Am. Public Education (APEI) Q3 2026 Earnings Call Transcript

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DATE

Mon, Nov. 9, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Angela Selden
• Executive Vice President and Chief Financial Officer - Edward Codispoti
• Chief Strategy and Growth Officer - Gary Janson
• Investor Relations - Jack Landry

TAKEAWAYS

• Consolidated Revenue -- $169.1 million, increasing 3.6% year over year and exceeding the high end of the company's guidance range.
• Net Income Available to Common Stockholders -- $5.9 million, representing a 6% year-over-year increase driven by operational growth across key segments.
• Adjusted EBITDA -- $17.5 million, surpassing the guidance range of $14 million to $17 million despite a timing-related revenue shift.
• Diluted EPS -- $0.32, a 6.7% increase compared to $0.30 in the third quarter of 2025.
• Military+ Net Course Registrations -- 103,800, representing 3.8% growth and exceeding the guided range of 101,000 to 103,000.
• Health+ Revenue -- $86.4 million, increasing 9% year over year due to double-digit growth in campus nursing and mid-teens growth in online healthcare programs.
• Quarterly Revenue Timing Shift -- $6 million, which moved from the third quarter to the fourth quarter due to registration timing within the Military+ segment.
• Organic Revenue Growth -- 4.2% year over year when excluding revenue from Graduate School USA, which was divested in July 2025.
• Full-Year Revenue Guidance -- $695 million to $701 million, raised from the prior forecast of $690 million to $698 million.
• Full-Year Adjusted EBITDA Guidance -- $98 million to $105 million, representing an increase from the previous range of $96 million to $104 million.
• Full-Year Diluted EPS Guidance -- $2.59 to $2.84, reflecting the momentum of the business and revised upward from $2.48 to $2.79.
• Share Repurchases -- $9 million in common stock repurchased during the quarter, more than doubling the pace from the second quarter.
• Instructional Costs -- 44.3% of total revenue, improving from 45.8% in the prior-year period due to operating leverage.
• Selling and Promotional Expenses -- $41.8 million, or 24.7% of revenue, increasing from 22.1% last year to support registration and enrollment growth.
• General and Administrative Expenses -- $39.3 million, increasing from $34.7 million primarily due to higher bad debt expense and marketing optimization investments.
• Total Cash and Investments -- $216.4 million, representing a 22.6% increase since Dec. 31, 2025.
• Outstanding Debt -- $87.8 million, with the company maintaining $40 million of available capacity under its revolving credit facility.
• Fourth Quarter Military+ Registration Guidance -- 100,000 to 105,000, representing projected growth of 21.7% to 27.7% year over year.
• Full-Year Capital Expenditures -- $23 million to $26 million, lowered from the previous guidance range of $25 million to $28 million.
• Institutional Cost Synergies -- $5 million in recurring annual savings targeted for 2027, resulting from the integration of Rasmussen University and Hondros College of Nursing.

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RISKS

• Codispoti stated, "We also experienced an increase in bad debt, primarily as a result of delays in Title IV disbursements following the institutional combination," noting that the company is working to expedite processing to mitigate the impact.
• Selden reported, "Our second Detroit campus is now facing a 1-quarter delay in opening, an unexpected result of our accreditor change due to the combination," indicating that the Higher Learning Commission requires its own approval process separate from prior accreditors.

SUMMARY

American Public Education, Inc. (NASDAQ:APEI) reported third quarter results that exceeded its prior guidance across revenue, net income, and adjusted EBITDA. Management attributed the performance to a rebound in military enrollment and double-digit growth in campus-based nursing programs. The company has completed its institutional combination into the American Public University System, a move designed to simplify operations and enhance regulatory compliance. While campus nursing and online healthcare programs saw mid-teens growth, management noted that the non-healthcare online segment remained a point of weakness. The company increased its share repurchase activity during the quarter while continuing investments in its technology infrastructure and new campus openings.

• Selden noted that a student enrolled at a physical campus generates twofold the revenue of an enrolled online student, underscoring the financial significance of the company's shift toward ground-based nursing education.
• Management reported that the Online+ non-healthcare programs are seeing slight declines, leading the company to evaluate marketing differentiation strategies for these offerings.
• The company remains on track with its Trailblazer Initiative to open two new smaller-footprint campuses each year for the next four years, with each expected to reach cash flow break-even within 18 months.
• James Kenigsberg stepped down from the Board of Directors to serve as the Chief Innovation and Technology Officer and was replaced on the board by Shira Goodman.
• The student lifecycle platform, implemented in collaboration with Salesforce, is scheduled for its initial go-live with the Health+ segment in early 2027 to improve student support and admissions.

INDUSTRY GLOSSARY

• HLC: Higher Learning Commission, the institutional accreditor for the American Public University System.
• Title IV: A section of the Higher Education Act that authorizes federal student financial aid programs.
• NDAAs: National Defense Authorization Acts, which are federal laws that specify the annual budget and expenditures of the U.S. Department of Defense.
• Fill the Back Row: A strategic marketing initiative focused on maximizing student enrollment in existing nursing campus classrooms to improve margins.
• Trailblazer Initiative: The company's expansion strategy to open two new nursing campuses per year to drive long-term revenue growth.
• Military+: A business segment serving active-duty military, veterans, and their families.
• Health+: A business segment focused on nursing and healthcare education through Rasmussen University and Hondros College of Nursing.
• Net Course Registrations: The aggregate number of courses for which students remain enrolled after the financial drop deadline.
• LPN: Licensed Practical Nursing, a program for healthcare professionals who provide basic nursing care.
• Student Lifecycle Platform: A technology system designed to manage student support, admissions, and retention using advanced data tools.

Full Conference Call Transcript

Operator: Thank you for standing by. My name is Caleb and I will be your conference operator today. At this time, I would like to welcome everyone to the APEI Third Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Jack Landry, Investor Relations. Please go ahead.

Jack Landry: Thank you and good afternoon, everyone. Welcome to American Public Education's conference call to discuss third quarter 2026 results. Joining me on the call today are Angela Selden, President and Chief Executive Officer of APEI and Chancellor of the American Public University System; Edward Codispoti, Executive Vice President and Chief Financial Officer; and Gary Janson, Chief Strategy and Growth Officer. Materials for today's call, which is being webcast and is open to the public, are available in the Events and Presentations section of APEI's website. Statements made during this call and in the accompanying presentation regarding APEI and its subsidiaries that are not historical facts may be forward-looking statements that are based on management's current expectations, assumptions, estimates and projections.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including risks related to potential impacts from changing federal or state government policies, laws, practices and actions, including impacts on revenues or the timing of receipts, and other factors identified in our Form 10-K and Form 10-Q under the heading Risk Factors and other SEC filings. Forward-looking statements may sometimes be identified by words like believe, estimate, expect, may, plan, potentially, project, target, outlook, path, position, on track, on pace, should, will, would and similar or opposite words.

Forward-looking statements include, without limitation, statements regarding expected operational efficiencies and synergies, technology platform implementations such as our student lifecycle platform, marketing efficiency initiatives and their expected benefits, expectations regarding the resilience of our programs to market or technological disruption, expectations for registration and enrollments, revenue, earnings, adjusted EBITDA, adjusted EBITDA margin and other earnings guidance, our foundation for growth and our current and future growth initiatives, strategic investments, capital allocation, share repurchases and M&A opportunities, operational milestones and time lines, the completed institutional combination, potential changes to military tuition assistance programs, governmental and regulatory actions, their impact and our response to those actions, changing market demands and our ability to satisfy such demands and other company initiatives.

Recall and the presentation contain references to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin and excess cash and short-term investments over debt. A reconciliation between each non-GAAP financial measure we use and the most directly comparable GAAP measure is located in the appendix to today's presentation and in the earnings release. Management believes that the presentation of non-GAAP financial information provides useful supplemental information to investors regarding its results of operations and should only be considered in addition to, and not as a substitute for or superior to, any measure of financial performance prepared in accordance with GAAP. I'd now like to turn the call over to APEI's President and CEO, Angela Selden. Angie, please go ahead.

Angela Selden: Thank you, Jack. Good afternoon and thank you very much for joining American Public Education, Inc. third quarter 2026 results call today. I'm very pleased to report that we exceeded our guidance on revenue, net income available to common stockholders, adjusted EBITDA and diluted earnings per share. This is a continued result of the strong moat we've built in our Military+ division, where active duty enrollment is rebounding, enrollment in veterans and families continues to see double-digit growth and the overall student value proposition of no out-of-pocket cost for undergraduate active duty military and a strong return on educational investment for veterans and families continues.

We've also built a strong moat in Health+, where our campus nursing and online health revenue continues to grow at double digits, with enrollment growth and modest price increases as the tailwinds for health professionals continue to drive student demand for our education in the markets we serve. Here are the headlines: Military+ net course registrations grew 3.8% to approximately 103,800, above our guidance range. Health+ revenue grew approximately 9%, with the mix shifting to campus nursing with low-teens growth driving performance. We're also pleased with the strong mid-teens revenue growth in the quarter for online health care. Total revenue was muted by Online+ non-health care revenue growth in low single digits.

Total APEI revenue grew 3.6% year-over-year to $169.1 million, above the high end of our guidance range of $164.5 million to $167 million. This does not include the approximately $6 million of Military+ revenue that shifted into the fourth quarter due to registration timing, as we previewed on our last earnings call. Net income available to common stockholders grew 6% to $5.9 million and diluted earnings per share grew 6.7% to $0.32, both above the high end of our guidance ranges. Adjusted EBITDA was $17.5 million, exceeding the high end of our guidance range of $14 million to $17 million.

As we anticipated when we provided guidance, adjusted EBITDA and margin were below the prior year, reflecting an increase in selling and promotion expenses that supported registration and enrollment growth, along with several nonrecurring events, including the revenue timing shift and the marketing optimization investments we outlined last quarter. Further, we experienced an increase in bad debt, primarily as a result of delays in Title IV disbursements following the institutional combination. We also believe that this is a temporary matter. We also more than doubled our pace of our share repurchases in the quarter. Finally, the third quarter was the beginning of our operating as a single Higher Learning Commission accredited institution, the American Public University System.

As a reminder, this combination allows us to simplify our operations, to expand our health care platform, to enhance academic choice for students and opportunities for faculty, to strengthen our financial position and to improve our regulatory compliance and risk management. Turning our attention to full-year 2026, we are raising full-year guidance on revenue, net income available to common stockholders, adjusted EBITDA and diluted EPS, reflecting the momentum of the business and our strategy. This is driven by the growth in our Military+ division, where our midpoint guidance reflects approximately 25% net course registration growth in Q4, a strong performance as compared to last year's partial Q4 government shutdown.

This also reflects continued growth in our campus and online health revenue and mix shift. With those headlines, I'll provide additional details on our 2 segments and give you an update on the work we committed to last quarter: marketing optimization, institutional combination synergies and our student lifecycle platform, which we are implementing in collaboration with Salesforce. I'll then turn it over to Ed Codispoti, APEI CFO, for more details on financial results and comments. So let's start with Health+.

Overall, Health+ revenue grew 9% to $86.4 million, driven by a mix shift to campus nursing, which increased low double-digit rates and which reflects our continued success in executing our Fill the Back Row strategy, along with a modest tuition increase in the second half of 2025. Our new Orlando campus continues to track ahead of initial expectations, including our recent introduction of an evening LPN program. Our second Detroit campus is now facing a 1-quarter delay in opening, an unexpected result of our accreditor change due to the combination. Hondros's former accreditor, ABHES, had approved the new location prior to our combination. Now HLC, our new accreditor, requires its own separate approval and this process is currently underway.

Fort Lauderdale remains on pace to open in Q4 2027 and overall we remain on track with our trailblazer initiative to open 2 new smaller-footprint campuses each year for the next 4 years. As a reminder, opening these smaller-footprint campuses gives us continued growth over the next 5 years. By successfully executing on our Fill the Back Row strategy with our existing campuses, these new campuses will also allow us to create revenue momentum and margin expansion, as we expect each to reach cash flow break-even in 18 months and full utilization in 4 to 5 years. Now turning to Military+. Our Military+ net course registrations grew 3.8% to approximately 103,800, above our guidance range of 101,000 to 103,000.

Military+ revenue of $82.7 million was flat year-over-year, affected by approximately $6 million in registration revenue that shifted into the fourth quarter, as we discussed during our last earnings call. Our military and military-affiliated learners remain the engine of this segment. Veteran and military family registrations grew at double-digit rates and active duty registrations returned to growth, led by the Army. As a reminder, our full-year guidance does not assume a resolution to the Middle East conflict. With our continued strength in the Army enrollments, the branch from which the largest number of our students come, a resolution to the conflict can support additional growth.

As we turn our attention to marketing, last quarter we shared that we had launched an end-to-end evaluation of marketing efficiency and effectiveness across all student segments and channels with a third party. We are implementing recommendations around organizational efficiency, marketing spend shifts, overall marketing optimization and expect to see continued improvements into 1H '27 and beyond. In the third quarter, selling and promotion expense was 24.7% of revenue, as compared with 22.1% in the prior-year period, and general and administration expense increased due to the investments to optimize our marketing, process and organization. We made these investments intentionally and the increased costs were taken into account in our guidance. Our results, including these increased costs, exceeded that guidance.

Now let's turn our attention to the combination synergies and the student lifecycle platform. We'd like to share more about the cost synergies resulting from our institutional combination. I want to highlight 3 buckets. First is the integration of Rasmussen University and Hondros College of Nursing, where we have a target of $5 million of recurring cost synergies in 2027 and beyond, including campus and academic operational synergies and cost savings from consolidated buying of books, materials and from other contracts. These savings are included in our already published 4-year plan.

Second, the cost synergies between Health+ and Military+ have a target of $9 million in recurring savings in 2028 and beyond, primarily from productivity gains in admissions, financial aid, leadership and other academic shared services. These savings are also included in our already published 4-year plan. We continue to evaluate our revenue synergies in 2 categories: the opportunity for Hondros students to enroll in Rasmussen nursing and online programs; and revenue synergies from our student lifecycle platform implementation. Our implementation of SLP with Salesforce remains on track for its initial go-live with our Health+ segment in early 2027, beginning with student support and admissions. As a reminder, the implementation costs have already been included in our previously stated 4-year plans.

The anticipated benefits, including improved retention, better student services and lower cost to serve, represent an incremental upside to the already published 4-year plan. We will quantify the benefits of this upside on a future call. With that, I'll turn the call over to Ed to discuss our third quarter financial results, capital allocation and our outlook in more detail.

Edward Codispoti: Thank you, Angie. I'll begin with our third quarter results, then review our balance sheet and cash flow, provide an update on capital allocation and share repurchases and conclude with our outlook for the fourth quarter and full-year 2026. Total revenue in the third quarter was $169.1 million compared to $163.2 million in the prior-year period, an increase of $5.9 million or 3.6%. Excluding $800,000 of Graduate School USA revenue in the prior-year period, revenue would have grown 4.2%.

As we discussed on our last call, because Military+ revenue is recognized ratably over the period of enrollment, the September 7 start date shifted approximately $6 million of revenue and approximately $4 million of adjusted EBITDA from the third quarter into the fourth quarter. Now let's break down revenue by segment. At Military+, third quarter revenue was $82.7 million compared to $83.1 million in the prior-year period, a decrease of 0.5%, reflecting the revenue timing shift. Military+ segment income from operations was $21.4 million compared with $25.3 million in the third quarter of 2025 and segment EBITDA margin was 27% compared to 32%, reflecting the revenue timing shift and increased selling and promotional expenses.

Net course registrations were approximately 103,800 compared to approximately 100,000 in the third quarter of 2025. At Health+, third quarter revenue was $86.4 million compared to $79.3 million in the prior-year period, representing 9% growth. The segment reported a loss from operations of $1.9 million compared to a loss of $2.1 million in the prior-year period, as the benefit from enrollment growth was partially offset by investment in advertising and bad debt expense, partly driven by delays in Title IV disbursements following the institutional combination. We expect the delays in Title IV disbursements to be temporary.

Turning now to expenses and profitability, instructional costs and services were $74.9 million, essentially flat year-over-year, improving to 44.3% of revenue from 45.8%, which reflects the operating leverage in our model. Selling and promotional expenses were $41.8 million or 24.7% of revenue compared to $36.1 million or 22.1% of revenue in the prior-year period. General and administrative expenses were $39.3 million compared to $34.7 million, primarily driven by increases in bad debt expense and professional service costs related to investments in marketing optimization. Third quarter net income available to common stockholders was $5.9 million or $0.32 per diluted share compared to $5.6 million or $0.30 per diluted share in the prior-year period.

Net interest income was $0.5 million compared to net interest expense of $1.1 million in the prior-year period, reflecting our stronger cash and short-term investment position and lower debt and borrowing rates. Third quarter adjusted EBITDA was $17.5 million, above the high end of our guidance range, compared to $20.7 million in the prior-year period. Adjusted EBITDA margin was 10.4% compared to 12.7%. The year-over-year decline was expected and reflected in our guidance. On a trailing 12-month basis, adjusted EBITDA was $96.1 million and adjusted EBITDA margin was 14.3%, up from 13.5% a year ago. Turning now to our balance sheet and cash flow.

As of September 30, 2026, our cash, cash equivalents, restricted cash and short-term investments totaled $216.4 million compared to $176.5 million at December 31, 2025, an increase of $39.9 million or 22.6%. Outstanding debt was $87.8 million and we had excess cash, cash equivalents, restricted cash and short-term investments over debt outstanding of $128.7 million. We also have $40 million of available capacity under our revolving credit facility. Year-to-date cash flows from operations were $87.3 million, up 18.7% year-over-year. Third quarter operating cash flow was $11.8 million compared to $21.7 million in the prior-year period, including because of delays in Title IV disbursements following the institutional combination. Turning to capital allocation, our capital allocation framework is deliberate and disciplined.

We evaluate alternative uses of capital, including organic growth, new campuses, technology, M&A and share repurchases against hurdle rates that we set for each use. Our first priority remains investing in organic growth, including our trailblazer campuses and the student lifecycle platform, both of which are funded within our 4-year plan. Management and our Board are also very focused on share repurchases as an important component of our capital allocation strategy. At the same time, our cash generation allows us to return capital to shareholders. In the third quarter, we repurchased 186,032 shares for approximately $9 million, more than double the amount we repurchased in the second quarter.

Year-to-date, we have repurchased 274,237 shares for approximately $14 million under the $50 million program our Board authorized in March. Accordingly, we have approximately $36 million remaining under the authorization. As a result of our share repurchases so far this year, our weighted average diluted share count declined to 18.7 million in the third quarter compared to 18.8 million in the prior-year period. I'll now discuss our outlook. Based on our third quarter results and our visibility into the fourth quarter, we are raising full-year guidance on revenue, net income available to common stockholders, adjusted EBITDA and diluted EPS.

For the full year 2026, our updated guidance is as follows: Revenue of $695 million to $701 million compared with our prior range of $690 million to $698 million. Net income available to common stockholders of $48.5 million to $53.2 million compared with our prior range of $46.5 million to $52.5 million. Adjusted EBITDA of $98 million to $105 million compared with our prior range of $96 million to $104 million. Diluted EPS of $2.59 to $2.84 compared with our prior range of $2.48 to $2.79. And we lowered our full-year capital expenditure guidance to $23 million to $26 million from $25 million to $28 million.

For the fourth quarter of 2026, our guidance is as follows: Revenue of $179.4 million to $185.4 million. Net income available to common stockholders of $15.2 million to $19.8 million. Adjusted EBITDA of $30.6 million to $37.6 million. And diluted EPS of $0.81 to $1.07. This assumes Military+ net registrations of 100,000 to 105,000, up 21.7% to 27.7% year-over-year, and Health+ enrollment of approximately 20,100, up approximately 1% year-over-year. As a reminder, our fourth quarter includes the approximately $6 million revenue shifted from the third quarter and the prior-year fourth quarter was impacted by the federal government shutdown. We remain committed to executing on the long-term strategy we laid out at Investor Day.

With that, I'll turn it back to Angie for closing remarks.

Angela Selden: Thank you, Ed. In closing, our first partial quarter as a single combined institution was a very strong one. We exceeded guidance on every key metric, our core military-affiliated and campus nursing programs continue to grow and we stepped up the returns of capital to shareholders. Subsequent to quarter-end, we welcomed Shira Goodman to the APEI Board effective October 27. Shira brings 26 years of leadership experience at Staples, including serving as CEO, along with extensive corporate board experience. APEI appointed her as a replacement for James Kenigsberg, who stepped down from the Board to become APEI's Chief Innovation and Technology Officer.

We look forward to leveraging Shira's expertise in strategic growth and organizational transformation as we advance our mission and expand educational opportunities. Our organization is purpose-built to deliver affordable and accessible education in fields that are in high demand and require human judgment: nursing and health care, where care is delivered at the bedside, and military service, which remains critical to our U.S. national defense strategy and is often delivered on the battlefield. We believe this positions APEI with differentiated offerings and meaningful moats for the foreseeable future.

At our November 2025 Investor Day, we laid out a multi-year framework targeting organic and inorganic revenue of $890 million to $1 billion by 2029 and adjusted EBITDA margins of 20% to 21%. That framework is intact. The institutional combination is complete, our trailblazer schedule is largely on track, the student lifecycle platform is on track for its initial go-live with our Health+ segment in early 2027 and our balance sheet remains very strong. Before we move to questions, I want to thank our investors, analysts and the APEI team for the dialogue and engagement over the past quarter.

We remain committed to providing you with clear insights into our performance, our strategic initiatives and the long-term value creation opportunities ahead of us. With that, I would now like to hand the call back to the operator to begin our question-and-answer session.

Operator: [Operator Instructions] Your first question comes from the line of Eric Martinuzzi with Lake Street Capital Markets.

Eric Martinuzzi: Congrats on the strong quarter and the healthy outlook for Q4. I wanted to ask about just kind of the rising inflationary environment. I know for you all, it can be come in the form of rising faculty costs and clinical placement costs. You've obviously raised your profit outlook for the year, so it seems like you're managing it, but can you go a layer deeper on how inflation is impacting your business?

Angela Selden: Thanks for the question, Eric. This is Angie, I'll start and then I'll turn it over to Ed. So you're right. By virtue of our raising guidance for the full year, we have been able to very effectively manage through the inflationary costs, and some of the categories that you outlined certainly are among those that we manage. I would say, I would add to that list certainly our employee compensation and in particular health care benefits, which we do think will rise again in 2027 and we've been working very hard to offset and mitigate the impact to our employees. Overall, our technology strategy is really focused on operational optimization and being able to do more with less.

And so as we roll out the student lifecycle platform enabled by the AI capabilities inside of Salesforce, we see that as a great way to mitigate those inflationary costs. Let me turn it over to Ed or Gary. Gary has something, yes?

Gary Janson: Yes, I was going to say, you know, it's kind of been our historical efforts at the Military+ side of things to find ways to optimize the business there. In that segment of the business, we consistently look at how do we improve operating efficiencies to allow for those inflationary costs to get absorbed within their business model and maintain the operating margins, so there's nothing new there. And on the Health+ side, we have historically used price on a regular basis, small inflationary increases to offset any inflationary costs.

Edward Codispoti: I think that's the theme, right? We have some pockets of the business where we have seen the inflation, but overall -- when you look at the overall business, the efficiencies that we're investing in have been able to mitigate those increases and even in some cases leverage additional profitability.

Eric Martinuzzi: Okay. And then if I could on the -- I was curious on the bad debt expense. Is this a situation where because there's a delay, there's an expectation that there could be bad debt, or is this we're already kind of reserving for it and we're expecting it?

Edward Codispoti: These are estimates, right? And so what we're seeing is that we have these delays as a result of -- primarily as a result of the combination. And so you try to estimate the fact that some of those students, if they cannot be processed quickly enough, would fall under some sort of payment plan, and then along with that, you have the associated bad debt expense that would go along with that. But we -- there's a lot of focus on our end to, number one, expedite the processing; and number two, put a lot of pressure on collections so that we don't have that bad debt expense materialize.

Angela Selden: I mean, the main cause of this, of course, was the Department of Ed's challenges in basically setting up financial aid in the combined entity for one of our divisions, and so that is what has delayed this. So we're working in partnership with them. They have worked tirelessly to help resolve these issues. Our students are fully covered, so they have been communicated to each that they have financial aid eligibility, so it's really just a matter of getting the packaging and the rest of the processes completed. Gary?

Gary Janson: And I was just going to say, those system challenges occurred and have been resolved, it's just the length of time that it took to get them resolved is what's caused the delay in processing and the incremental assessment on bad debt.

Angela Selden: So we hope to deliver a better number at the end of Q4, but this is a number that we think is probably a worst-case scenario.

Operator: Your next question comes from the line of Griffin Boss with B. Riley.

Griffin Boss: Great to see the strong results. I just wanted to hone in on the price increases, the modest price increases you mentioned, Angie. Just curious if there's any more color you can give on your pricing plans for 2027, if there's anticipated ongoing price increases beyond this year, and then kind of the tolerance for any sort of future price increases just kind of taking into account affordability pressures and whatnot.

Angela Selden: Sure. Thanks for the question, Griffin. So we'll start with Military+. As you know, our active duty, we, for undergraduate students, really have held true to our value proposition of no out-of-pocket cost. And so the $250 per credit hour dictates the price we charge for undergraduate active duty military. We have at times passed through a small expense increase for the other categories, for veterans and for families. We anticipate a very small price increase in 2027 for those categories.

And then if you turn your attention to Health+, we had communicated in the November 2025 4-year strategic plan meeting that we discussed, we did signal that we would do an every-other-year price increase for the programs in our Health+ division.

Operator: Your next question comes from the line of Luke Horton with Northland Securities.

Lucas John Horton: Congrats on the quarter. I did just want to touch on the Military+ side, just for a little bit of margin compression here in the quarter. Was that purely due to the, I think $6 million of revenue pushed into 4Q, or were there any sort of increased costs on the marketing side? I know that's largely referral-based, but just given the kind of conflict in the Middle East, just wondering your thoughts there.

Edward Codispoti: I think, yes, to your point, Luke, most of that is from the shift of the $6 million into Q4, of which the EBITDA was about $4 million. That's the main driver. Gary, did you agree with that?

Gary Janson: Yes, I was going to say the margins in that business stay pretty consistent over time. That shift was a one-time anomaly.

Lucas John Horton: Okay. Got it. And then just from a regulatory perspective, kind of given the recent election results here, is there any update on that potential increase in per-credit-hour funding on the active duty military side and then anything else that sort of came out of the election results that you guys are watching closely?

Angela Selden: Yes. A great question, Luke. And of course, I think the entire world is turning its attention to watching what's going to happen as a result of the election. I'll start by saying that the NDAA that was passed in the House and was awaiting pass in the Senate now is sitting having to be reconsidered as a result of the new election. Our government relations team says that there's a strong belief that there's support for the passing of an NDAA, but perhaps not at the level of the original one.

That has nothing to do with the raise of the per-credit hour that was discussed, just a general philosophy around how much they would like to see in the total NDAA. What I will say is that we have been working and monitoring carefully with our government relations team the progress on that policy of potentially increasing the reimbursement rates. We understand that the Department of War continues to evaluate changes to tuition assistance. We see that they could really support and implement reimbursement levels for programs at different classifications. We have no information at this time about whether they're going to make any changes and what the changes could look like.

So it's very difficult for us to speculate on whether or not any of the changes that were previously discussed in the past congressional session are going to be implemented and if it could have a beneficial or even a detrimental effect on us.

Operator: Your next question comes from the line of Stephen Sheldon with William Blair.

Stephen Sheldon: First one here just on the Military+ side. It seemed like, as I looked at the fourth quarter guidance, it's a slightly wider guidance range than we typically see. So just curious if there's anything in the business that's creating more potential variability in outcomes, or if that is mainly just uncertainty around the ongoing conflict in the Middle East and how continued deployments could impact enrollment.

Gary Janson: No, I mean, I think the high end of the guidance on the registration side, as well as the revenue which is implied in the overall guide, indicates that we feel pretty good, but we still have 1 month left in the start cycle, so we just increased the range. But I do think, as Angie said, we're seeing some rebounding in specific segments that gives us confidence, so we just have to see one more month. I think that we feel good about the prospects at Military+ and the registration guidance and the corresponding revenue that goes along with that. So nothing unusual about the wider guidance.

It is different than what we've done in the past, but you're correct.

Stephen Sheldon: Got it. And then as a follow-up, just on the Detroit delayed opening for the second campus on the nursing side. Can you just give us a refresh on potential timing for that launch now? I know you still need, I think, the HLC accreditation. But -- and then just generally sounds like campus expansions have been tracking along your plans. So I guess do you still think 2 new campuses per year is the appropriate cadence or as you build out the organizational muscle, I guess the campus expansion muscle, could it make sense eventually to move even quicker at some point?

Angela Selden: Yes, so let me start with your first question. So yes, we were -- unfortunately, we were surprised by the fact that even though ABHES, which was Hondros's accreditor pre-combination, had already approved the location, that HLC needed to go through its own process steps to approve the location, so it was an unexpected 1-quarter delay. So now enrollment for that new Detroit 2 campus, we anticipate students will start being educated in Q2 of '27 instead of Q1 of '27. And so then, as it relates to the momentum around trailblazer, I'll turn it over to Gary, who leads that effort for us.

Gary Janson: I think we're still focused on 2 new campuses per year right now. I think things may change as we continue to evaluate the market and opportunities. We've identified those locations, we are not disclosing them until we have all the plans in place and I's dotted and T's crossed, but I think right now we're at 2 campuses.

If we feel good after the next 2 material launches, and again, the first campus for Rasmussen in several years will be the opening of the South Florida, Fort Lauderdale location, so that's the area we have to make sure is that we have good muscle memory around opening these campuses, but certainly we could deploy additional capital in out years, call it late 2028.

Angela Selden: We'd love to be able to do that.

Operator: Your next question comes from the line of Jasper Bibb with Truist Securities.

Jasper Bibb: Thanks for all the detail in the prepared remarks and congratulations on closing the combination. I just wanted to ask about Health+. Seems like kind of decelerating a little bit from an enrollment growth perspective in the fourth quarter guide. Could you maybe give a little bit of color on what's going on there, and it would be helpful if you could maybe break out between the ground and online pieces of the business, because I know those have been a little bit different, at least last quarter.

Gary Janson: Yes. I mean, it's a really good question. So I think, as Angie mentioned, that we saw some weakness in the online portion of the business. The ground where we -- is exactly where we'd expect it to be. I think in Q3 we were around, call it 7% and Q4 is at the same rate, with the inflationary increases that we discussed. That's right on our long-term growth plan. We saw really strong numbers in Q3 on the online health programs and we still think that's a good upmarket force area.

We're still trying to figure out and before we invest heavily behind that, we're looking at different ways to go after the Online+, which is really non-health care programs, the more undifferentiated pieces of the business, and I would say that's where all the weakness in what we're seeing is coming from. So from the health standpoint, we're really pleased with how it's progressing, with the non-health portion, which is, again, a small percentage of the business, but it is driving down the overall enrollment headline number. That piece of the business, we're still trying to work on the marketing piece of that, as well as trying to figure out how we can create some differentiation there.

Angela Selden: Two things I'll add, Jasper. One, and I think we've shared this in previous earnings calls, an enrolled student in a campus is going to generate 2x the revenue of an enrolled student online, either in health or non-health. So certainly you can see, when we talk about mix shift, the fact that our campuses are growing at low- to mid-double digits really allows us to demonstrate the power of that mix shift to 2x revenue for each additional student. And as we discussed in our Investor Day last year, we had not planned for, what we call our O+ or our Online+, which is the non-health care online, to grow. We had just planned for it to remain flat.

We are seeing slight declines there right now, which is pulling down the overall Health+ performance, but we're continuing to invest behind the campuses and our online health, which is really seeing great momentum.

Jasper Bibb: No, all that makes sense. I apologize if you've given this number before, but have you shared the percentage of Health+ enrollment that's in these kind of Online+ programs? I think that would just be helpful context to understand at what point the good things you're seeing in the majority of that business start to kind of like offset some of the kind of Online+ trends in your reported enrollment numbers for the segment overall.

Angela Selden: Yes. So we -- if you remember, there was a stacked bar chart in the Investor Day that show -- that was an enrollment-based chart, so really less than 15% of our revenue and enrollment is coming from O+, and obviously as the other 2 pieces grow, that as a percentage of the total is going to continue to shrink.

Operator: There are no further questions at this time. This concludes today's call. Thank you for attending, you may now disconnect.

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