Net income available to common stockholders. The net income available to common stockholders was $33.4 million for the nine months ended September 30, 2026, compared to a net income available to common stockholders of $12.7 million for the nine months ended September 30, 2025, an improvement of $20.7 million. This improvement was due to the factors discussed above.
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Analysis of Operating Results by Reportable Segment
The following table provides details on our operating results by reportable segment for the respective periods (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Military+ Segment | $ | 82,727 | $ | 83,137 | $ | 257,708 | $ | 248,814 | |||||||||||||||
| Health+ Segment | 86,432 | 79,270 | 258,004 | 233,852 | |||||||||||||||||||
| Corporate and Other | (16) | 808 | (100) | 7,866 | |||||||||||||||||||
| Total revenue | $ | 169,143 | $ | 163,215 | $ | 515,612 | $ | 490,532 | |||||||||||||||
| Income (loss) from operations before interest and income taxes: | |||||||||||||||||||||||
| Military+ Segment | $ | 21,400 | $ | 25,280 | $ | 75,841 | $ | 70,848 | |||||||||||||||
| Health+ Segment | (1,938) | (2,113) | (1,113) | (5,309) | |||||||||||||||||||
| Corporate and Other | (11,547) | (13,470) | (31,644) | (36,571) | |||||||||||||||||||
| Total income from operations before interest and income taxes | $ | 7,915 | $ | 9,697 | $ | 43,084 | $ | 28,968 | |||||||||||||||
Military+ Segment
For the three months ended September 30, 2026, the $0.4 million, or 0.5%, decrease to approximately $82.7 million of revenue in our Military+ Segment was primarily attributable to the timing of course starts in the three months ended September 30, 2026, as compared to the prior year period. Net course registrations increased 3.8% to approximately 103,800 from approximately 100,000 in the prior year period, primarily due to increases in military registrations from students utilizing TA and students utilizing financial aid. Income from operations before interest and income taxes declined to $21.4 million during the three months ended September 30, 2026, from $25.3 million in the prior year period, a decrease of $3.9 million, or 15.3%, primarily due to the $0.4 million decrease in revenue and increases of $2.1 million in advertising costs, $0.6 million in loss on long-lived assets, and $0.5 million non-cash loss on assets held for sale, as compared to the prior year period.
For the nine months ended September 30, 2026, the $8.9 million, or 3.6%, increase to approximately $257.7 million of revenue in our Military+ Segment was primarily attributable to higher net course registrations and modest price increases, as compared to the prior year period. Net course registrations increased 3.3% to approximately 308,600 from approximately 298,800 in the prior year period, primarily due to increases in military registrations from students utilizing TA, students utilizing financial aid, and military-affiliated students utilizing education benefit programs administered by the VA. Income from operations before interest and income taxes improved to $75.8 million during the nine months ended September 30, 2026, from $70.8 million in the prior year period, an increase of $5.0 million, or 7.0%, primarily due to the $8.9 million increase in revenue, a $3.7 million decrease in employee compensation costs, a $1.0 million decrease in loss on assets held for sale, partially offset by increases of $5.3 million in advertising costs, as compared to the prior year period.
Health+ Segment
For the three months ended September 30, 2026, the $7.2 million, or 9.0%, increase to approximately $86.4 million of revenue in the Health+ Segment was primarily due to a 2.5% increase in total student enrollment, which was driven by a 6.8% increase in on-ground enrollment, as compared to the prior year period, and the impact of tuition increases in the second half of 2025, partially offset by a 2.9% decrease in online enrollment as compared to the prior year period. Loss from operations before interest and income taxes was $1.9 million for the three months ended September 30, 2026, and $2.1 million for the three months ended September 30, 2025, respectively, an improvement of $0.2 million. The improvement was primarily due to the $7.2 million revenue increase, partially offset by increases of $2.6 million in bad debt expense caused by higher student receivable balances resulting from delays in Title IV financial aid processing due to delays in ED’s effectuation of changes in its system to reflect the Combination and to a lesser degree by changes a vendor made to its systems to mitigate a cybersecurity risk, $2.3 million in advertising costs, and $2.3 million in employee compensation costs, as compared to the prior year period.
For the nine months ended September 30, 2026, the $24.2 million, or 10.3%, increase to approximately $258.0 million of revenue in the Health+ Segment was primarily due to a 5.5% increase in total student enrollment which was driven by a
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8.2% increase in on-ground enrollment, and a 2.1% increase in online enrollment, as compared to the prior year period, and the impact of tuition increases in the second half of 2025. Loss from operations before interest and income taxes was $1.1 million for the nine months ended September 30, 2026, and $5.3 million for the nine months ended September 30, 2025, respectively, an improvement of $4.2 million. The improvement was primarily due to the $24.2 million revenue increase and a $1.2 million decrease in occupancy costs, partially offset by increases of $7.2 million in advertising costs, $4.7 million in employee compensation costs, $3.9 million in bad debt expense, and $3.1 million in classroom and course materials costs, as compared to the prior year period.
Liquidity and Capital Resources
Liquidity
Cash, cash equivalents, and restricted cash were $125.0 million and $176.5 million at September 30, 2026, and December 31, 2025, respectively, representing a decrease of $51.5 million, or 29.2%. The decrease was primarily due to the purchase of approximately $127.2 million in short-term investments. Excluding purchases of short-term investments, cash increased approximately $40.0 million, primarily due to the collection of TA accounts receivable in our Military+ Segment and our improved financial performance partially offset by lower Title IV program fund disbursements received for our Health+ Segment. We have historically financed operating activities and capital expenditures with cash provided by operating activities. We expect to continue to fund our costs and expenses through cash generated from operations for the next twelve months and beyond. For more on our material cash requirements from known contractual and other obligations, please refer to the section entitled “Contractual Obligations” in Item 7 of Part II of our Annual Report.
In the second quarter of 2026, we began purchasing short-term highly liquid available-for-sale debt securities, consisting primarily of investment grade commercial paper and U.S. Treasury securities. The Company’s investment policy limits credit exposure by restricting investments to high-quality issuers and by establishing concentration limits.
We derive a significant portion of our revenue from our participation in ED’s Title IV programs, for which disbursements are governed by federal regulations. We have typically received disbursements under Title IV programs within 30 days of the start of the applicable course or term. During the three months ended September 30, 2026, we experienced delays in Title IV processing due to delays in ED’s effectuation of changes in its system to reflect the Combination.
Another significant source of revenue is derived from TA from the DoW and programs from the VA. Generally, VA funds are received within 60 days of the start of the courses to which they relate, and TA funds are received within 30 days of the invoice date. Previously, Military+ generally invoiced for TA approximately nine weeks after the start of a course and has on occasion modified its billing practices, which has affected, and may in the future affect, the timing of collections between reporting periods. For example, in July 2025, Military+ delayed billing to certain branches, further delaying payments until 2026. This change in billing practices increased accounts receivable as of December 31, 2025, and resulted in an increase to the leverage ratio under the Prior Credit Agreement as defined and discussed in “Note 8. Long-term Debt.” During the nine months ended September 30, 2026, Military+ collected approximately $33.3 million of TA receivables related to these delayed 2025 billings. During the third quarter of 2026, Military+ revised its TA billing process and reduced the billing lag from approximately nine weeks after the start of a course to approximately five weeks after the start of a course, accelerating the timing of invoices and related cash collections.
On March 2, 2026, we completed the first step of the Combination, the Legal Merger, and on August 4, 2026, we completed the second step of the Combination, the Institutional Combination. For the years ended December 31, 2025, and 2024, we incurred $3.5 million and $2.2 million in professional fees, respectively, related to the Combination. For the nine months ended September 30, 2026, we incurred $2.8 million in professional fees and expect to incur approximately $0.5 million in professional fees during the remainder of 2026 in connection with the Combination.
That certain Credit Agreement dated as of September 1, 2021, as amended, by and among the Company, as borrower, the lenders from time to time party thereto, and Macquarie Capital Funding, LLC, as administrative agent and collateral agent, or the Prior Credit Agreement, contained financial covenants that required us to maintain a Total Net Leverage Ratio (as defined in the Prior Credit Agreement) of no greater than 2.00 to 1.00, respectively, which was subject to certain exceptions. The Total Net Leverage Ratio under the Prior Credit Agreement at December 31, 2025, was negative 0.30 due to the growth in both cash and earnings and the reduction in restricted cash.
On March 9, 2026, we entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and collateral agent, PNC Capital Markets LLC as joint lead arranger and bookrunner, and a syndicate of lenders, or the 2026 Credit Agreement. The 2026 Credit Agreement provides for (i) a $90.0 million senior secured term loan, or the 2026 Term
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Loan, and (ii) a senior secured revolving credit facility in an aggregate principal amount of up to $40.0 million, or the 2026 Revolving Credit Facility, or, together with the 2026 Term Loan, the 2026 Facilities. The 2026 Revolving Credit Facility replaces our prior $20.0 million senior secured revolving credit facility under the Prior Credit Agreement, and the proceeds of the 2026 Term Loan, together with cash on hand, were used to repay the approximately $96.4 million principal amount outstanding under our prior $175.0 million term loan under the Prior Credit Agreement.
The 2026 Credit Agreement contains financial covenants that require us to (i) maintain a Consolidated Total Net Leverage Ratio of no greater than 2.50:1.00, (ii) maintain a Consolidated Interest Coverage Ratio of no less than 2.50:1.00 and (iii) maintain a minimum balance of domestic unrestricted cash and cash equivalents of $40.0 million. The Consolidated Interest Coverage Ratio (as defined in the 2026 Credit Agreement) reflects a ratio of consolidated EBITDA to consolidated interest expense. The Consolidated Total Net Leverage Ratio, under the 2026 Credit Agreement, at September 30, 2026, was negative 0.14. For more information on the 2026 Facilities and their terms, please refer to “Note 8. Long-Term Debt”.
Capital expenditures could be higher in the future as a result of, among other things, additional expenditures for technology or other business capabilities, the maintenance of existing campuses at Health+, the opening or closing of campuses or the consolidation of existing campuses at Health+, the acquisition or lease of existing structures or potential new construction projects, and necessary tenant improvements that arise as a result of our ongoing evaluation of our space needs and opportunities for physical growth. We also expect to continue to explore opportunities to invest in the education industry, which could include purchasing or investing in other education-related companies or companies developing new technologies.
Share Repurchase Program
On March 10, 2026, the Board approved a common stock repurchase program of up to $50 million in the aggregate. The program replaces our prior repurchase authorizations. During the three and nine months ended September 30, 2026, the Company repurchased 186,032 and 274,237 shares of common stock, respectively. As of September 30, 2026, there remains $36.0 million available under our share repurchase authorization.
Operating Activities
Net cash provided by operating activities was $87.3 million and $73.5 million for the nine months ended September 30, 2026, and 2025, respectively. The increase in cash from operating activities was primarily due to our improved financial performance, and other changes in working capital due to the timing of receipts and payments. Accounts receivable at September 30, 2026, decreased approximately $14.0 million compared to December 31, 2025, primarily related to TA collections in our Military+ Segment. The decrease in accounts receivable was partially offset by an increase of approximately $15.4 million in accounts receivable in our Health+ Segment due to increased revenue and enrollment as well as delays in Title IV financial aid processing due to delays in ED’s effectuation of changes in its system to reflect the Combination. Cash provided by changes in accounts payable, accrued liabilities, and accrued compensation and benefits increased by approximately $11.8 million compared to December 31, 2025, primarily due to higher advertising and employee compensation accruals.
Investing Activities
Net cash used in investing activities was $105.6 million for the nine months ended September 30, 2026, compared to $10.5 million of net cash provided by investing activities for the nine months ended September 30, 2025, mainly due to purchases of short-term investments of $127.2 million during the nine months ended September 30, 2026. For the nine months ended September 30, 2025, cash provided by investing activities included $23.0 million in proceeds from the sale of assets held for sale.
Financing Activities
Net cash used in financing activities was $33.2 million and $49.8 million for the nine months ended September 30, 2026, and 2025, respectively. The decrease in cash used in financing activities in the current year period is primarily due to the refinancing of our corporate debt which included a $6.5 million net principal paydown and $1.8 million for debt issuance costs. For the nine months ended September 30, 2026, we repurchased $22.8 million of shares through the common stock repurchase program and share withholdings related to our stock compensation plan. Financing activities for the nine months ended September 30, 2025, included our redemption of Series A Senior Preferred Stock in June 2025 for $43.2 million and preferred stock dividends paid of $2.8 million.
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Contractual Commitments
We have various contractual obligations consisting of operating leases and purchase obligations. Purchase obligations include agreements with consultants, contracts with third-party service providers, and other future contracts or agreements.
During 2026, the Company entered into two operating lease agreements for new campus locations in Michigan and Florida as part of its continued campus expansion efforts. The leases are expected to commence in the fall of 2026 and spring of 2027, respectively, and have aggregate contractual rental commitments of approximately $8.1 million. The Company will recognize the related right-of-use assets and lease liabilities upon lease commencement in accordance with ASC 842.
During 2026, the Company also entered into a five-year customer relationship management and student information system software agreement with total remaining contractual commitments exceeding $10 million as of September 30, 2026. In addition, subsequent to September 30, 2026 and prior to the issuance of these financial statements, the Company executed a five-year agreement for its learning management system with aggregate contractual commitments of approximately $6.2 million.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risk
We had no material derivative financial instruments or derivative commodity instruments as of September 30, 2026. We maintain our cash and cash equivalents in bank deposit accounts, money market funds, and U.S. Treasury bills, and investment grade commercial paper with original maturities of less than three months. The bank deposits exceed federally insured limits. We have historically not experienced any losses in such accounts. Our short-term investment portfolio includes U.S. Treasury securities and investment grade commercial paper with original maturities ranging from three months to one year. We believe we are not exposed to any significant credit risk on cash and cash equivalents or our short-term investments. Due to the short-term duration of our investment portfolio, the low yield on the portfolio, and the low risk profile of our investments, a 10% increase or decrease in interest rates would not have a material impact on the fair value of our portfolio.
Interest Rate Risk
We are subject to risk from changes in interest rates primarily relating to our investment of funds in U.S. Treasury securities and investment grade commercial paper issued at a discount to their par value. Our future investment income will vary due to changes in interest rates.
In the normal course of business, we employ established policies and procedures to manage our exposure to changes in interest rates. For every 100 basis point increase in the Term Secured Overnight Financing Rate, we would incur an incremental $0.9 million in interest expense per year, excluding any impact offset from the interest rate cap agreement.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of September 30, 2026. Based upon the evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
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Item 1. Legal Proceedings
From time to time, we have been and may be involved in various legal proceedings. We currently have no material legal proceedings pending.
Item 1A. Risk Factors
An investment in our stock involves a high degree of risk. You should carefully consider the risks set forth in the “Risk Factors” section of our Annual Report and the other information set forth in this Quarterly Report on Form 10-Q, our Annual Report, and the additional information in the other reports we file with the SEC. If any of the risks contained in those reports actually occur, our business, results of operations, financial condition, and liquidity could be harmed, the value of our securities could decline, and you could lose all or part of your investment. With the exception of the following, there have been no material changes in the risk factors set forth in the “Risk Factors” section of our Annual Report.
We may not realize the expected benefits of the Combination, and its completion has led to and could lead to unanticipated considerations, some of which could have adverse impacts on our business, reputation, financial condition, or results of operations.
As discussed in greater detail under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Legislative and Regulatory Activity – The Combination of APUS, RU, and HCN”, on August 4, 2026, we completed the Combination. However, we may not realize its anticipated benefits, including expected operational efficiencies, cost synergies, and regulatory outcomes, within the anticipated timeframe or at all. The realization of these benefits depends on a number of factors, including our ability to operate our academic units as a combined institution, our implementation of operational and administrative changes, required changes in ED systems, and actions by, or interactions with, ED and other regulatory bodies. The Combination may also result in unanticipated costs, operational complexities, regulatory consequences, or other effects that could offset or limit the realization of the Combination’s anticipated benefits.
For example, for the three months ended September 30, 2026, delays in ED’s implementation of systems changes to reflect the Combination affected the timing of Title IV financial aid processing, resulting in higher student receivable balances and increased bad debt. These delays have affected, and may continue to affect, the timing of our receipt of Title IV program funds and our cash flows. Although we expect this disruption to be temporary, if we or ED are unable to timely resolve these issues, we may incur additional bad debt expense, and our liquidity, financial condition, and results of operations could be adversely affected. Continued delays could also adversely affect the student experience and enrollments. The delayed implementation of changes in ED systems to reflect the Combination has also affected our ability to address certain Title IV processing requirements, such as, in certain cases, timely enrollment reporting and timely returns of unearned Title IV program funds for students who withdraw from APUS, and may affect other Title IV compliance obligations. If delays persist or if we are unable to adequately address regulatory matters and ED or other regulatory bodies take adverse action in response, there could be adverse effects on our business, reputation, financial condition, and results of operations. For additional information on the potential outcomes related to regulatory compliance, see the discussion in our Annual Report under the heading “Regulatory Environment—Student Financing Sources and Related Regulations/Requirements—Department of Education—Regulation of Title IV Financial Aid Programs.”
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases
The table and footnotes below provide details regarding our repurchase programs (unaudited):
| Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)(3) | ||||||||||||||||||||||||||||
| July 1, 2026 | — | — | — | — | $ | 44,999,077 | ||||||||||||||||||||||||||
| July 1, 2026 - July 31, 2026 | 76,392 | 52.36 | 76,392 | — | 40,999,192 | |||||||||||||||||||||||||||
| August 1, 2026 - August 31, 2026 | 109,640 | 45.60 | 109,640 | — | 35,999,608 | |||||||||||||||||||||||||||
| September 1, 2026 - September 30, 2026 | — | — | — | — | 35,999,608 | |||||||||||||||||||||||||||
| Total | 186,032 | $ | 48.38 | 186,032 | — | $ | 35,999,608 | |||||||||||||||||||||||||
(1)On March 10, 2026, our Board approved a common stock repurchase program of up to $50.0 million in the aggregate. This program replaces the prior repurchase authorizations described in footnotes 2 and 3 of this table.
(2)On December 9, 2011, our Board approved a common stock repurchase program under which we could annually purchase up to the cumulative number of shares issued or deemed issued in that year under our equity incentive and stock purchase plans. The authorization under this repurchase program was terminated in connection with our March 2026 purchase authorization as described in footnote 1 of this table.
(3)On May 2, 2019, our Board approved a common stock repurchase program of up to $35.0 million, and on December 5, 2019, our Board approved an additional authorization of up to $25.0 million. Further, on November 27, 2023, our Board approved an additional authorization of up to $10.0 million. The authorization under this program was terminated in connection with our March 2026 purchase authorization as described in footnote 1 of this table.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
During the three months ended September 30, 2026, none of our directors or officers adopted terminated
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Item 6. Exhibits
| Exhibit No. | Exhibit Description | ||||
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1) | ||||
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1) | ||||
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2) | ||||
| EX-101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
| EX-101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||
| EX-101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
| EX-101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
| EX-101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||
| (1) | Filed herewith. | ||||
| (2) | Furnished herewith. | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AMERICAN PUBLIC EDUCATION, INC. | ||||||||
| /s/ Angela Selden | November 9, 2026 | |||||||
| Angela Selden | ||||||||
| President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| /s/ Edward H. Codispoti | November 9, 2026 | |||||||
| Edward H. Codispoti | ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||
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