Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 07, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-33810 | |
Entity Registrant Name | AMERICAN PUBLIC EDUCATION, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 01-0724376 | |
Entity Address, Address Line One | 111 West Congress Street, | |
Entity Address, City or Town | Charles Town, | |
Entity Address, State or Province | WV | |
Entity Address, Postal Zip Code | 25414 | |
City Area Code | 304 | |
Local Phone Number | 724-3700 | |
Title of 12(b) Security | Common Stock, $.01 par value | |
Trading Symbol | APEI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,797,011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001201792 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash, cash equivalents, and restricted cash (Note 2) | $ 216,038 | $ 202,740 |
Accounts receivable, net of allowance of $5,758 in 2020 and $6,174 in 2019 | 6,922 | 11,325 |
Prepaid expenses | 9,426 | 7,087 |
Income tax receivable | 2,601 | 1,757 |
Total current assets | 234,987 | 222,909 |
Property and equipment, net | 74,079 | 78,495 |
Operating lease assets, net | 10,483 | 11,658 |
Investments | 10,502 | 10,502 |
Goodwill | 26,563 | 26,563 |
Other assets, net | 5,087 | 4,770 |
Total assets | 361,701 | 354,897 |
Current liabilities: | ||
Accounts payable | 5,034 | 3,546 |
Accrued compensation and benefits | 17,105 | 13,753 |
Accrued liabilities | 8,551 | 8,270 |
Deferred revenue and student deposits | 20,783 | 17,426 |
Operating lease liabilities, current | 2,379 | 2,283 |
Total current liabilities | 53,852 | 45,278 |
Operating lease liabilities, long-term | 8,277 | 9,495 |
Deferred income taxes | 5,961 | 3,391 |
Total liabilities | 68,090 | 58,164 |
Commitments and contingencies (Note 7) | ||
Stockholders’ equity: | ||
Preferred stock, $.01 par value; Authorized shares - 10,000; no shares issued or outstanding | 0 | 0 |
Common stock, $.01 par value; Authorized shares - 100,000; 14,797 issued and outstanding in 2020; 15,178 issued and outstanding in 2019 | 148 | 152 |
Additional paid-in capital | 191,996 | 190,620 |
Retained earnings | 101,467 | 105,961 |
Total stockholders’ equity | 293,611 | 296,733 |
Total liabilities and stockholders’ equity | $ 361,701 | $ 354,897 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Accounts receivable, net of allowance of $5,758 in 2020 and $6,174 in 2019 | $ 5,758 | $ 6,174 |
Equity [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 14,797,000 | 15,178,000 |
Common stock, outstanding (in shares) | 14,797,000 | 15,178,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 82,127,000 | $ 70,560,000 | $ 156,743,000 | $ 144,001,000 |
Costs and expenses: | ||||
Instructional costs and services | 30,744,000 | 28,725,000 | 59,974,000 | 56,640,000 |
Selling and promotional | 17,056,000 | 14,087,000 | 35,242,000 | 29,134,000 |
General and administrative | 21,737,000 | 18,123,000 | 42,740,000 | 37,188,000 |
Loss on disposals of long-lived assets | 158,000 | 4,000 | 324,000 | 130,000 |
Impairment of goodwill | 0 | 0 | 0 | 5,855,000 |
Depreciation and amortization | 3,391,000 | 3,943,000 | 6,729,000 | 7,994,000 |
Total costs and expenses | 73,086,000 | 64,882,000 | 145,009,000 | 136,941,000 |
Income from operations before interest income and income taxes | 9,041,000 | 5,678,000 | 11,734,000 | 7,060,000 |
Interest income, net | 179,000 | 1,135,000 | 881,000 | 2,188,000 |
Income before income taxes | 9,220,000 | 6,813,000 | 12,615,000 | 9,248,000 |
Income tax expense | 2,532,000 | 1,898,000 | 3,506,000 | 1,835,000 |
Equity investment income (loss) | 1,000 | 6,000 | 0 | (1,481,000) |
Net income | $ 6,689,000 | $ 4,921,000 | $ 9,109,000 | $ 5,932,000 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.45 | $ 0.30 | $ 0.61 | $ 0.36 |
Diluted (in dollars per share) | $ 0.45 | $ 0.30 | $ 0.61 | $ 0.36 |
Weighted average number of common shares: | ||||
Basic (in shares) | 14,789 | 16,512 | 14,907 | 16,522 |
Diluted (in shares) | 14,948 | 16,653 | 15,026 | 16,671 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings |
Beginning balance (in shares) at Dec. 31, 2018 | 16,425 | |||
Beginning balance at Dec. 31, 2018 | $ 321,266 | $ 164 | $ 187,172 | $ 133,930 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock under employee benefit plans (in shares) | 251 | |||
Issuance of common stock under employee benefit plans | 0 | $ 3 | (3) | |
Deemed repurchased shares of common and restricted stock for tax withholding (in shares) | (83) | |||
Deemed repurchased shares of common and restricted stock for tax withholding | (2,510) | $ (1) | (2,509) | |
Stock-based compensation | 3,319 | 3,319 | ||
Repurchased and retired shares of common stock (in shares) | (327) | |||
Repurchased and retired shares of common stock | (9,551) | $ (3) | (9,548) | |
Net income | 5,932 | 5,932 | ||
Ending balance (in shares) at Jun. 30, 2019 | 16,266 | |||
Ending balance at Jun. 30, 2019 | 318,456 | $ 163 | 187,979 | 130,314 |
Beginning balance (in shares) at Dec. 31, 2019 | 15,178 | |||
Beginning balance at Dec. 31, 2019 | 296,733 | $ 152 | 190,620 | 105,961 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock under employee benefit plans (in shares) | 240 | |||
Issuance of common stock under employee benefit plans | 0 | $ 2 | (2) | |
Deemed repurchased shares of common and restricted stock for tax withholding (in shares) | (73) | |||
Deemed repurchased shares of common and restricted stock for tax withholding | (1,946) | $ (1) | (1,945) | |
Stock-based compensation | 3,323 | 3,323 | ||
Repurchased and retired shares of common stock (in shares) | (548) | |||
Repurchased and retired shares of common stock | (13,608) | $ (5) | (13,603) | |
Net income | 9,109 | 9,109 | ||
Ending balance (in shares) at Jun. 30, 2020 | 14,797 | |||
Ending balance at Jun. 30, 2020 | $ 293,611 | $ 148 | $ 191,996 | $ 101,467 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities | ||
Net income | $ 9,109,000 | $ 5,932,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,729,000 | 7,994,000 |
Stock-based compensation | 3,323,000 | 3,319,000 |
Equity investment loss | 0 | 1,481,000 |
Deferred income taxes | 2,570,000 | 891,000 |
Loss on disposals of long-lived assets | 324,000 | 130,000 |
Impairment of goodwill | 0 | 5,855,000 |
Other | 10,000 | 62,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net of allowance for bad debt | 4,403,000 | 7,646,000 |
Prepaid expenses | (2,727,000) | (2,407,000) |
Income tax receivable/payable | (844,000) | (3,864,000) |
Operating leases, net | 53,000 | 364,000 |
Other assets | (317,000) | 292,000 |
Accounts payable | 1,202,000 | (4,187,000) |
Accrued compensation and benefits | 3,352,000 | (3,612,000) |
Accrued liabilities | 1,201,000 | 3,080,000 |
Deferred revenue and student deposits | 3,357,000 | 744,000 |
Net cash provided by operating activities | 31,745,000 | 23,720,000 |
Investing activities | ||
Capital expenditures | (2,893,000) | (2,957,000) |
Net cash used in investing activities | (2,893,000) | (2,957,000) |
Financing activities | ||
Cash paid for repurchase of common stock | (15,554,000) | (12,061,000) |
Net cash used in financing activities | (15,554,000) | (12,061,000) |
Net increase in cash, cash equivalents, and restricted cash | 13,298,000 | 8,702,000 |
Cash, cash equivalents, and restricted cash at beginning of period | 202,740,000 | 212,131,000 |
Cash, cash equivalents, and restricted cash at end of period | 216,038,000 | 220,833,000 |
Supplemental disclosure of cash flow information | ||
Income taxes paid | $ 1,780,000 | $ 4,809,000 |
Nature of the Business
Nature of the Business | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the Business American Public Education, Inc., or APEI, which together with its subsidiaries is referred to as the “Company,” is a provider of online and campus-based postsecondary education to approximately 85,400 students through two subsidiary institutions: • American Public University System, Inc., or APUS, provides online postsecondary education directed primarily at the needs of the military, military-affiliated, public service and service-minded communities through American Military University, or AMU, and American Public University, or APU. APUS is institutionally accredited by the Higher Learning Commission, or HLC. • National Education Seminars, Inc., which is referred to herein as Hondros College of Nursing, or HCN, provides nursing education to students enrolled at five campuses in Ohio, and, beginning in April 2020, to students enrolled at a campus in Indianapolis, Indiana, to serve the needs of the nursing and healthcare communities. HCN is institutionally accredited by the Accrediting Bureau for Health Education Schools, or ABHES. In March 2020, in response to the novel coronavirus COVID-19 global pandemic, HCN, leveraging the expertise of APUS, shifted to a blended model with online delivery of its courses and on campus delivery of certain labs. HCN has since fully reopened its campuses, using smaller in person classes with screening, social distancing and masking requirements while continuing to offer courses in a virtual setting for those that prefer remote course learning. There can be no assurance that HCN will not need to again further limit campus interactions or close its campuses in response to the COVID-19 pandemic or as a result of location regulations. The Company’s institutions are licensed or otherwise authorized, or are in the process of obtaining such licenses or authorizations, to offer postsecondary education programs by state authorities to the extent the institutions believe such licenses or authorizations are required, and are certified by the United States Department of Education, or ED, to participate in student financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, or Title IV programs. The Company’s operations are organized into two reportable segments: • American Public Education Segment, or APEI Segment. This segment reflects the operational activities at APUS, other corporate activities, and minority investments. • Hondros College of Nursing Segment, or HCN Segment. This segment reflects the operational activities of HCN. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Accounting The accompanying unaudited, interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Principles of Consolidation The accompanying unaudited interim Consolidated Financial Statements include accounts of APEI and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. Unaudited Interim Financial Information The unaudited interim Consolidated Financial Statements do not include all of the information and notes required by GAAP for audited annual financial statement presentations. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of the Company’s financial position, results of operations, and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019, or the Annual Report. Use of Estimates In preparing financial statements in conformity with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, and various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to the Company’s Consolidated Financial Statements. Restricted Cash Cash, cash equivalents, and restricted cash includes funds held for students for unbilled educational services that were received from Title IV programs. The Company is required to maintain and restrict these funds pursuant to the terms of the applicable institution’s program participation agreement with the U.S. Department of Education. Restricted cash on the Company’s Consolidated Balance Sheets was approximately $1.3 million at both June 30, 2020 and December 31, 2019. Investments The Company periodically evaluates its equity method investment for indicators of an other-than-temporary impairment. Factors the Company considers when evaluating for an other-than-temporary impairment include the duration and severity of the impairment, the reasons for the decline in value, and the potential recovery period. For an investee with impairment indicators, the Company measures fair value on the basis of discounted cash flows or other appropriate valuation methods. If it is probable that the Company will not recover the carrying amount of the investment, the impairment is considered other-than-temporary and recorded in equity investment income (loss), and the equity investment balance is reduced to fair value. Each reporting period the Company evaluates its cost method investments for observable price changes. Factors the Company may consider when evaluating an observable price may include significant changes in the regulatory, economic or technological environment, changes in the general market condition, bona fide offers to purchase or sell similar investments, and other criteria. Management must exercise significant judgment in evaluating the potential impairment of its equity investments. The Company evaluated its equity method and cost method investments for impairment as of June 30, 2020, including a review of any impacts related to the COVID-19 pandemic, and determined none of the investments were impaired. Goodwill and Indefinite-lived Intangible Assets The Company evaluated events and circumstances related to the valuation of goodwill through June 30, 2020 to determine if there were indicators of impairment. This evaluation included consideration of enrollment trends and financial performance, as well as industry and market conditions, and the impact of the COVID-19 pandemic. This evaluation concluded there were no indicators of impairment during the period, and consequently, there was no impairment during the three and six months ended June 30, 2020. During the three months ended March 31, 2019, the Company completed an interim goodwill impairment test as a result of circumstances that included HCN’s underperformance against 2019 internal targets and overall 2019 financial performance. The implied fair value of goodwill was calculated and compared to the recorded goodwill, and the Company determined the fair value of goodwill was $28.0 million, or $5.9 million less than its carrying value. There was no impairment of the intangible assets. As a result, the Company recorded a pretax, non-cash charge of $5.9 million to reduce the carrying value of its goodwill in our HCN Segment. For additional information on goodwill and intangible assets see the Company’s Consolidated Financial Statements and accompanying notes in its audited financial statements included in the Annual Report. Stock-based Compensation Stock-based payments may include incentive stock options or non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance shares, performance units, cash-based awards, other stock-based awards, including unrestricted shares, or any combination of the foregoing. Stock-based compensation cost is recognized as expense generally over a three-year vesting period using the straight-line method for employees and the graded-vesting method for members of the Board of Directors, and is measured using the Company’s closing stock price on the date of the grant. An accelerated one-year period is used to recognize stock-based compensation cost for employees who have reached certain service and retirement eligibility criteria on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model. Judgment is required in estimating the percentage of share-based awards that are expected to vest, and in the case of performance stock units, or PSUs, the level of performance that will be achieved and the number of shares that will be earned. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. If actual results differ significantly from these estimates, stock-based compensation expense could be higher and have a material impact on the Company’s consolidated financial statements. Estimates of fair value are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value. On May 15, 2020, the Company’s stockholders approved an amendment to the American Public Education, Inc. 2017 Omnibus Plan, or the 2017 Plan, to increase the number of shares available for issuance thereunder by 1,425,000 and to extend the term of the 2017 Plan to May 15, 2030, as well as to clarify limitations on repricing. Stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Instructional costs and services $ 402 $ 406 $ 880 $ 809 Selling and promotional 218 199 476 393 General and administrative 953 1,025 1,967 2,117 Stock-based compensation expense in operating income $ 1,573 $ 1,630 $ 3,323 $ 3,319 Incentive-based Compensation The Company provides incentive-based compensation opportunities to certain employees through cash incentive and equity awards. The expense associated with these awards is reflected within the Company’s operating expenses. For the years ending December 31, 2020 and 2019, the Management Development and Compensation Committee of the Company’s Board of Directors approved an annual incentive arrangement for senior management employees. The aggregate amount of any awards payable is dependent upon the achievement of certain Company financial and operational goals, as well as individual performance goals. Given that the awards are generally contingent upon achieving annual objectives, final determination of the current year incentive awards cannot be made until after the results for the year are finalized. The Company recognizes the estimated fair value of performance-based restricted stock units by assuming the satisfaction of any performance-based objectives at the “target” level, which is the most probable outcome determined for accounting purposes at the time of grant, and multiplying the corresponding number of shares earned based upon such achievement by the closing price of the Company’s stock on the date of grant. To the extent performance goals are not met, compensation cost is not ultimately recognized against the goals and, to the extent previously recognized, compensation cost is reversed. Amounts accrued are subject to change in future interim periods if actual future financial results or operational performance are better or worse than expected. The Company recognized an aggregate expense associated with the Company’s incentive-based compensation plans of approximately $1.8 million and $3.1 million during the three and six month periods ended June 30, 2020, respectively, compared to an aggregate expense of $0.7 million and $1.4 million during the three and six month periods ended June 30, 2019, respectively. Other Employee Benefits On May 15, 2020, the Company’s stockholders approved an amendment to the American Public Education, Inc. Employee Stock Purchase Plan, or ESPP, to increase the number of shares of the Company’s common stock available for issuance under the plan by 100,000 shares and extend the term of the ESPP to May 15, 2030. As of June 30, 2020, 106,088 shares remained available for purchase under the ESPP, including the 100,000 additional shares reserved under the plan following the stockholder approval. Income Taxes The Company determines its interim tax provision by applying the estimated income tax rate expected for the full calendar year to income before income taxes for the period adjusted for discrete items. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses, which is included in Accounting Standards Codification, or ASC , Topic 326, Measurement of Credit Losses on Financial Instruments with certain amendments made to the standard in November 2018 through ASU No. 2018-9, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The new guidance revises the accounting requirements related to the measurement of credit losses and will require entities to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable and supportable forecasts about collectability. Assets must be presented in the financial statements at the net amount expected to be collected. The guidance is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption was permitted. The adoption of this standard effective January 1, 2020 did not have a material impact on its Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract , which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software or software licenses. The accounting for the service element of a hosting arrangement that is a service contract is not affected by this amendment. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption was permitted. The Company adopted this standard effective January 1, 2020 using the prospective approach. The adoption of this standard effective January 1, 2020 did not have a material impact on its Consolidated Financial Statements. The Company considers the applicability and impact of all ASUs issued by the FASB. All other ASUs issued subsequent to the filing of the Annual Report on March 10, 2020 were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s consolidated financial position and/or results of operations. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of Revenue In the following table, revenue, shown net of grants and scholarships, is disaggregated by type of service provided. The table also includes a reconciliation of the disaggregated revenue with the reportable segments (in thousands): Three Months Ended June 30, 2020 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 73,082 $ 7,268 $ (22) $ 80,328 Graduation fees 275 — — 275 Textbook and other course materials — 1,194 — 1,194 Other fees 190 140 — 330 Total Revenue $ 73,547 $ 8,602 $ (22) $ 82,127 Three Months Ended June 30, 2019 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 62,973 $ 6,238 $ (29) $ 69,182 Graduation fees 274 — — 274 Textbook and other course materials — 799 — 799 Other fees 201 104 — 305 Total Revenue $ 63,448 $ 7,141 $ (29) $ 70,560 Six Months Ended June 30, 2020 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 139,638 $ 13,659 $ (39) $ 153,258 Graduation fees 601 — — 601 Textbook and other course materials — 2,223 — 2,223 Other fees 402 259 — 661 Total Revenue $ 140,641 $ 16,141 $ (39) $ 156,743 Six Months Ended June 30, 2019 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 128,171 $ 13,013 $ (56) $ 141,128 Graduation fees 584 — — 584 Textbook and other course materials — 1,661 — 1,661 Other fees 414 214 — 628 Total Revenue $ 129,169 $ 14,888 $ (56) $ 144,001 The APEI Segment charges the HCN Segment for the value of courses taken by HCN Segment employees at APUS. The intersegment elimination represents the elimination of this intersegment revenue in consolidation. Contract Balances and Performance Obligations The Company has no contract assets or deferred contract costs as of June 30, 2020 and December 31, 2019. The Company recognizes a contract liability, or deferred revenue, when a student begins an online course or term, in the case of APUS, or starts a term, in the case of HCN. Deferred revenue at June 30, 2020 was $20.8 million and includes $12.0 million in future revenue that has not yet been earned for courses and terms that are in progress, as well as $8.8 million in consideration received in advance for future courses or terms, or student deposits. Deferred revenue at December 31, 2019 was $17.4 million and includes $9.6 million in future revenue that has not yet been earned for courses and terms that are in progress, as well as $7.8 million in student deposits. Deferred revenue represents the Company’s performance obligation to transfer future instructional services to students. The Company’s remaining performance obligations represent the transaction price allocated to future reporting periods. The Company has elected, as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with customers that have an expected duration of one year or less. When the Company begins performing its obligations, a contract receivable is created, resulting in accounts receivable on the Company’s Consolidated Balance Sheets. The Company accounts for receivables in accordance with FASB ASC 310, Receivables . The Company uses the portfolio approach, a practical expedient, to evaluate if a contract exists and to assess collectability at the time of contract inception based on historical experience. Contracts are subsequently reviewed for collectability if significant events or circumstances indicate a change. The allowance for doubtful accounts is based on management’s evaluation of the status of existing accounts receivable. Among other factors, management considers the age of the receivable, the anticipated source of payment, and historical allowance considerations. Consideration is also given to any specific known risk areas among the existing accounts receivable balances. Recoveries of receivables previously written off are recorded when received. APUS does not charge interest on past due accounts receivable. HCN charges interest on payment plans when a student leaves upon graduation or exit of the program. Interest income earned on open receivables during the three and six months ended June 30, 2020 was approximately $4,300 and $8,600, compared to interest income of approximately $3,000 and $8,000 earned during the three and six months ended June 30, 2019. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for office space and campus facilities. Some leases include options to terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The APEI Segment leases corporate and administrative office space in Maryland and Virginia under operating leases that expire through June 2023. The HCN Segment leases administrative office space in suburban Columbus, Ohio, and leases six campuses, located in the suburban areas of Cincinnati, Cleveland, Columbus, Dayton, and Toledo, Ohio, and, beginning in April 2020, Indianapolis, Indiana, under operating leases that expire through June 2029. Operating lease assets are right of use, or ROU, assets, which represent the right to use the underlying assets for the lease term. Operating lease liabilities represent the obligation to make lease payments arising from the lease. Operating leases are included in the Operating lease assets, net, and Operating lease liabilities, current and long-term, on the Consolidated Balance Sheets at June 30, 2020 and December 31, 2019. These assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. When the lease does not provide an implicit interest rate, the Company uses an incremental borrowing rate based on information available at lease commencement to determine the present value of the lease payments. The ROU assets include all remaining lease payments and exclude lease incentives. Lease expense for operating leases is recognized on a straight-line basis over the lease term. There are no variable lease payments. Lease expense for the three and six month periods ended June 30, 2020 was $0.7 million and $1.5 million, respectively, compared to $0.6 million and $1.2 million for the three and six month periods ended June 30, 2019, respectively. These costs are primarily related to long-term operating leases, but also include amounts for short-term leases with terms greater than 30 days that are not material. Cash paid for amounts included in the present value of operating lease liabilities during the three and six month periods ended June 30, 2020 was $0.7 million and $1.4 million, respectively and is included in operating cash flows. Cash paid for amounts included in the present value of operating lease liabilities during the three and six month periods ended June 30, 2019 was $0.6 million and $1.2 million, respectively, and is included in operating cash flows. The following tables present information about the amount and timing of cash flows arising from the Company’s operating leases as of June 30, 2020 (dollars in thousands): Maturity of Lease Liabilities (Unaudited) Lease Payments 2020 (remaining) $ 1,423 2021 2,903 2022 2,857 2023 1,909 2024 928 2025 498 2026 and beyond 1,742 Total future minimum lease payments 12,260 Less imputed interest (1,604) Present value of operating lease liabilities $ 10,656 Balance Sheet Classification Operating lease liabilities, current $ 2,379 Operating lease liabilities, long-term 8,277 Total operating lease liabilities $ 10,656 Other Information Weighted average remaining lease term (in years) 5.2 Weighted average discount rate 5.2 % |
Net Income Per Common Share
Net Income Per Common Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | Net Income Per Common Share Basic net income per common share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share increases the shares used in the per share calculation by the dilutive effects of restricted stock awards. The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted net income per common share (in thousands). Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Basic weighted average shares outstanding 14,789 16,512 14,907 16,522 Effect of dilutive restricted stock 159 141 119 149 Diluted weighted average shares outstanding 14,948 16,653 15,026 16,671 During the three and six month periods ended June 30, 2020, the Company had 33,329 and 145,427 shares of restricted stock, respectively, excluded from the diluted earnings per share calculation because the effect would have been antidilutive. During the three and six month periods ended June 30, 2019, the Company had 12,774 and 37,738 shares of restricted stock, respectively, that were excluded from the calculation as antidilutive. For both the three and six month periods ended June 30, 2020 there were 51,134 stock options excluded from the calculation as antidilutive. For the three and six month periods ended June 30, 2019 there were no stock options outstanding. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has two operating segments that are managed in the following reportable segments: • American Public Education Segment , or APEI Segment ; and • Hondros College of Nursing Segment , or HCN Segment . In accordance with FASB ASC 280, Segment Reporting , the chief operating decision-maker has been identified as the Company’s Chief Executive Officer. The Company’s Chief Executive Officer reviews operating results to make decisions about allocating resources and assessing performance for the APEI and HCN Segments. A summary of financial information by reportable segment is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Revenue: American Public Education Segment $ 73,547 $ 63,448 $ 140,641 $ 129,169 Hondros College of Nursing Segment 8,602 7,141 16,141 14,888 Intersegment elimination (22) (29) (39) (56) Total Revenue $ 82,127 $ 70,560 156,743 $ 144,001 Depreciation and amortization: American Public Education Segment $ 3,221 $ 3,688 $ 6,415 $ 7,470 Hondros College of Nursing Segment 170 255 314 524 Total Depreciation and amortization $ 3,391 $ 3,943 6,729 $7,994 Income (loss) from operations before interest income and income taxes: American Public Education Segment $ 9,077 $ 6,589 $ 12,655 $ 14,111 Hondros College of Nursing Segment (35) (910) (921) (7,056) Intersegment elimination (1) (1) — 5 Total income from operations before interest income and income taxes $ 9,041 $ 5,678 11,734 $ 7,060 Interest income, net: American Public Education Segment $ 177 $ 1,123 867 $ 2,170 Hondros College of Nursing Segment 2 12 14 18 Total Interest income, net $ 179 $ 1,135 881 $ 2,188 Income tax expense (benefit): American Public Education Segment $ 2,537 $ 2,132 3,752 $ 3,798 Hondros College of Nursing Segment (5) (234) (246) (1,963) Total Income tax expense (benefit) $ 2,532 $ 1,898 3,506 $ 1,835 Capital expenditures: American Public Education Segment $ 999 $ 1,229 $ 2,744 $ 2,574 Hondros College of Nursing Segment 25 143 149 383 Total Capital expenditures $ 1,024 $ 1,372 2,893 $2,957 The APEI Segment charges the HCN Segment for the value of courses taken by HCN Segment employees at APUS. The intersegment elimination represents the elimination of this intersegment revenue in consolidation. A summary of the Company’s consolidated assets by reportable segment is as follows (in thousands): As of June 30, 2020 As of December 31, 2019 (Unaudited) Assets: American Public Education Segment $ 312,479 $ 305,896 Hondros College of Nursing Segment 49,222 49,001 Total Assets $ 361,701 $ 354,897 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses, associated with any such contingency. From time to time the Company may be involved in legal matters in the normal course of its business. |
Concentration
Concentration | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration | Concentration APUS students utilize various payment sources and programs to finance their educational expenses, including funds from: Department of Defense, or DoD, tuition assistance programs; education benefit programs administered by the U.S. Department of Veterans Affairs, or VA; and federal student aid from Title IV programs; as well as cash and other sources. Reductions in or changes to DoD tuition assistance, VA education benefits, Title IV programs, and other payment sources could have a significant impact on the Company’s operations. As of June 30, 2020, approximately 59% of APUS students self-reported that they served in the military on active duty at the time of initial enrollment. Active duty military students generally take fewer courses per year on average than non-military students. A summary of APEI Segment revenue derived from students by primary funding source for the three and six month periods ended June 30, 2020 and 2019 is included in the table below (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 DoD tuition assistance programs 44% 40% 43% 40% VA education benefits 21% 23% 22% 22% Title IV programs 20% 24% 21% 24% Cash and other sources 15% 13% 14% 14% A summary of HCN Segment revenue derived from students by primary funding source for the three and six month periods ended June 30, 2020 and 2019 is included in the table below (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Title IV programs 83% 80% 82% 80% Cash and other sources 15% 18% 16% 18% VA education benefits 2% 2% 2% 2% |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Accounting | Basis of Presentation and AccountingThe accompanying unaudited, interim Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited interim Consolidated Financial Statements include accounts of APEI and its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with GAAP, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, and various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to the Company’s Consolidated Financial Statements. |
Restricted Cash | Restricted Cash Cash, cash equivalents, and restricted cash includes funds held for students for unbilled educational services that were received from Title IV programs. The Company is required to maintain and restrict these funds pursuant to the terms of the applicable institution’s program participation agreement with the U.S. Department of Education. |
Investments | Investments The Company periodically evaluates its equity method investment for indicators of an other-than-temporary impairment. Factors the Company considers when evaluating for an other-than-temporary impairment include the duration and severity of the impairment, the reasons for the decline in value, and the potential recovery period. For an investee with impairment indicators, the Company measures fair value on the basis of discounted cash flows or other appropriate valuation methods. If it is probable that the Company will not recover the carrying amount of the investment, the impairment is considered other-than-temporary and recorded in equity investment income (loss), and the equity investment balance is reduced to fair value. Each reporting period the Company evaluates its cost method investments for observable price changes. Factors the Company may consider when evaluating an observable price may include significant changes in the regulatory, economic or technological environment, changes in the general market condition, bona fide offers to purchase or sell similar investments, and other criteria. |
Goodwill and Indefinite-lived Intangible Assets | Goodwill and Indefinite-lived Intangible Assets The Company evaluated events and circumstances related to the valuation of goodwill through June 30, 2020 to determine if there were indicators of impairment. This evaluation included consideration of enrollment trends and financial performance, as well as industry and market conditions, and the impact of the COVID-19 pandemic. |
Stock-based and incentive-based compensation | Stock-based Compensation Stock-based payments may include incentive stock options or non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance shares, performance units, cash-based awards, other stock-based awards, including unrestricted shares, or any combination of the foregoing. Stock-based compensation cost is recognized as expense generally over a three-year vesting period using the straight-line method for employees and the graded-vesting method for members of the Board of Directors, and is measured using the Company’s closing stock price on the date of the grant. An accelerated one-year period is used to recognize stock-based compensation cost for employees who have reached certain service and retirement eligibility criteria on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model. Judgment is required in estimating the percentage of share-based awards that are expected to vest, and in the case of performance stock units, or PSUs, the level of performance that will be achieved and the number of shares that will be earned. The Company estimates forfeitures of share-based awards at the time of grant and revises such estimates in subsequent periods if actual forfeitures differ from original estimates. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. If actual results differ significantly from these estimates, stock-based compensation expense could be higher and have a material impact on the Company’s consolidated financial statements. Estimates of fair value are subjective and are not intended to predict actual future events, and subsequent events are not indicative of the reasonableness of the original estimates of fair value. On May 15, 2020, the Company’s stockholders approved an amendment to the American Public Education, Inc. 2017 Omnibus Plan, or the 2017 Plan, to increase the number of shares available for issuance thereunder by 1,425,000 and to extend the term of the 2017 Plan to May 15, 2030, as well as to clarify limitations on repricing. Stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Instructional costs and services $ 402 $ 406 $ 880 $ 809 Selling and promotional 218 199 476 393 General and administrative 953 1,025 1,967 2,117 Stock-based compensation expense in operating income $ 1,573 $ 1,630 $ 3,323 $ 3,319 Incentive-based Compensation The Company provides incentive-based compensation opportunities to certain employees through cash incentive and equity awards. The expense associated with these awards is reflected within the Company’s operating expenses. For the years ending December 31, 2020 and 2019, the Management Development and Compensation Committee of the Company’s Board of Directors approved an annual incentive arrangement for senior management employees. The aggregate amount of any awards payable is dependent upon the achievement of certain Company financial and operational goals, as well as individual performance goals. Given that the awards are generally contingent upon achieving annual objectives, final determination of the current year incentive awards cannot be made until after the results for the year are finalized. The Company recognizes the estimated fair value of performance-based restricted stock units by assuming the satisfaction of any performance-based objectives at the “target” level, which is the most probable outcome determined for accounting purposes at the time of grant, and multiplying the corresponding number of shares earned based upon such achievement by the closing price of the Company’s stock on the date of grant. To the extent performance goals are not met, compensation cost is not ultimately recognized against the goals and, to the extent previously recognized, compensation cost is reversed. Amounts accrued are subject to change in future interim periods if actual future financial results or operational performance are better or worse than |
Income Taxes | Income Taxes The Company determines its interim tax provision by applying the estimated income tax rate expected for the full calendar year to income before income taxes for the period adjusted for discrete items. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-13, Financial Instruments - Credit Losses, which is included in Accounting Standards Codification, or ASC , Topic 326, Measurement of Credit Losses on Financial Instruments with certain amendments made to the standard in November 2018 through ASU No. 2018-9, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The new guidance revises the accounting requirements related to the measurement of credit losses and will require entities to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable and supportable forecasts about collectability. Assets must be presented in the financial statements at the net amount expected to be collected. The guidance is effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption was permitted. The adoption of this standard effective January 1, 2020 did not have a material impact on its Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract , which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software or software licenses. The accounting for the service element of a hosting arrangement that is a service contract is not affected by this amendment. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption was permitted. The Company adopted this standard effective January 1, 2020 using the prospective approach. The adoption of this standard effective January 1, 2020 did not have a material impact on its Consolidated Financial Statements. The Company considers the applicability and impact of all ASUs issued by the FASB. All other ASUs issued subsequent to the filing of the Annual Report on March 10, 2020 were assessed and determined to be either inapplicable or not expected to have a material impact on the Company’s consolidated financial position and/or results of operations. |
Commitments and Contingencies | Commitments and Contingencies The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate costs and expenses, associated with any such contingency. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of stock-based compensation cost charged against income | Stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Instructional costs and services $ 402 $ 406 $ 880 $ 809 Selling and promotional 218 199 476 393 General and administrative 953 1,025 1,967 2,117 Stock-based compensation expense in operating income $ 1,573 $ 1,630 $ 3,323 $ 3,319 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | In the following table, revenue, shown net of grants and scholarships, is disaggregated by type of service provided. The table also includes a reconciliation of the disaggregated revenue with the reportable segments (in thousands): Three Months Ended June 30, 2020 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 73,082 $ 7,268 $ (22) $ 80,328 Graduation fees 275 — — 275 Textbook and other course materials — 1,194 — 1,194 Other fees 190 140 — 330 Total Revenue $ 73,547 $ 8,602 $ (22) $ 82,127 Three Months Ended June 30, 2019 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 62,973 $ 6,238 $ (29) $ 69,182 Graduation fees 274 — — 274 Textbook and other course materials — 799 — 799 Other fees 201 104 — 305 Total Revenue $ 63,448 $ 7,141 $ (29) $ 70,560 Six Months Ended June 30, 2020 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 139,638 $ 13,659 $ (39) $ 153,258 Graduation fees 601 — — 601 Textbook and other course materials — 2,223 — 2,223 Other fees 402 259 — 661 Total Revenue $ 140,641 $ 16,141 $ (39) $ 156,743 Six Months Ended June 30, 2019 (Unaudited) APEI HCN Intersegment Consolidated Instructional services, net of grants and scholarships $ 128,171 $ 13,013 $ (56) $ 141,128 Graduation fees 584 — — 584 Textbook and other course materials — 1,661 — 1,661 Other fees 414 214 — 628 Total Revenue $ 129,169 $ 14,888 $ (56) $ 144,001 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Minimum rental commitments | The following tables present information about the amount and timing of cash flows arising from the Company’s operating leases as of June 30, 2020 (dollars in thousands): Maturity of Lease Liabilities (Unaudited) Lease Payments 2020 (remaining) $ 1,423 2021 2,903 2022 2,857 2023 1,909 2024 928 2025 498 2026 and beyond 1,742 Total future minimum lease payments 12,260 Less imputed interest (1,604) Present value of operating lease liabilities $ 10,656 Balance Sheet Classification Operating lease liabilities, current $ 2,379 Operating lease liabilities, long-term 8,277 Total operating lease liabilities $ 10,656 |
Schedule of information related to leases | Other Information Weighted average remaining lease term (in years) 5.2 Weighted average discount rate 5.2 % |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted net income per common share (in thousands). Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Basic weighted average shares outstanding 14,789 16,512 14,907 16,522 Effect of dilutive restricted stock 159 141 119 149 Diluted weighted average shares outstanding 14,948 16,653 15,026 16,671 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Summary of financial information by reportable segment | A summary of financial information by reportable segment is as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) Revenue: American Public Education Segment $ 73,547 $ 63,448 $ 140,641 $ 129,169 Hondros College of Nursing Segment 8,602 7,141 16,141 14,888 Intersegment elimination (22) (29) (39) (56) Total Revenue $ 82,127 $ 70,560 156,743 $ 144,001 Depreciation and amortization: American Public Education Segment $ 3,221 $ 3,688 $ 6,415 $ 7,470 Hondros College of Nursing Segment 170 255 314 524 Total Depreciation and amortization $ 3,391 $ 3,943 6,729 $7,994 Income (loss) from operations before interest income and income taxes: American Public Education Segment $ 9,077 $ 6,589 $ 12,655 $ 14,111 Hondros College of Nursing Segment (35) (910) (921) (7,056) Intersegment elimination (1) (1) — 5 Total income from operations before interest income and income taxes $ 9,041 $ 5,678 11,734 $ 7,060 Interest income, net: American Public Education Segment $ 177 $ 1,123 867 $ 2,170 Hondros College of Nursing Segment 2 12 14 18 Total Interest income, net $ 179 $ 1,135 881 $ 2,188 Income tax expense (benefit): American Public Education Segment $ 2,537 $ 2,132 3,752 $ 3,798 Hondros College of Nursing Segment (5) (234) (246) (1,963) Total Income tax expense (benefit) $ 2,532 $ 1,898 3,506 $ 1,835 Capital expenditures: American Public Education Segment $ 999 $ 1,229 $ 2,744 $ 2,574 Hondros College of Nursing Segment 25 143 149 383 Total Capital expenditures $ 1,024 $ 1,372 2,893 $2,957 |
Summary of consolidated assets by reportable segment | A summary of the Company’s consolidated assets by reportable segment is as follows (in thousands): As of June 30, 2020 As of December 31, 2019 (Unaudited) Assets: American Public Education Segment $ 312,479 $ 305,896 Hondros College of Nursing Segment 49,222 49,001 Total Assets $ 361,701 $ 354,897 |
Concentration (Tables)
Concentration (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
American Public Education Segment | |
Concentration Risk [Line Items] | |
Summary of APEI segment revenue | A summary of APEI Segment revenue derived from students by primary funding source for the three and six month periods ended June 30, 2020 and 2019 is included in the table below (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 DoD tuition assistance programs 44% 40% 43% 40% VA education benefits 21% 23% 22% 22% Title IV programs 20% 24% 21% 24% Cash and other sources 15% 13% 14% 14% |
Hondros College of Nursing Segment | |
Concentration Risk [Line Items] | |
Summary of APEI segment revenue | A summary of HCN Segment revenue derived from students by primary funding source for the three and six month periods ended June 30, 2020 and 2019 is included in the table below (unaudited): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Title IV programs 83% 80% 82% 80% Cash and other sources 15% 18% 16% 18% VA education benefits 2% 2% 2% 2% |
Nature of the Business (Details
Nature of the Business (Details) | 6 Months Ended |
Jun. 30, 2020segmentcampussubsidiarystudent | |
Segment Reporting Information [Line Items] | |
Number of students | student | 85,400 |
Number of subsidiaries | subsidiary | 2 |
Number of reportable segments | segment | 2 |
Hondros College of Nursing Segment | |
Segment Reporting Information [Line Items] | |
Number of campuses | 6 |
Ohio | Hondros College of Nursing Segment | |
Segment Reporting Information [Line Items] | |
Number of campuses | 5 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | May 15, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Restricted cash | $ 1,300,000 | $ 1,300,000 | $ 1,300,000 | |||
Impairment of goodwill | 0 | $ 0 | $ 0 | $ 5,855,000 | ||
Options previously granted vesting period | 3 years | |||||
Award accelerated service period | 1 year | |||||
Stock-based compensation expense in operating income | $ 1,573,000 | 1,630,000 | $ 3,323,000 | 3,319,000 | ||
ESPP | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Number of shares available for issuance (in shares) | 100,000 | |||||
Shares remaining (in shares) | 106,088 | 106,088 | ||||
Amended 2017 Plan | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Number of shares available for issuance (in shares) | 1,425,000 | |||||
Incentive-Based Compensation Plan | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Stock-based compensation expense in operating income | $ 1,800,000 | 700,000 | $ 3,100,000 | 1,400,000 | ||
COVID-19 [Member] | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Equity method investment impairments | 0 | |||||
Cost method investment impairments | $ 0 | |||||
Hondros College of Nursing Segment | ||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||||
Impairment of goodwill | 5,900,000 | |||||
Fair value of goodwill | $ 28,000,000 | $ 28,000,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Stock-based compensation expense in operating income | $ 1,573 | $ 1,630 | $ 3,323 | $ 3,319 |
Instructional costs and services | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Stock-based compensation expense in operating income | 402 | 406 | 880 | 809 |
Selling and promotional | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Stock-based compensation expense in operating income | 218 | 199 | 476 | 393 |
General and administrative | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Stock-based compensation expense in operating income | $ 953 | $ 1,025 | $ 1,967 | $ 2,117 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 82,127 | $ 70,560 | $ 156,743 | $ 144,001 |
Instructional services, net of grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 80,328 | 69,182 | 153,258 | 141,128 |
Graduation fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 275 | 274 | 601 | 584 |
Textbook and other course materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 1,194 | 799 | 2,223 | 1,661 |
Other fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 330 | 305 | 661 | 628 |
Intersegment | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | (22) | (29) | (39) | (56) |
Intersegment | Instructional services, net of grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | (22) | (29) | (39) | (56) |
Intersegment | Graduation fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 0 | 0 | 0 |
Intersegment | Textbook and other course materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 0 | 0 | 0 |
Intersegment | Other fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 0 | 0 | 0 |
APEI | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 73,547 | 63,448 | 140,641 | 129,169 |
APEI | Operating Segments | Instructional services, net of grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 73,082 | 62,973 | 139,638 | 128,171 |
APEI | Operating Segments | Graduation fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 275 | 274 | 601 | 584 |
APEI | Operating Segments | Textbook and other course materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 0 | 0 | 0 |
APEI | Operating Segments | Other fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 190 | 201 | 402 | 414 |
HCN | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 8,602 | 7,141 | 16,141 | 14,888 |
HCN | Operating Segments | Instructional services, net of grants and scholarships | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 7,268 | 6,238 | 13,659 | 13,013 |
HCN | Operating Segments | Graduation fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 0 | 0 | 0 | 0 |
HCN | Operating Segments | Textbook and other course materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 1,194 | 799 | 2,223 | 1,661 |
HCN | Operating Segments | Other fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 140 | $ 104 | $ 259 | $ 214 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||||
Contract assets | $ 0 | $ 0 | $ 0 | ||
Deferred revenue | 20,783,000 | 20,783,000 | 17,426,000 | ||
Interest income earned | 4,300 | $ 3,000 | 8,600 | $ 8,000 | |
Courses in Progress | |||||
Disaggregation of Revenue [Line Items] | |||||
Future revenue | 12,000,000 | 12,000,000 | 9,600,000 | ||
Future Courses | |||||
Disaggregation of Revenue [Line Items] | |||||
Future revenue | $ 8,800,000 | $ 8,800,000 | $ 7,800,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)campus | Jun. 30, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Variable lease payments | $ 0 | |||
Lease expense | $ 700,000 | $ 600,000 | 1,500,000 | $ 1,200,000 |
Cash paid for amounts included in operating lease liabilities | $ 700,000 | $ 600,000 | $ 1,400,000 | $ 1,200,000 |
Hondros College of Nursing Segment | ||||
Segment Reporting Information [Line Items] | ||||
Number of campuses | campus | 6 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 (remaining) | $ 1,423 | |
2021 | 2,903 | |
2022 | 2,857 | |
2023 | 1,909 | |
2024 | 928 | |
2025 | 498 | |
2026 and beyond | 1,742 | |
Total future minimum lease payments | 12,260 | |
Less imputed interest | (1,604) | |
Present value of operating lease liabilities | 10,656 | |
Operating lease liabilities, current | 2,379 | $ 2,283 |
Operating lease liabilities, long-term | $ 8,277 | $ 9,495 |
Leases - Other Information (Det
Leases - Other Information (Details) | Jun. 30, 2020 |
Leases [Abstract] | |
Weighted average remaining lease term (in years) | 5 years 2 months 12 days |
Weighted average discount rate | 5.20% |
Net Income Per Common Share - S
Net Income Per Common Share - Schedule of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 14,789 | 16,512 | 14,907 | 16,522 |
Effect of dilutive restricted stock (in shares) | 159 | 141 | 119 | 149 |
Diluted (in shares) | 14,948 | 16,653 | 15,026 | 16,671 |
Net Income Per Common Share - N
Net Income Per Common Share - Narrative (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Restricted Stock Award | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock options (in shares) | 33,329 | 12,774 | 145,427 | 37,738 |
Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock options (in shares) | 51,134 | 0 | 51,134 | 0 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2020segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue: | ||||
Revenue | $ 82,127 | $ 70,560 | $ 156,743 | $ 144,001 |
Depreciation and amortization: | ||||
Total Depreciation and amortization | 3,391 | 3,943 | 6,729 | 7,994 |
Income (loss) from operations before interest income and income taxes: | ||||
Total income from operations before interest income and income taxes | 9,041 | 5,678 | 11,734 | 7,060 |
Interest income, net: | ||||
Interest income, net | 179 | 1,135 | 881 | 2,188 |
Income tax expense (benefit): | ||||
Total Income tax expense (benefit) | 2,532 | 1,898 | 3,506 | 1,835 |
Capital expenditures: | ||||
Total Capital expenditures | 1,024 | 1,372 | 2,893 | 2,957 |
Intersegment elimination | ||||
Revenue: | ||||
Revenue | (22) | (29) | (39) | (56) |
Income (loss) from operations before interest income and income taxes: | ||||
Total income from operations before interest income and income taxes | (1) | (1) | 0 | 5 |
American Public Education Segment | ||||
Depreciation and amortization: | ||||
Total Depreciation and amortization | 3,221 | 3,688 | 6,415 | 7,470 |
Interest income, net: | ||||
Interest income, net | 177 | 1,123 | 867 | 2,170 |
Income tax expense (benefit): | ||||
Total Income tax expense (benefit) | 2,537 | 2,132 | 3,752 | 3,798 |
Capital expenditures: | ||||
Total Capital expenditures | 999 | 1,229 | 2,744 | 2,574 |
American Public Education Segment | Operating Segments | ||||
Revenue: | ||||
Revenue | 73,547 | 63,448 | 140,641 | 129,169 |
Income (loss) from operations before interest income and income taxes: | ||||
Total income from operations before interest income and income taxes | 9,077 | 6,589 | 12,655 | 14,111 |
Hondros College of Nursing Segment | ||||
Depreciation and amortization: | ||||
Total Depreciation and amortization | 170 | 255 | 314 | 524 |
Interest income, net: | ||||
Interest income, net | 2 | 12 | 14 | 18 |
Income tax expense (benefit): | ||||
Total Income tax expense (benefit) | (5) | (234) | (246) | (1,963) |
Capital expenditures: | ||||
Total Capital expenditures | 25 | 143 | 149 | 383 |
Hondros College of Nursing Segment | Operating Segments | ||||
Revenue: | ||||
Revenue | 8,602 | 7,141 | 16,141 | 14,888 |
Income (loss) from operations before interest income and income taxes: | ||||
Total income from operations before interest income and income taxes | $ (35) | $ (910) | $ (921) | $ (7,056) |
Segment Information - Summary_2
Segment Information - Summary of Consolidated Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Total Assets | $ 361,701 | $ 354,897 |
American Public Education Segment | ||
Assets: | ||
Total Assets | 312,479 | 305,896 |
Hondros College of Nursing Segment | ||
Assets: | ||
Total Assets | $ 49,222 | $ 49,001 |
Concentration (Details)
Concentration (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
American Public Education Segment | ||||
Concentration Risk [Line Items] | ||||
Percentage of students served in military on active duty at time of initial enrollment | 59.00% | 59.00% | ||
Customer Concentration Risk | Revenue | American Public Education Segment | DoD tuition assistance programs | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 44.00% | 40.00% | 43.00% | 40.00% |
Customer Concentration Risk | Revenue | American Public Education Segment | VA education benefits | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 21.00% | 23.00% | 22.00% | 22.00% |
Customer Concentration Risk | Revenue | American Public Education Segment | Title IV programs | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 20.00% | 24.00% | 21.00% | 24.00% |
Customer Concentration Risk | Revenue | American Public Education Segment | Cash and other sources | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 15.00% | 13.00% | 14.00% | 14.00% |
Customer Concentration Risk | Revenue | Hondros College of Nursing Segment | VA education benefits | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 2.00% | 2.00% | 2.00% | 2.00% |
Customer Concentration Risk | Revenue | Hondros College of Nursing Segment | Title IV programs | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 83.00% | 80.00% | 82.00% | 80.00% |
Customer Concentration Risk | Revenue | Hondros College of Nursing Segment | Cash and other sources | ||||
Concentration Risk [Line Items] | ||||
Percentage of segment revenue | 15.00% | 18.00% | 16.00% | 18.00% |