# AMERICAN PUBLIC EDUCATION INC (APEI) Informational only - not investment advice. CIK: 0001201792 SIC: 8200 Services-Educational Services SIC breadcrumb: [Services](/division/I/) > [SIC Major Group 82](/major-group/82/) > [SIC 8200 Services-Educational Services](/industry/8200/) Latest 10-K filed: 2026-03-12 SEC page: https://www.sec.gov/edgar/browse/?CIK=1201792 Filing source: https://www.sec.gov/Archives/edgar/data/1201792/000120179226000004/apei-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 648862000 | USD | 2025 | 2026-03-12 | | Net income | 31557000 | USD | 2025 | 2026-03-12 | | Assets | 521418000 | USD | 2025 | 2026-03-12 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001201792.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | | | 313,139,000 | 299,248,000 | 297,687,000 | 286,270,000 | 321,785,000 | 418,803,000 | 606,328,000 | 600,545,000 | 624,559,000 | 648,862,000 | | Net income | | | | | 24,155,000 | 21,121,000 | 25,639,000 | 10,013,000 | 18,822,000 | 17,752,000 | -114,993,000 | -47,286,000 | 16,113,000 | 31,557,000 | | Operating income | | | | | 38,276,000 | 34,859,000 | 32,526,000 | 12,756,000 | 24,757,000 | 30,371,000 | -137,348,000 | -48,306,000 | 33,066,000 | 47,935,000 | | Diluted EPS | | | | | 1.49 | 1.29 | 1.54 | 0.62 | 1.25 | 0.97 | -6.08 | -2.93 | 0.55 | 1.36 | | Operating cash flow | | | | | 56,014,000 | 47,938,000 | 44,179,000 | 38,370,000 | 44,810,000 | 16,265,000 | 29,215,000 | 45,514,000 | 48,872,000 | 61,965,000 | | Capital expenditures | | | | | 16,399,000 | 14,788,000 | 9,430,000 | 7,255,000 | 4,926,000 | 11,828,000 | 16,389,000 | 13,895,000 | 21,082,000 | 15,864,000 | | Share buybacks | | | | | 848,000 | 1,587,000 | 1,823,000 | 40,506,000 | 15,705,000 | 3,032,000 | 1,538,000 | 10,739,000 | 4,238,000 | 4,262,000 | | Assets | | | | | 315,620,000 | 339,038,000 | 370,958,000 | 354,897,000 | 371,018,000 | 725,608,000 | 615,056,000 | 557,386,000 | 570,103,000 | 521,418,000 | | Liabilities | | | | | 50,950,000 | 49,632,000 | 49,692,000 | 58,164,000 | 64,093,000 | 309,996,000 | 265,329,000 | 265,410,000 | 266,224,000 | 226,636,000 | | Stockholders' equity | | | | | 264,670,000 | 289,406,000 | 321,266,000 | 296,733,000 | 306,925,000 | 415,612,000 | 349,727,000 | 291,976,000 | 303,879,000 | 294,782,000 | | Cash and cash equivalents | 114,901,000 | 94,820,000 | 115,634,000 | 105,734,000 | 146,351,000 | 179,205,000 | | | | | 102,519,000 | 116,660,000 | 131,926,000 | 174,095,000 | | Free cash flow | | | | | 39,615,000 | 33,150,000 | 34,749,000 | 31,115,000 | 39,884,000 | 4,437,000 | 12,826,000 | 31,619,000 | 27,790,000 | 46,101,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | | | 7.71% | 7.06% | 8.61% | 3.50% | 5.85% | 4.24% | -18.97% | -7.87% | 2.58% | 4.86% | | Operating margin | | | | | 12.22% | 11.65% | 10.93% | 4.46% | 7.69% | 7.25% | -22.65% | -8.04% | 5.29% | 7.39% | | Return on equity | | | | | 9.13% | 7.30% | 7.98% | 3.37% | 6.13% | 4.27% | -32.88% | -16.20% | 5.30% | 10.71% | | Return on assets | | | | | 7.65% | 6.23% | 6.91% | 2.82% | 5.07% | 2.45% | -18.70% | -8.48% | 2.83% | 6.05% | | Liabilities / equity | | | | | 0.19 | 0.17 | 0.15 | 0.20 | 0.21 | 0.75 | 0.76 | 0.91 | 0.88 | 0.77 | | Current ratio | | | | | 3.76 | 4.41 | 5.25 | 4.92 | 4.57 | 2.42 | 2.63 | 2.94 | 3.29 | 3.46 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001201792.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q2 | 2022-06-30 | | | -5.82 | reported discrete quarter | | 2022-Q3 | 2022-09-30 | | | -0.20 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | -0.38 | reported discrete quarter | | 2023-Q2 | 2023-03-31 | | -5,740,000 | | reported discrete quarter | | 2023-Q2 | 2023-06-30 | 147,214,000 | | -2.93 | reported discrete quarter | | 2023-Q3 | 2023-06-30 | | -51,232,000 | | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 150,838,000 | | -0.27 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 152,804,000 | 13,014,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 154,432,000 | 516,000 | -0.06 | reported discrete quarter | | 2024-Q2 | 2024-03-31 | | 516,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 152,895,000 | | -0.06 | reported discrete quarter | | 2024-Q3 | 2024-06-30 | | 371,000 | | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 153,122,000 | | 0.04 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 164,110,000 | 12,964,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 164,551,000 | 8,893,000 | 0.41 | reported discrete quarter | | 2025-Q2 | 2025-03-31 | | 8,893,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 162,766,000 | | -0.02 | reported discrete quarter | | 2025-Q3 | 2025-06-30 | | 4,496,000 | | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 163,215,000 | | 0.30 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 158,330,000 | 12,608,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 174,738,000 | 17,731,000 | 0.94 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1201792/000120179226000008/apei-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-05-11 Report date: 2026-03-31 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 institutions 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; •the impact, timing, projected benefits, and terms of the planned 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; •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; •the branding and marketing of our institutions; •our ability to leverage our investments in support of our initiatives, students, and institutions; •our maintenance and expansion of our relationships and partnerships and the development of new relationships and partnerships; •actions by the Department of Defense, or DoD, or branches of the U.S. Armed Forces, including actions related to participating in DoD 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 19 •our expectations and estimates regarding tax and accounting matters. 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 institutions’ 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 institutions make to improve the student experience and enhance each institution’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 Combination, including changes in its anticipated timeline; •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 of the Higher Education Act of 1965, as amended, or Title IV programs, 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 108,900 students through our subsidiary, American Public University System, Inc. which currently operates three separately accredited institutions, APUS, RU, and HCN. Our institutions offer 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. Our institutions are accredited and licensed or otherwise authorized by state authorities to offer postsecondary education programs to the extent the institution believe such licenses or authorizations are required and 20 are certified by ED to participate in Title IV programs. In January 2025, we announced the planned combination of our three institutions, or the Combination, which will result in a combined Higher Learning Commission-accredited institution named American Public University System. Effective March 2, 2026, or the Merger Date, we completed the merger of the legal entities that owned and operated our three institutions, with American Public University System, Inc. surviving the merger, or the Legal Merger, and we subsequently notified ED that the Legal Merger occurred. We currently expect the Combination to occur during the third quarter of 2026, subject to obtaining required approvals. 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: •Military+, which was formerly the APUS Segment, provides online postsecondary education to approximately 89,500 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 APUS, which operates through two brands: American Military University, and American Public University. As of March 31, 2026, approximately 62% of Military+ students self-reported that they served in the military on active duty at th [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion together with the consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that are based on management’s current expectations, estimates, and projections about our business and operations, and involves risks and uncertainties. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those we discuss under “Risk Factors”, “Special Note Regarding Forward-Looking Statements”, and elsewhere in this Annual Report. For a discussion of our financial condition and results of operations for 2024 compared to 2023, refer to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC, on March 6, 2025, which discussion is incorporated in this Annual Report by reference and which is available free of charge on the SECs website at www.sec.gov. OVERVIEW     We are a provider of online and campus-based postsecondary education to approximately 108,600 students through three subsidiary institutions, American Public University System, or APUS, Rasmussen University, or RU, and Hondros College of Nursing, or HCN. Our subsidiary institutions offer purpose-built education programs designed to prepare individuals for productive contributions to their professions and society, and offer opportunities designed to advance students in their current professions or to help them prepare for their next career. Our subsidiary institutions are licensed or otherwise authorized by state authorities to offer postsecondary education programs to the extent the institutions believe such licenses or authorizations are required and are certified by ED to participate in Title IV programs. Additional information regarding our subsidiary institutions and their regulation is included in the “Business” section of this Annual Report. Our revenue is largely driven by the number of students enrolled at our institutions, the number of and types of courses that students take, student payor source, and the mix of programs students attend. Our consolidated revenue in 2025 was $648.9 million, representing a $24.3 million, or 3.9%, increase from $624.6 million in 2024. This includes revenue from GSUSA through July 25, 2025, or the GSUSA Sale Date. A significant portion of our revenue comes from our institutions’ participation in Title IV programs, and APUS’s participation in the DoD TA programs, and VA education programs, and this creates significant risks to our operations. Our operations for the periods covered by this Annual Report are organized into three reporting segments: •American Public University System, or APUS Segment. This segment reflects the operational activities of APUS. •Rasmussen University Segment, or RU Segment. This segment reflects the operational activities of RU. •Hondros College of Nursing Segment, or HCN Segment. This segment reflects the operational activities of HCN. Beginning in fiscal year 2026, we will have two reporting segments: APU Global, formerly the APUS Segment, and RU Health+, the business that formerly comprised the RU Segment and HCN Segment. On January 28, 2025, we announced the planned combination of APUS, RU, and HCN, or the Combination, which will result in a combined institution named American Public University System comprised of two divisions named (i) APU Global, comprised of AMU and APU, and (ii) RU Health+, comprised of RU’s campus-based and online nursing programs, RU’s healthcare programs, HCN’s campus-based nursing and healthcare programs, and RU’s non-healthcare programs. The Combination constitutes a Change of Control, Structure or Organization pursuant to HLC policy and, accordingly, we were required to obtain HLC approval prior to effectuating the Combination. In December 2024, APUS and RU jointly submitted an application for Change of Control, Structure or Organization to HLC. Subsequently, ED informed us that we would need to follow a different process to implement the Combination that entails two steps instead of one: (i) merger of the legal entities that own and operate APUS, RU, and HCN, with the APUS entity surviving following the merger, and (ii) combination of the institutions into one HLC-accredited institution. As a result of this process change, HLC required APUS and RU to submit a new joint application for Change of Control, Structure or Organization to HLC in September 2025 containing substantially the same information that had been submitted previously and reflecting the two-step process. In February 2026, HLC approved the continuation of accreditation of APUS and RU after the legal entity merger with an acknowledgment that the intent is to eventually consolidate the three institutions into one HLC accreditation. ABHES has also informed HCN that it will continue HCN’s ABHES accreditation after the legal entity merger. On March 2, 2026, we completed the merger of the legal entities that 84 own and operate APUS, RU, and HCN with the APUS entity surviving the merger, and subsequently notified ED that the merger occurred and resulted in RU and HCN being directly owned by the same legal entity that directly owns APUS. We currently expect to complete the implementation of step two of the Combination in the third quarter of 2026, subject to obtaining required approvals. We will evaluate changes to our segment reporting as a result of the Combination. For the years ended December 31, 2024, and 2025, we incurred $2.2 million and $3.5 million in professional fees, respectively, and we expect to incur between approximately $2.0 million and $4.0 million in professional fees in 2026 to complete the Combination. See the Risk Factor with the caption beginning “The planned combination of APUS, RU, and HCN …” and “Business – Regulatory Environment – Accreditation – Institutional Accreditation – The Planned Combination of APUS, RU, and HCN” for more information. U.S. Federal Government Shutdown. On October 1, 2025, the U.S. federal government shut down due to a failure by Congress to pass appropriations legislation, resulting in, among other things, suspension of the DoD TA programs and ultimately an inability of APUS students seeking to use TA as a payment source to register, or in some cases stay registered, for courses. The 2025 Shutdown ended on November 12, 2025. In connection with the 2025 Shutdown, APUS TA course registrations decreased by approximately 20,600 in the fourth quarter 2025, when compared to the prior year period. This was the first time since 2013 that APUS had dropped course registrations as a result of a government shutdown because the Defense Appropriations Bill, which annually funds TA, was not passed before the 2025 Shutdown. Prior to the end of the 2025 Shutdown, on October 24, 2025, the Navy announced that TA funding was restored for classes starting on or before December 31, 2025, using TA funds appropriated as part of the OBBBA, or OBBBA TA Funds. Also, prior to the end of the 2025 Shutdown, certain individuals responsible for oversight of the voluntary education programs at the Army, Air Force, Navy, and Marines returned to their roles and, in the cases of the Army, Air Force, and Navy, began approving TA requests using OBBBA TA Funds. As of November 10, 2025, APUS estimated that it was able to recover approximately 5,000 course registrations for November 2025 course starts by students using OBBBA TA funds. As a result of the 2025 Shutdown, we implemented various cost savings measures, including a reduction in force, hiring freeze, and a reduction in travel and discretionary costs. The One Big Beautiful Bill Act. As discussed in “Business –Regulatory Actions and Restrictions on Operations – Other Regulations – The One Big Beautiful Bill Act”, President Trump recently signed into law the OBBBA, which, among other things, makes significant changes to federal student financial aid programs and related eligibility requirements. New caps on federal loans may limit borrowing options for our students and a new accountability framework could limit the availability of certain programs due to a potential loss of Direct Loans, which could have a significant adverse impact on enrollments and our business, operations, and financial results. See “Risk Factors – Risks Related to the Regulation of Our Industry – “The One Big Beautiful Bill Act . . . .” for additional information regarding risks relating to the OBBBA. Student Body. At APUS and for RU programs excluding pre-licensure nursing and allied health programs, all coursework is delivered online. As of December 31, 2025, approximately 62% of APUS’s students self-reported that they served in the military on active duty at the time of initial enrollment, and as a result APUS is particularly reliant on TA programs, and the DoD budget. At APUS, active-duty military students generally take fewer courses per year on average than non-military students and have a lower revenue per net course registration than students utilizing other funding sources. A significant portion of APUS’s registrations is also attributable to students using VA education benefits, and funds from Title IV programs. RU nursing students and HCN students generally attend classes at physical campuses and use Title IV program funds. For the fiscal year ended December 31, 2025, 39% of RU students were enrolled in nursing programs, 26% in health sciences programs, 15% in business programs, with the remainder of students in education, technology, design and justice studies programs. For the fiscal year ended December 31, 2025, approximately 67% of HCN students were enrolled in the PN program, while 32% were enrolled in the ADN program. Efforts to Attract and Retain Students. We believe that in order to continue to attract and retain qualified students our institutions need to continuously update and expand the content of their existing programs and develop new programs, specializations and modes of teaching, faculty engagement initiatives, and co-curricular initiatives. These efforts may require obtaining appropriate regulatory approvals, incurring marketing expenses, and making investments in management and capital expenditures, including technology-related expenditures. Initiatives to attract and retain qualified students require significant time, energy, and resources, and if our efforts are not successful, our results of operations, cash flows, and financial condition may be adversely impacted. For more information about the risks related to attracting and retaining qualified students please refer to “Risk Factors – Risks Related to Attracting and Retaining Students”. 85 Reductions in Force. In the third quarter of 2023, we completed a reduction in force that resulted in the termination of 74 employees, primarily non-faculty, and the elimination of 57 open positions across a variety of roles and departments at APEI, RU, HCN and GSUSA. We incurred an aggregate of approximately $3.0 million of pre-tax cash expenses associated with employee severance costs as a result of this reduction in force. These headcount reductions reflect our ongoing efforts focused on realigning our organizational structure, eliminating redundancies, and optimizing certain functions. In the fourth quarter of 2025, as a result of the 2025 Shutdown, we completed a reduction in force that resulted in the termination of approximately 40 non-faculty employees at APUS, representing approximately 6.5% of the APUS non-faculty workforce. Separately, in the fourth quarter of 2025, approximately 20 information technology employees at APEI were terminated in connection with our ongoing efforts to optimize certain information technology functions. We incurred an aggregate of approximately $1.3 million of pre-tax cash expenses associated with employee severance costs as a result of these reductions in force. We recorded expenses for termination benefits related to the workforce reductions in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 420, Exit or Disposal Cost Obligations. Tuition Increases. Providing affordable degree and certificate programs is an important element of our competitive strategy. As more fully described in “Business – Our Institutions and Operations – Our Institutions – Accreditation – Affordability and Cost of Attendance”, certain of our institutions implemented tuition and fee increases in 2023, 2024, and 2025. Even with these increases, tuition and fees at our institutions are designed to be affordable and competitive when compared to the tuition and fees at similar institutions offering the same level of flexibility, accessibility, and student experience. Our Initiatives. Our revenue may decline, and our costs and expenses may increase, as our institutions adjust to changes in their student composition, undertake initiatives to improve the learning experience, and work to attract students who are more likely to persist in their programs. Additional initiatives that we are implementing or may implement that may increase costs and expenses or adversely affect our revenue may include the following: •altering our institutions’ marketing programs to target the appropriate prospective students; •the Combination; •opening new campuses or entering new markets; •offering new degree programs; •investing in technology related to our overall information technology program, including AI, to support our students’ current and future needs; •changing admissions standards, requirements, processes, and procedures; •implementing more stringent satisfactory academic progress standards; •changing tuition costs and payment options; •continuing to improve our RU Segment enrollment, financial results, and NCLEX pass rates; •improving student retention and NCLEX pass rates at our HCN Segment; and •implementing alternative learning delivery methods. Information technology systems are an essential part of the student experience and our business operations, as discussed more fully in “Business – Company Overview – Information Technology” in this Annual Report. APEI provides information technology services to its institutions through a shared services model. We continue, and may need to increase, our investment of time and money into technology operations and enhancements to support our systems and mission and evaluate when it is appropriate to make significant changes, modifications, or upgrades. We are making investments in information technology, including AI, in response to competitive pressures in the marketplace, including increased demand for interactive solutions and access from multiple platforms, to update older systems and to enhance functionality. Information technology operating and capital expenditures may increase in future periods as we accelerate the investment in and refreshment of our information technology systems. Changes and upgrades to our information technology systems have resulted and may continue to result in our incurring significant costs, including in the short term, and carry risk to our operations and financial results. For example, in 2024, we completed the consolidation of APUS’s customer relationship management systems onto a single platform and announced the plan to expand APU to become a global digital university that integrates emerging technology and enhanced teaching and learning opportunities for faculty and students. 86 In 2024, as part of our technology transformation program, we transitioned to a managed service provider for certain services including service desk, student support, end user support, and network support and operations, and completed the insourcing of information technology to APEI for RU. We incurred approximately $3.8 million in information technology transition services costs in 2024. Not all of our information technology spending can be capitalized, and our investments may cost more than expected or fail to be successful. Furthermore, as a result of unsuccessful development efforts, or a result of replacing outdated technology, software, or other technology related assets, we may have assets that become impaired. As discussed more fully in “Business – Company Overview – Information Technology, in 2026, we plan to begin migrating HCN to a new SIS platform as part of our broader strategy to reduce fragmentation and complexity across student information systems. Additionally, we plan to transition RU from Blackboard Ultra to D2L to consolidate our LMS environment across our institutions, which we expect will reduce operational complexity and support a more consistent academic experience. RU Change in Ownership. The Rasmussen Acquisition, was required to be reported to, and in some cases approved by, various education regulatory bodies. An institution must obtain ED approval for a change in ownership and control in order to continue to participate in Title IV programs under the new ownership. In September 2021, in connection with the Rasmussen Acquisition, RU timely submitted a change in ownership and control application to ED seeking approval to participate in the Title IV programs under our ownership. ED and RU entered into a TPPPA that allowed RU to continue disbursing Title IV funds during ED’s review of the application. The TPPPA continued growth restrictions that ED imposed as a result of RU’s March 2019 change in ownership and control, which was prior to our acquisition of RU, including limitations on new programs and locations, and an enrollment cap, until after ED reviewed and accepted financial statements and compliance audits that cover complete fiscal periods of RU’s Title IV participation under our ownership. In May 2025, ED released RU from temporary growth restrictions imposed in connection with RU’s 2019 change in ownership. For more information on the regulatory review related to the Rasmussen Acquisition and RU’s previous change in ownership and related risks, please refer to “Business – Regulatory Environment – Student Financing Sources and Related Regulations/Requirements – Regulation of Title IV Financial Aid Programs – Eligibility and Certification Procedures” and “– Regulatory Actions and Restrictions on Operations – Change in Ownership Resulting in a Change of Control”. Competition. The U.S. postsecondary education market is characterized by intense competition, with more than 4,500 institutions of higher learning. Due to the increase in online postsecondary offerings, coupled with the prospect of continued uncertainty in postsecondary enrollment in the United States, we face increased competition as students pursue degree-based postsecondary education from a wider selection of offerings. We expect each branch of the Armed Forces and the DoD to continually evaluate their approaches to education, and any resulting changes could have a material adverse effect on APUS’s enrollments. For more information on our competition and its potential impacts, please refer to “Business – Our Market and Competition – Competition” in this Annual Report. “90/10 Rule” Compliance and Delayed Billing. For fiscal years beginning on or after January 1, 2023, which for our institutions means the year ended December 31, 2023, federal educational assistance funds used to calculate the “90%” side of the ratio include Title IV funds, and all other educational assistance funds provided by a federal agency directly to an institution or a student, including the federal portion of any grant funds provided by or administered by a non-federal agency, except for non-Title IV federal educational assistance funds provided directly to a student to cover expenses other than tuition, fees, and other institutional charges. The 90/10 Rule no longer permits institutions to count federal aid for veterans and service members as part of the “10%” side of the ratio. Effective January 1, 2023, TA and VA benefits are included in the “90%” side of the ratio, and our institutions’ 90/10 Rule percentages increased, particularly at APUS. In addition, on July 7, 2025, ED issued an interpretative rule that specifies that for-profit schools will be allowed to count non-federal funds generated from programs offered entirely through distance education, if such programs satisfy certain criteria, as non-federal revenue in their 90/10 calculations, and may revise 90/10 Rule calculations for prior fiscal years to include revenue from distance education programs in the “10%” side of the ratio. While each of our institutions was in compliance with the 90/10 Rule for 2025, with APUS’s relevant percentage for 2025 being 89%, there is no assurance that we will continue to be able to comply in future years, particularly at APUS, including following the Combination. As a result of the problems with TA discussed in further detail in the Risk Factor that begins “Our student registrations, revenue, and cash flow have been adversely impacted...”, approximately $18.4 million in cash payments from the Army to APUS that were expected to be received in 2021 and 2022 were received in 2023. This, together with the January 1, 2023, change to the 90/10 Rule and enrollment growth among service members as compared to declines in students who use non-federal educational assistance funds, caused APUS’s 90/10 Rule percentage to increase. In September 2023, APUS changed its approach to invoicing for TA, taking longer to bill TA, which had the effect of delaying payments from 2023 to 2024. Due to this change in the approach to invoicing TA in the fourth quarter of 2023, in 87 2024 APUS collected approximately $22.1 million from TA related to periods prior to 2024. The change in billing approach positively impacted the “90%” side of the ratio in 2023. In January 2024, APUS separately revised its billing policy for students utilizing TA from two weeks to five weeks after course start date to nine weeks after the course start date. The change in billing approach positively impacted the “90%” side of the ratio in 2024. In December 2024, APUS again changed its approach to invoicing for TA, taking longer to bill TA, and as a result of this change, in 2025, APUS collected approximately $32.5 million from TA related to periods prior to 2025. The change in billing approach positively impacted the “90%” side of the ratio and reduced operating cash flow in 2024. In 2025, the change in billing approach increased operating cash flow. In July 2025, APUS again delayed billing to certain branches, further delaying payments until 2026. We estimate that this delay in APUS’s billing approach implemented beginning in July 2025 will result in approximately $34.1 million of receivables that we would have expected to receive in 2025 to be received in 2026. The change in billing approach could have an adverse impact on our cash flow and results of operations, as well as APUS’s ability to comply with the 90/10 Rule in 2026, including and following the Combination. The change in billing practice added to our accounts receivable as of December 31, 2025, and resulted in an increase to our leverage ratio as of December 31, 2025, under our Credit Agreement as defined and discussed in “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 9. Long-term Debt”. Regulated Industry. Our institutions operate in a highly regulated industry. For more information on the regulations to which our institutions are subject and recent regulatory developments, please refer to “Business – Regulatory Environment” in this Annual Report. Regulations may impact our financial results in a way that we cannot predict and may have an adverse impact on our financial condition. OUR KEY FINANCIAL METRICS Revenue When reviewing our revenue, we evaluate the following elements: net course registrations and enrollment; tuition rate; net tuition; and other fees. Net course registrations and enrollment. For financial reporting and analysis purposes, APUS measures its student population in terms of aggregate course enrollments, or net course registrations. Net course registrations, which include one-credit lab courses combined with their related three-credit courses, represent the aggregate number of courses in which students remain enrolled after the date by which they may drop the course without financial penalty. RU and HCN measure their student population in terms of student enrollments. Student enrollment represents the total number of students enrolled in a term immediately after the date students may drop a term without financial penalty. At APUS, because we recognize revenue over the length of a course, net course registrations and student enrollments in a financial reporting period do not correlate directly with revenue for that period because revenue recognized from courses is not necessarily recognized in the financial reporting period in which the course registrations or enrollments occur. For example, at APUS, revenue in a quarter reflects a portion of the revenue from courses that began in a prior quarter and continued into the quarter, all revenue from courses that began and ended in the quarter, and a portion of the revenue from courses that began but did not end in the quarter. At RU and HCN, generally terms begin and end in a calendar quarter. The average number of courses taken by students at APUS varies by payor type. For example, Title IV students take more courses on average than TA students. As a result, should the number of APUS’s students who utilize ED’s Title IV programs decrease (or the number of students using TA increase), we anticipate that it may cause the average number of courses per student to decrease. You should not rely on the results of any prior periods as an indication of future net course registrations at APUS, student enrollments at RU and HCN, or consolidated revenue. The composition of our students, changing market demands, and competition make forecasting very difficult, and we are unable to determine if we will continue to grow or what level of growth we will achieve, if any. Tuition rate. Providing affordable degree and certificate programs is an important element of our competitive strategy. APUS implemented modest tuition and fee increases for non-military and veteran students in the second and third quarters of 2023. In April 2024, APUS implemented an additional tuition increase to master’s level students across all categories, including military, non-military and veteran students, and in September 2024, APUS returned the military rate for master’s level students to the $250 per credit hour rate in effect prior to the April 2024 tuition increase. In February 2026 APUS implemented modest 88 tuition increases for all nonmilitary undergraduate and graduate students. We believe that APUS’s tuition and fees remain lower than the average in-state cost at public universities. RU implemented modest tuition increases for all students in select programs in the first quarters of 2023 and 2024, for new students in select programs in August 2024, and for returning students in select programs in October 2024. RU implemented modest tuition increases for new and re-entering students in August 2025. RU implemented modest increases for current students in non-prelicensure nursing programs in October 2025 and implemented a modest tuition increase for prelicensure nursing program students in January 2026. In October 2026, RU plans to implement a modest tuition increase for all students. HCN implemented a 5% increase in tuition and fees effective in the second quarter of 2023 across all programs, and in October 2025 for its ADN and PN programs. The tuition and fee increases at RU and HCN are intended to reflect adjustments to be consistent with the local campus markets. Even with these increases, RU and HCN’s tuition and fees are designed to be affordable and competitive when compared to the tuition and fees at similar institutions offering the same level of flexibility, accessibility, and student experience. Net tuition. Tuition revenue varies from period to period based on the number of students enrolled at our institutions, 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. Tuition revenue is adjusted to reflect amounts for students who withdraw from a course in the month or term in which the withdrawal occurs. We also provide tuition grants and scholarships to certain students to assist them financially with their educational goals. The cost of these grants and scholarships is reported as a reduction of tuition revenue in the period incurred for purposes of establishing net tuition revenue. Other fees. In addition to tuition, prior to the second quarter of 2023, APUS charged a technology fee of $65 per course to all non-military students. In the second quarter of 2023, the technology fee increased to $85 per course, and in the third quarter of 2023 the technology fee per course was eliminated for all undergraduate students. APUS students are also charged certain additional fees, such as graduation, late registration, transcript request, and comprehensive examination fees, when applicable. APUS provides an APUS-funded grant to cover the technology fee for certain students. Technology fee revenue net of technology fee grants was approximately $8.1 million in 2023, $4.7 million in 2024, and $5.0 million in 2025, or 2.7%, 1.5%, and 1.6% of APUS revenue, respectively. RU and HCN students are charged fees for various items such as applications, testing, books and supplies, laboratory work, technology, and graduation. For example, RU charges a course technology and resource fee of $200 per course and a one-time administrative fee for certain programs, up to $495, for all new, reentering, and program transfer students. In addition, RU students may purchase required textbooks or e-books through RU for a flat fee of $15 for each textbook (traditional or e-book) for each course. HCN charges an application fee of $25, an enrollment fee of $50, as well as other fees for books and technology that vary by program. Textbook and other course materials revenue for RU and HCN was approximately $43.3 million in 2023, $45.7 million in 2024, and $52.0 million in 2025, or 16.0%, 16.1%, and 16.2% of RU and HCN revenue, respectively. Costs and Expenses We categorize our costs and expenses in the following categories: instructional costs and services expenses; selling and promotional expenses; general and administrative expenses; depreciation and amortization; impairment of goodwill and intangible assets; loss on sale of subsidiary; loss on assets held for sale; loss on leases; and loss on disposals of long-lived assets. Instructional costs and services expenses. Instructional costs and services expenses are directly attributable to the educational services our institutions provide to their students. Instructional costs and services expenses include salaries and benefits for full-time faculty, administrators, and academic advisors, and costs associated with part-time faculty. Instructional costs and services expenses also include costs associated with curriculum development, academic records and graduation, and other services provided by our institutions, such as evaluating transcripts. Instructional costs and services expenses are generally affected by the cost of academic resources, including technology related costs, the efficiency of delivering academic products and services to our students, salaries and benefits for our faculty and other academic and administration personnel, and the level of expenditures for new and existing academic programs. At RU and HCN, instructional costs and services expenses also includes operating expenses directly associated with campus operations, including rent and technology costs. At APUS, instructional costs and services expenses include expenses related to course materials, learning resources, the library, the APUS-funded book grant program, and instructional pay for part-time faculty that are primarily dependent on the number of students taught. 89 Selling and promotional expenses. Selling and promotional expenses include salaries and benefits of personnel engaged in student enrollment, advertising costs, and marketing material production costs. Our selling and promotional expenses are generally affected by the cost of advertising media, the efficiency of our selling efforts, salaries and benefits for our selling and admissions personnel, and the level of expenditures for advertising initiatives for new and existing academic programs. General and administrative expenses. General and administrative expenses include salaries and benefits of employees engaged in corporate management, finance, financial aid processing, information technology, human resources, finance, legal, and compliance, and other corporate functions, the cost of renting and maintaining administrative facilities, technology expenses, and costs for professional services. General and administrative expenses also include bad debt expense. General and administrative expenses are generally affected by the costs of salaries and benefits for our general and administrative personnel, the efficiency of delivering back-office support, including technology services, the costs of services purchased from third-party vendors, including information technology managed service providers, and the level of expenditures for supporting company initiatives. Depreciation and amortization. We incur depreciation and amortization expenses for costs related to the capitalization of property, equipment, software, and program development on a straight-line basis over the estimated useful lives of the assets. In addition, prior to September 30, 2024, we incurred amortization expense for the amortization of identified intangible assets with a definite life resulting from the Rasmussen Acquisition. Impairment of goodwill and intangible assets. Impairment of goodwill and intangible assets recognizes the difference between the carrying value of goodwill and intangible asset and the fair value of goodwill and intangible asset. Loss on sale of subsidiary. Loss on sale of subsidiary is the difference between the net asset value of the subsidiary sold and the consideration received, less closing costs and customary adjustments, including for net working capital and cash. Loss on assets held for sale. Loss on assets held for sale is the difference between the asset’s estimated fair value less estimated costs to sell and the asset’s book value at the time the asset is no longer used for operations and reclassified as held for sale in accordance with the held-for-sale criteria. Loss on leases. Loss on leases recognizes the difference between the estimated remaining economic benefit to the Company and the carrying value of lease’s right-of-use assets, as well as losses incurred as the result of lease terminations. Loss on disposals of long-lived assets. Loss on disposals of long-lived assets is the difference between the long-lived asset’s residual value and their book value at the time of the asset’s disposition or abandonment. Interest expense, net. Interest expense, net, consists primarily of interest incurred on our long-term debt, net of any interest income earned on cash and cash equivalents. Equity Investment Loss. Equity investment loss consists of our proportional share of after-tax income or losses attributable to our equity investment as well as the loss from any other-than-temporary impairment charges, which represents the difference between the carrying value of and fair value of the investment. CRITICAL ACCOUNTING ESTIMATES The discussion of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. During the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition and the valuation of goodwill and indefinite-lived intangible assets and assets held for sale. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ and have a material impact on our Consolidated Financial Statements, or our results of operations and financial position, and subsequent events are not necessarily indicative of the reasonableness of the original assumptions or estimates. The following discussion of our critical accounting estimates is intended to supplement the accounting policies presented in “Note 2. Significant Accounting Policies” included in our Consolidated Financial Statements. Goodwill and indefinite-lived intangible assets. 90 In connection with the acquisitions of RU and HCN, we recorded goodwill and identified 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 identified intangible assets. Goodwill is not amortized. Goodwill is reported at the reporting unit level that we have defined as our reporting segments. There was no goodwill recorded in connection with the acquisition of GSUSA reported in Corporate and Other, and there is no goodwill in our APUS Segment. In connection with the acquisitions of RU and HCN, we also recorded identified intangible assets with an indefinite useful life which include trade name, accreditation, licensing, and Title IV, and affiliate agreements, and a definite useful life which include student roster, curricula, student contracts and relationships, lead conversions, and non-compete agreements. There are no indefinite-lived or definite-lived intangible assets in our APUS Segment. Goodwill and indefinite-lived intangible assets are tested 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 or 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, fair value was determined by discounting the estimated future cash flows of RU and HCN 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, pricing multiples from other public companies in the public higher education market were used to determine the fair value of RU and HCN. Values derived under the two valuation methods are then weighted to estimate RU and HCN’s enterprise values. 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. At October 31, 2025, we completed our annual assessment of goodwill and indefinite-lived intangibles for our RU and HCN Segments. The annual assessment concluded that the fair value of goodwill for RU and HCN exceeded their carrying values by approximately $92.9 million, or 64%, and $27.3 million, or 78%, respectively. Significant assumptions in the forecast used in the discounted cash flow valuation model include continued improvement in our RU Segment enrollment and cost containment measures. Our HCN Segment’s significant assumptions in the forecast relate to future campus openings and tuition increases. These assumptions could be negatively affected by and of the following including, but not limited to, changes in our regulatory environment, declines in student enrollment, adverse actions by state boards of nursing including enrollment caps, and increases in our expenses not in our plan. In addition, we determined the fair value of our RU and HCN Segment indefinite-lived intangible asset was greater than their carrying values. Therefore, for the year ended December 31, 2025, there was no impairment of RU and HCN Segment goodwill and indefinite-lived intangible assets. 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 the significant assumption 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. At December 31, 2025, after recording non-cash impairment charges for RU and HCN Segment goodwill and intangible assets in 2022 and 2023, the carrying value of RU and HCN Segments goodwill was $33.0 million and $26.6 million, respectively, and the carrying value of RU and HCN Segments intangible assets was $24.5 million and $3.7 million, respectively. For additional details regarding goodwill and indefinite-lived intangible assets please refer to “Note 6. Goodwill and Intangible Assets” included in our Consolidated Financial Statements. 91 RECENT ACCOUNTING PRONOUNCEMENTS     We consider the applicability and impact of all Accounting Standards Updates, or ASUs. Please refer to “Note 2 Significant Accounting Policies” included in our Consolidated Financial Statements for information relating to our discussion of the effects of recent accounting pronouncements.      Results of Operations The following table sets forth statements of income data as a percentage of revenue for each of the years ended: Year Ended December 31, 2024 2025 Revenue 100.0  % 100.0  % Costs and expenses: Instructional costs and services 47.3  % 45.8  % Selling and promotional 20.6  % 21.2  % General and administrative 22.7  % 22.3  % Depreciation and amortization 3.1  % 2.5  % Loss on sale of subsidiary —  % 0.6  % Loss on assets held for sale 0.3  % 0.2  % Loss on leases 0.6  % —  % Loss on disposals of long-lived assets 0.1  % 0.1  % Total costs and expenses 94.7  % 92.7  % Income from operations before interest and income taxes 5.3  % 7.3  % Interest expense, net (0.3) % (0.6) % Income from operations before income taxes 5.0  % 6.7  % Income tax expense 1.7  % 1.9  % Equity investment loss (0.7) % —  % Net income 2.6  % 4.8  % Preferred Stock Dividend 1.0  % 0.4  % Loss on redemption of preferred stock —  % 0.5  % Net income available to common stockholders 1.6  % 3.9  % Year Ended December 31, 2025, Compared to Year Ended December 31, 2024 Revenue For the year ended December 31, 2025, our consolidated revenue was $648.9 million, an increase of $24.3 million, or 3.9%, compared to $624.6 million in 2024. The increase in revenue was due to a $30.0 million, or 13.9%, increase in revenue in our RU Segment, a $7.7 million, or 11.4%, increase in revenue in our HCN Segment, and a $2.8 million, or 0.9%, increase in revenue in our APUS Segment, partially offset by a $16.3 million, or 67.1%, decrease in GSUSA revenue included in Corporate and Other for the period prior to the GSUSA Sale Date. The increase in APUS revenue was driven by an increase in net course registrations when compared to the prior year, and the impact of the 2024 tuition increases. APUS net course registrations increased approximately 0.7% to 381,000 for the year ended December 31, 2025, from approximately 378,400 in the 2024 period. The increase in net course registrations was primarily due to an increase in registrations by military-affiliated students utilizing VA benefits, and an increase in students using financial aid, which was partially offset by a decrease in registrations from military students utilizing TA due to the government shutdown in the fourth quarter 2025. Net course registrations represent the total number of courses for which students remain enrolled after the date by which they may drop a course without financial penalty. 92 The increase in RU revenue was driven by an increase in enrollment and the impact of the 2024 and 2025 tuition increases. For the year ended December 31, 2025, RU student enrollment increased 8.7% as compared to the 2024 period. This increase in enrollment was driven by a 9.6% increase in online enrollment, which has a lower revenue per student, and a 7.7% increase in on-ground enrollment. The increase in RU enrollment was primarily due to the improvement in marketing and admissions efficiencies as well as increased student retention rates driven in part by course redesigns. RU total student enrollment represents the total number of students enrolled in a term immediately after the date by which students may drop a course without financial penalty. The increase in HCN revenue was driven by an increase in enrollment. For the year ended December 31, 2025, HCN student enrollment increased approximately 12.3% as compared to the 2024 period. The increase in total student enrollment was primarily due to the continued enrollment growth across all of our campuses. The revenue increase for the year was less than the enrollment increase due to more students taking repeat courses in the current year as compared to the prior year. Revenue per student is lower for students taking a repeat course. HCN total student enrollment represents the total number of students enrolled in a term immediately after the date by which students may drop a course without financial penalty. Costs and Expenses For the year ended December 31, 2025, costs and expenses were $600.9 million, an increase of $9.4 million, or 1.6%, compared to $591.5 million in 2024, and included GSUSA costs and expenses in Corporate and Other only for the period prior to the GSUSA Sale Date. Costs and expenses for the year ended December 31, 2025, included a $3.9 million loss on sale of subsidiary in Corporate and Other relating to the sale of GSUSA, $3.7 million in professional fees relating to the Combination and the sale of GSUSA in Corporate and Other, $3.3 million in severance costs in all segments and Corporate and Other, a $1.5 million loss on assets held for sale in our APUS Segment, $0.8 million in other transition services costs relating to the retirement of our former Chief Financial Officer in Corporate and Other, and a $0.1 million loss on leases in our RU Segment, all on a pre-tax basis. Costs and expenses for the year ended December 31, 2024, included $3.8 million in information technology transition services costs in all segments as well as Corporate and Other, $3.7 million loss on leases in our RU Segment, $2.2 million in professional fees in Corporate and Other relating to the Combination, $1.6 million loss on assets held for sale in our APUS Segment, and $0.5 million in severance costs in Corporate and Other and the completed and pending campus closures in Wisconsin in our RU Segment, all on a pre-tax basis. Costs and expenses for the year ended December 31, 2025, as compared to the prior year period, excluding the items noted above, increased $8.5 million, primarily due to increases in employee compensation costs, advertising costs, bad debt expense, classroom and course materials costs, and title IV processing fees, partially offset by decreases in information technology costs, occupancy costs, depreciation and amortization expenses, and other professional fees. Costs and expenses as a percentage of revenue decreased to 92.7% in 2025 from 94.7% in 2024. Excluding items noted above, costs and expenses were 90.6% of revenue for the year ended December 31, 2025, compared to 92.9% of revenue in the prior year period. Our income before interest and income taxes as a percentage of revenue, or our operating margin, improved to 7.3% in 2025 from 5.3% compared to the prior year period. Excluding the charges noted above, our operating margin improved to 9.4% in 2025 from 7.1% compared to the prior year period. The decrease in our costs and expenses as a percentage of revenue and improvement in our operating margin was primarily due to the factors discussed above. Instructional costs and services expenses. For the year ended December 31, 2025, instructional costs and services expenses were $297.0 million, an increase of approximately $1.3 million, or 0.4%, compared to $295.7 million in 2024. The increase in instructional costs and services expenses was driven by a $8.9 million increase in employee compensation costs and a $3.6 million increase in classroom and course materials costs in our RU and HCN Segments due to increases in enrollment. These increases were partially offset by decreases of $7.7 million in Corporate and Other costs due to the sale of GSUSA, $2.4 million in information technology costs primarily relating to the insourcing of technology and $1.1 million in occupancy costs and services expenses in our RU Segment primarily related to campus closures in 2024 and 2025. Instructional costs and services expenses as a percentage of revenue decreased to 45.8% in 2025 compared to 47.3% in 2024. Selling and promotional expenses. For the year ended December 31, 2025, selling and promotional expenses were $137.3 million, an increase of $8.5 million, or 6.6%, compared to $128.8 million in 2024. The increase in selling and promotional expenses was primarily due to increases of $6.0 million in advertising costs and $3.7 million in employee compensation costs relating to an increase in employees to support our growth in all segments, and a $0.7 million increase in other marketing materials in our RU Segment, partially offset by a $2.0 million decrease in selling and promotional expenses in Corporate and Other due to the sale of GSUSA. Selling and promotional expenses as a percentage of revenue increased to 21.2% in 2025, compared to 20.6% in 2024. General and administrative expenses. For the year ended December 31, 2025, general and administrative expenses were $144.6 million, an increase of $2.6 million, or 1.8%, compared to $142.0 million in 2024. General and administrative expenses for the year ended December 31, 2025, included $3.7 million in professional fees relating to the Combination and the 93 sale of GSUSA in Corporate and Other, and $1.4 million in severance costs in Corporate and Other, and in our HCN and APUS Segments, all on a pre-tax basis. General and administrative expenses for the year ended December 31, 2024, included $2.2 million in professional fees relating to the Combination, and $0.4 million in severance costs in Corporate and Other, all on a pre-tax basis. The increase in general and administrative expenses was primarily due to $5.8 million increases in employee compensation costs, which includes severance costs, in all segments and Corporate and Other, a $3.3 million increase in bad debt expense in all segments, and $2.3 million increase in professional fees, which included fees associated with combination, in Corporate and Other. These increases were partially offset by a decreases of $6.1 million information technology costs, which included costs associated with our offshore initiatives, in our APUS and RU Segments and Corporate and Other, a $2.5 million decrease in Corporate and Other costs due to the sale of GSUSA, and a $1.5 million decrease in professional fees in all segments primarily due to less outside legal and consulting services. General and administrative expenses as a percentage of revenue decreased to 22.3% in 2025 compared to 22.7% in 2024. For the year ended December 31, 2025, consolidated bad debt expense increased to $21.7 million, or approximately 3.3% of revenue, from $18.5 million, or approximately 3.0% of revenue, in 2024. The increase in bad debt expense was due to an increase in the RU, HCN, and APUS Segments of $1.4 million, $1.2 million and $0.8 million, respectively, as compared to the prior year period. Depreciation and amortization. Depreciation and amortization expenses were $16.1 million and $19.3 million for the years ended December 31, 2025, and 2024, respectively, a decrease of $3.2 million or 16.6%, primarily related to the full amortization of all definite lived intangible assets in our RU Segment in 2024. Depreciation and amortization expenses as a percentage of revenue decreased to 2.5% in 2025 compared to 3.1% in 2024. Loss on sale of subsidiary. For the year ended December 31, 2025, we recorded a $3.9 million pre-tax loss on sale of subsidiary relating to the sale of GSUSA. There was no loss on sale of subsidiary in the prior year. Loss on assets held for sale. For the years ended December 31, 2025, and 2024, we recorded a $1.5 million and a $1.6 million pre-tax non-cash loss, respectively, on assets held for sale for real property located in Charles Town, West Virginia in our APUS Segment. Loss on leases. RU Segment loss on leases was $0.1 million and $3.7 million for the years ended December 31, 2025 and 2024, respectively. In 2024, we elected to terminate a lease in Dallas, Texas, consolidate two Minnesota campuses, and voluntarily close Wisconsin campuses, and, as a result, we recorded losses in the RU Segment of $2.1 million, $1.2 million, and $0.4 million, respectively. In 2025, we recorded an additional loss of $0.1 million in the RU Segment associated with the pending closure of a Wisconsin campus. Loss on disposal of long-lived assets. The loss on disposal of long-lived assets was $0.4 million in 2025 and 2024. Stock-based compensation. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expenses was $8.4 million and $7.7 million for the years ended December 31, 2025 and 2024, respectively. Stock-based compensation costs includes accelerated expense for retirement-eligible employees and performance stock unit incentive costs. The table below reflects our stock-based compensation expense recorded in our Consolidated Statements of Income included in our Consolidated Financial Statements for the years ended 2024 and 2025 (in thousands): Year Ended December 31, 2024 2025 Instructional costs and services $ 808  $ 770  Selling and promotional 562  759  General and administrative 6,298  6,823  Total stock-based compensation expense $ 7,668  $ 8,352  Interest expense, net. Interest expense, net of interest income was $4.2 million and $2.1 million for the years ended December 31, 2025 and 2024, respectively. The increase in net interest expense was primarily due to an increase in interest expense due to the expiration of the interest rate cap in December 2024 and a decrease in interest income earned, as compared to the prior year period. 94 Income tax expense. For the year ended December 31, 2025, we recognized an income tax expense of $12.1 million, compared to an income tax expense of $10.4 million in 2024. The effective tax rate was 27.8% and 39.3% in 2025 and 2024, respectively. The effective tax rate in 2025 was impacted by excess tax benefits related to stock compensation offset by non-deductible employee compensation. The effective tax rate in 2024 was primarily due to the $4.4 million equity investment loss not deductible for tax purposes, and an increase in non-deductible stock compensation expense in relation to taxable income in the period. Equity investment loss. There was no equity investment loss in 2025. The equity investment loss of $4.4 million for the year ended December 31, 2024 was related to a $3.3 million non-cash investment loss on an equity investment due to the investee entering into a new convertible debt agreement, which resulted in the conversion of our preferred stock holdings in the investee into common shares, and the dilution of our ownership percentage, and a $1.1 million loss on sale of our remaining equity method investment. Net income. Net income in 2025 was $31.6 million, compared to $16.1 million in 2024, an increase of $15.4 million. This increase was related to the factors discussed above. Preferred stock dividends. Preferred stock dividends for the year ended December 31, 2025, were $2.8 million compared to $6.1 million in 2024. The decrease in preferred stock dividends in 2025 was due to the redemption of all 400 outstanding shares of our Series A Senior Preferred Stock in June 2025. Loss on redemption of preferred stock. In June 2025, we redeemed all outstanding 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. Net income available to common stockholders in 2025 was $25.3 million, compared to $10.1 million in 2024, an increase of $15.2 million. This increase was related to the factors discussed above. Operating Results by Reportable Segment - Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The table below details our operating results by reportable segment for the periods indicated (in thousands): Year Ended December 31, 2024 2025 $ Change % Change Revenue APUS Segment $ 317,049  $ 319,842  $ 2,793  0.9  % RU Segment 216,262  246,231  29,969  13.9  % HCN Segment 67,290  74,983  7,693  11.4  % Corporate and Other 23,958  7,806  (16,152) (67.4) % Total Revenue $ 624,559  $ 648,862  $ 24,303  3.9  % Income (loss) from operations before interest and income taxes APUS Segment $ 89,422  $ 90,825  1,403  1.6  % RU Segment (21,798) 4,040  25,838  (118.5) % HCN Segment (1,122) (854) 268  (23.9) % Corporate and Other $ (33,436) $ (46,076) (12,640) 37.8  % Total income from operations before interest and income taxes $ 33,066  $ 47,935  $ 14,869  45.0  % APUS Segment Our APUS Segment revenue was $319.8 million in 2025, an increase of $2.8 million, or 0.9%, compared to $317.0 million in 2024, which was primarily attributable to higher net course registrations, as compared to the prior year, and the impact of the 2024 tuition increases. Net course registrations at APUS increased 0.7% to approximately 381,000 in 2025 95 compared to the prior year period. The increase in net course registrations was primarily due to an increase in registrations by military-affiliated students utilizing VA benefits, and an increase in students using financial aid, partially offset by a decrease in military registrations from students utilizing TA due to the government shutdown in the fourth quarter 2025. Income from operations before interest and income taxes was $90.8 million in 2025, an increase of $1.4 million, or 1.6%, compared to the 2024 period. The increase in income from operations before interest and income taxes was due to the increase in revenue and decreases in information technology costs, depreciation and amortization expenses, and professional fees, partially offset by increases in advertising costs, bad debt expense, and employee compensation costs, as compared to the prior year period. RU Segment Our RU Segment revenue was $246.2 million in 2025, an increase of $30.0 million, or 13.9%, compared to $216.3 million in 2024, primarily due to an 8.7% increase in year over year total student enrollment, driven by a 9.6% increase in online enrollment, and a 7.7% increase in on-ground enrollment, as compared to the prior year period, and the impact of tuition increases in 2024 and 2025. During 2025, RU experienced improvements with both on-ground and online enrollment as compared to prior year periods. Income from operations before interest and income taxes was $4.0 million in 2025 compared to a loss from operations before income taxes of $21.8 million in 2024. The RU Segment improvement was primarily due to the increase in revenue as well as decreases in information technology costs, loss on leases, depreciation and amortization expenses, and occupancy costs partially offset by increases in employee compensation costs, classroom and course materials costs, advertising costs, and bad debt expense, as compared to the prior year period. HCN Segment Our HCN Segment revenue was approximately $75.0 million in 2025, an increase of $7.7 million, or 11.4%, compared to $67.3 million in 2024, primarily due to an increase in student enrollment, as compared to the prior year period. HCN student enrollment increased approximately 12.3% during the year ended December 31, 2025, as compared to the prior year period. The increase in total student enrollment was primarily due to the continued enrollment growth across all of our campuses. The revenue increase for the year was less than the enrollment increase due to more students taking repeat courses in the current year as compared to the prior year. Revenue per student is lower for students taking a repeat course. Loss from operations before interest and income taxes in the HCN Segment was approximately $0.9 million in 2025 compared to a loss from operations of $1.1 million in 2024, an improvement of $0.3 million. The HCN Segment improvement was primarily due to the increase in revenue, partially offset by increases in employee compensation costs, bad debt expense, classroom and course materials costs, and advertising costs, as compared to the prior year period. Liquidity and Capital Resources Cash, cash equivalents, and restricted cash was $158.9 million and $176.5 million at December 31, 2024, and 2025, respectively, representing an increase of $17.6 million, or 11.0%, in the 2025 period. The increase was primarily due to the improved financial performance at RU and the proceeds from the sale of assets held for sale of $23.0 million, partially offset by cash used to redeem our Series A Senior Preferred Stock of $43.2 million. 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 “Contractual Obligations” below in this Annual Report. 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. Another significant source of revenue is derived from TA from the DoD and programs from the VA. Generally, these funds are received within 60 days of the start of the courses to which they relate, however, as discussed in “90/10 Rule” Compliance and Delayed Billing” above, APUS has repeatedly changed its approach to invoicing for TA, taking longer to bill TA, which has had the effect of delaying payments from one period into another. In July 2025, APUS again delayed billing to certain branches, further delaying payments until 2026, which could have an adverse impact on APUS’s ability to comply with the 90/10 Rule in 2026 or future years. The change in TA billing practice added to our accounts receivable as of December 31, 2025, and resulted in an increase to our leverage ratio as of December 31, 2025, under our Credit Agreement as defined and discussed in “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 8. Long-term Debt”. We estimate that this delay in APUS’s billing approach implemented beginning in July 2025 will result in approximately $34.1 million of receivables that we would have expected to receive in 2025 to be received in 2026. For additional detail, please refer to the Risk Factor that begins “Our student registrations, revenue, and cash flow have been adversely impacted...”, in this Annual Report. ED evaluates institutions on an annual basis for compliance with specified financial responsibility standards, including a complex formula based on line items from the institution’s audited financial statements. Generally, an institution’s financial 96 ratios must yield a composite score of at least 1.5 for the institution to be deemed financially responsible. A composite score between 1.0 and 1.4 is considered by ED to be in the “zone.” An institution in the “zone” may still participate in Title IV programs as a financially responsible institution through the “zone alternative” as set forth in ED regulations. In April 2025, ED notified us that according to its calculations, we had a fiscal year end 2023 consolidated composite score of 1.3 and our institutions were therefore in the “zone,” and we selected the “zone alternative” as the alternative basis on which we establish financial responsibility. Thereafter, APUS, RU and HCN operated under the zone alternative to establish financial responsibility, which imposed on us certain restrictions and obligations, including HCM1. On March 10, 2026, ED notified us that, as of such date, APUS, RU, and HCN were no longer required to comply with the zone alternative requirements due to a composite score for fiscal 2024 of 2.6. Our previous placement on HCM1 status did not have a significant impact on our 2025 financial results. Additionally, RU was required to provide a letter of credit for the benefit of ED on behalf of RU in connection with RU’s 2020 composite score, which is used by ED for determining compliance with financial responsibility standards being below the minimum required. Restricted cash at December 31, 2024, included a $25.4 million restricted certificate of deposit to secure a letter of credit. In May 2025, the letter of credit was released by ED, and the related cash was thereby no longer restricted. Our Credit Agreement as defined and discussed in “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 8. Long-term Debt” contained financial covenants that required us to maintain a Total Net Leverage Ratio of no greater than 2.00 to 1.00. Our Total Net Leverage Ratio under the Credit Agreement at December 31, 2024, and 2025, was 0.20 and negative 0.30, respectively. Our Credit Agreement as defined and discussed in “Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 16. Subsequent Events – 2026 Credit Agreement”, discussed in more detail in Item 9B below, contains financial covenants that requires us to maintain a Total Net Leverage Ratio of no greater than 2.50 to 1.00. Budget cuts or constraints, particularly those that impact DoD or include suspension or modifications to TA programs, reductions in military forces, or cuts to services and tools that we or APUS students rely upon for recruitment, enrollment access, and TA, including in connection with congressional action or inaction relating to the federal debt ceiling, could have a material adverse effect on APUS’s enrollments and on our cash flows, results of operations, and financial condition. Even temporary changes to military activity and budgets may adversely affect operations. For example, funding for the federal government or portions thereof, including the DoD, Department of Homeland Security, and Coast Guard, lapsed as a result of the 2025 Shutdown. As discussed in greater detail in the Risk Factor captioned “Enrollments and course registrations may be adversely affected by a variety of factors not directly related to education programs, including changes in military activity, budgets and government shutdowns” and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – U.S. Federal Government Shutdown” section, the 2025 Shutdown resulted in, among other things, an inability of APUS students seeking to use TA as a payment source to register, or in some cases stay registered, for courses, and APUS course registration drops. The 2025 Shutdown has and could continue to have, and any future government shutdown may have, an adverse effect on APUS’s enrollments and on our cash flows and results of operations, and a U.S. government default on its debt would have broad adverse macroeconomic effects that would materially affect our cash flow and results of operations. Our operating expenditures may increase in future periods as we continue to invest in the modernization of our information technology systems, advertising, and other expenditures. We are in the midst of a multi-year technology transformation program that we expect will enable us to enhance the learning experience for students, better accommodate new flexible learning modalities, and improve the operational effectiveness of our enterprise. In 2024, we completed a transition with a managed service provider to outsource a number of our information technology operations, including service desk, student support, end user support, and network management and operations, and we completed the insourcing of information technology services. For the year ended December 31, 2024, we incurred approximately $3.8 million in information technology transition services costs. Operating and capital expenditures may also increase as we continue to update and invest in our core enterprise systems. As discussed in greater detail in “Business – Company Overview – Information Technology”, in 2026, we plan to begin move non-core SIS data and workflow functions for RU and HCN into Salesforce to preserve core regulatory and academic-record functions within the SIS while shifting surrounding processes into a more stable and standardized platform. In 2026 we also plan to begin migrating HCN to a new SIS platform as part of our broader strategy to reduce fragmentation and complexity across student information systems, and transition RU from Blackboard Ultra to D2L to consolidate our LMS environment across our institutions. 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 RU and HCN, the opening or closing of campuses or the consolidation of existing campuses at RU and HCN, 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 97 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. On January 28, 2025, we announced the Combination. On March 2, 2026, we completed the first step of the Combination, and we anticipate completing the Combination fully in the third quarter of 2026, subject to obtaining required approvals. For the years ended December 31, 2024, and 2025, we incurred $2.2 million and $3.5 million in professional fees, respectively, and expect to incur between approximately $2.0 million and $4.0 million in professional fees in 2026 to complete the Combination. See the Risk Factor with the caption beginning “The planned combination of APUS, RU, and HCN …”, “Business – Regulatory Environment – Accreditation – Institutional Accreditation – The Planned Combination of APUS, RN, and HCN” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview” for more information. On June 23, 2025, APEI redeemed all 400 outstanding shares of Series A Senior Preferred Stock for $43.1 million, excluding unpaid and accrued dividends of $1.4 million. Accordingly, no shares of preferred stock were issued or outstanding at December 31, 2025. For additional details regarding the redemption of the Series A Senior Preferred Stock, please refer to “Note 12. Preferred Stock” included in our Consolidated Financial Statements. In connection with the completion of the Rasmussen Acquisition, we entered into a credit agreement with Macquarie Capital Funding LLC, as administrative agent and collateral agent, Macquarie Capital (USA) Inc., and Truist Securities, Inc. as joint lead arrangers and bookrunners, and a syndicate of lenders that provided us with (i) a $175.0 million term loan, of which $96.4 million was outstanding at December 31, 2025, and (ii) a senior secured revolving loan facility in an aggregate commitment amount of $20.0 million. 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 Lenders. Pursuant to the Credit Agreement, the Lenders provided us with (i) the $90.0 million Term Loan, and (ii) a senior secured revolving loan facility in an aggregate commitment amount of $40.0 million, or together with the Term Loan, the Facilities. The Facilities will be used to refinance the $20.0 million senior secured revolving loan facility and repay $96.4 million outstanding under the $175.0 million term loan. For more information on the Facilities and their terms, please refer to “Note 8. Long-Term Debt” included in the Consolidated Financial Statements in this Annual Report. We believe our cash flow from operations and our existing cash and cash equivalents will provide adequate funds for ongoing operations, debt, and interest obligations, and planned capital expenditures for the next 12 months and the foreseeable future. However, our future capital requirements and our ability to generate sufficient cash to fund our future operations will depend on a number of factors. There can be no guarantee that our business will generate sufficient cash flow from operations or that future capital or borrowings will be available to us in an amount sufficient to enable us to service our indebtedness, or to fund our other liquidity needs. Failure to achieve business performance consistent with our expectations, including as a result of regulatory action, or to comply with the 90/10 Rule or meet the financial responsibility requirements, or any government shutdown could adversely impact our cash flows and results of operations. In addition, our efforts to comply with the 90/10 Rule could lead us to reduce enrollments or require us to make expenditures that would reduce our existing cash available for operations. In addition, upon the occurrence of certain events, such as a change of control, we could be required to repay or refinance our indebtedness, which would also reduce our existing cash available for operations. There can be no assurance that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Operating Activities Net cash provided by operating activities was $48.9 million and $62.0 million in 2024, and 2025, respectively. The increase in cash from operating activities was primarily due to the improved financial performance at RU and other changes in working capital due to the timing of receipts and payments. Accounts receivable at December 31, 2025, increased approximately $5.3 million compared to December 31, 2024, primarily related to delayed billings in our APUS Segment. Income tax receivable at December 31, 2025, increased approximately $2.5 million compared to December 31, 2024, primarily related to the timing of estimated tax payments. 98 Investing Activities Net cash used in investing activities was $21.1 million for the year ended December 31, 2024, compared to $4.8 million in net cash provided by investing activities in the current year period. For the year ended December 31, 2024, capital expenditures were $21.1 million compared to $15.9 million in 2025. In 2025, investing activities includes $23.0 million in proceeds from the sale of excess real property located in Charles Town, West Virginia. Prior year period capital expenditures were higher than the current year period primarily due to the planned campus consolidations at RU and relocations at HCN that occurred in the prior year period. Financing Activities Net cash used in financing activities was $13.2 million and $49.2 million in 2024 and 2025, respectively. The increase in cash used in financial activities is primarily due to the redemption of our Series A Senior Preferred Stock in June 2025 for $43.2 million. Financing activities for the year ended December 31, 2024, included preferred stock dividends paid of $6.1 million, $2.8 million paid for the repurchase of 251,146 shares of common stock, and $2.6 million in principal payments on our long-term debt due to a mandatory prepayment relating to the excess cash flow, compared to $2.8 million preferred stock dividends paid in the current year period. Contractual Obligations Long-term debt We had long-term debt outstanding under the Credit Agreement of $96.4 million as of December 31, 2025. No principal payments are due in 2026 as a result of the December 2022 prepayments. Interest payable of $9.2 million is due in 2026, assuming the variable interest rate as of December 31, 2025. For more information on the timing and amount of our future principal and interest payments, please refer to “Note 8. Long-Term Debt” included in the Consolidated Financial Statements in this Annual Report. Lease obligations We have leases for campus facilities and office space. As of December 31, 2025, we had lease payment obligations of $87.3 million, with $15.1 million payable in 2026. For more information on the timing and amount of our future lease obligations, please refer to “Note 7. Leases” included in the Consolidated Financial Statements in this Annual Report. Other purchase obligations As of December 31, 2025, we had other purchase obligations of $12.8 million, with $5.1 million payable in 2026. In July 2024, RU entered into a contract with a third-party to provide nursing program curriculum upgrades and course materials, and testing services to nursing students, replacing an existing third-party provider. Total annual expense under this contract is estimated to be between approximately $8.0 million and $9.0 million annually through December 31, 2027, based on enrollment. Impact of Inflation Recently, the U.S. economy experienced the highest rates of inflation since the 1980s. Historically, we have not experienced significant inflation risk in our business arising from fluctuations in market prices; however, our ability to raise our tuition and fees depends on market conditions. APUS and RU increased certain tuition and fees in 2024, RU and HCN increased certain tuition in 2025, and APUS and RU increased tuition in the first quarter of 2026, in order to offset increased faculty costs and other costs, but there may be periods during which we are unable to fully recover increases in our costs.