American Public Education (NASDAQ:APEI) raised its full-year 2026 outlook after reporting second-quarter revenue and adjusted EBITDA that exceeded the high end of its guidance ranges. The company also completed the institutional combination of its education units and announced plans to implement an AI-enabled student lifecycle platform with Salesforce.
Total second-quarter revenue rose 5.5% year over year to $171.7 million. Excluding $3.4 million in prior-year revenue from Graduate School USA, a business APEI sold in July 2025, revenue growth would have been 7.8%, President and Chief Executive Officer Angela Selden said.
Health+ Drives Revenue Growth
APEI’s Health+ segment generated $86.2 million in revenue, up 11% from the prior year, supported by 7% enrollment growth to roughly 19,600 students and a modest price increase. The company said its on-ground healthcare campuses delivered approximately 9% enrollment growth as it continued its “Fill the Back Row” strategy, which focuses on adding students to available seats in existing programs and campuses.
The company’s Orlando Health+ campus welcomed its first class during the quarter, with enrollment running ahead of plan, according to Selden. The campus also introduced a licensed practical nurse program in the Orlando market. APEI said its Detroit II campus remains on track to begin enrolling students in 2026, while it signed a lease for a Fort Lauderdale, Florida, location expected to begin enrollment in the fourth quarter of 2027.
Health+ recorded income from operations of $0.3 million, compared with an operating loss of $2.4 million a year earlier. Chief Financial Officer Edward Codispoti said enrollment momentum and early benefits from capacity utilization efforts were partially offset by advertising and technology investments.
Selden also said Mark Arnold, president of the Health+ division, is leaving for personal reasons. Duane Bertotto will continue to lead day-to-day Health+ operations, including the Fill the Back Row and “Leverage the Ladder” initiatives.
Military+ Faces Deployment-Related Pressure
Military+ revenue increased 4.7% to $85.5 million, while net course registrations rose 2% to approximately 98,300 students. Segment income from operations increased 10.6% to $23.7 million, and segment adjusted EBITDA margin expanded 150 basis points to 29.4%.
Selden said registrations from veterans and military families continued to grow at a mid-teens rate. However, active-duty enrollment has faced pressure from continuing deployments of Navy, Air Force and Marine service members tied to the conflict in the Middle East.
Management said Army enrollment remained strong and described the headwinds as event-related rather than evidence of a structural change in demand. The company’s guidance assumes the active-duty deployment effects continue through the remainder of 2026.
During the call, Selden also discussed potential legislation that could raise military tuition-assistance reimbursement from $250 to $350 per credit hour. The House passed a version of the National Defense Authorization Act containing the proposed increase, she said, though Senate approval, Department of Defense action and appropriations steps would still be required. If enacted, the change could allow the Military+ division to reevaluate active-duty pricing while maintaining its commitment not to require active-duty undergraduate students to pay out of pocket.
Institutional Combination Completed
On Aug. 4, APEI completed the combination of American Public University System, Rasmussen University and Hondros College of Nursing into a single American Public University System institution. The Higher Learning Commission approved the combination under one institutional accreditation, and the Department of Education approved the arrangement for federal student financial-aid programs.
The unified institution includes more than 290 degree programs, about 109,000 students and more than 250,000 alumni worldwide, Selden said. The transaction also removed a Department of Education restriction imposed in 2021 that limited the total number of Rasmussen students who could access federal financial aid.
Management said the completed combination clears the way to pursue revenue synergies, including expanding Rasmussen RN-to-BSN, post-licensure healthcare and bachelor of science in nursing programs to Hondros campuses. The company said it expects to provide more detail on those opportunities in a future call.
Salesforce Platform and Updated Outlook
APEI is building an AI-enabled student lifecycle platform with Salesforce, using Salesforce’s next-generation student information platform, Data 360 and Agentforce. The rollout is scheduled to begin with Health+ admissions and student-support functions in the first quarter of 2027, then expand across Health+ and Military+ through 2027 and the first half of 2028.
Selden said the costs of the platform were already included in the company’s four-year financial plan. Management expects the initiative to improve service speed, support student retention, identify potential early-warning signs among online students and create operating efficiencies, though it has not yet quantified the expected benefits.
The company also launched a third-party review of marketing efficiency after seeing higher cost per lead in non-core online student segments. Management said early findings identified opportunities to lower cost per start and improve effectiveness. Process, organizational and spending changes are already being implemented, with improvements expected to begin appearing in the fourth quarter.
APEI increased its full-year 2026 guidance to:
- Revenue: $690 million to $698 million, up from $686 million to $696 million.
- Net income available to common stockholders: $46.5 million to $52.5 million, up from $44.9 million to $51.6 million.
- Adjusted EBITDA: $96 million to $104 million, up from $93 million to $102 million.
- Diluted EPS: $2.48 to $2.79, up from $2.33 to $2.68.
- Capital expenditures: $25 million to $28 million, reduced from $28 million to $32 million.
For the third quarter, APEI forecast revenue of $164.5 million to $167 million and adjusted EBITDA of $14 million to $17 million. Codispoti said approximately $6 million in Military+ revenue and roughly $4 million in adjusted EBITDA associated with a Sept. 7 start date are expected to shift from the third quarter into the fourth quarter because revenue is recognized ratably over the enrollment period.
As of June 30, the company reported $222.8 million in cash equivalents, restricted cash and short-term investments, versus total debt of $88.9 million. Year-to-date operating cash flow increased 45.6% from a year earlier to $75.4 million. APEI had $45 million remaining under its $50 million share-repurchase authorization after activity during the second quarter.
About American Public Education (NASDAQ:APEI)
American Public Education, Inc operates as a provider of online postsecondary education, offering degree and certificate programs through its wholly owned subsidiary, American Public University System (APUS). The company designs and delivers a broad range of undergraduate and graduate programs in fields such as business administration, information technology, criminal justice, homeland security, health sciences, and education. Its curriculum is developed to meet the needs of working adults, military personnel, veterans and civilian students seeking flexible, career-relevant learning opportunities.
APUS is regionally accredited by the Middle States Commission on Higher Education and employs a proprietary online learning platform that supports asynchronous instruction, digital course materials and interactive learning tools.
