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Item 2 — Management's Discussion and Analysis
American Public Education Inc · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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In this Quarterly Report on Form 10-Q, or this Quarterly Report, “we,” “our,” “us,” the “Company” and similar terms refer to American Public Education, Inc., or APEI, and its subsidiary institutions collectively unless the context indicates otherwise. All quarterly information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations is unaudited. The following discussion of our historical results of operations and our liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements and related notes that appear elsewhere in this Quarterly Report and the audited financial information and related notes, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations and other disclosures, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, or our Annual Report.
Forward-Looking Statements
This Quarterly Report contains forward-looking statements intended to be covered by the safe harbor provisions for forward-looking statements in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “will,” or “may,” or other words or expressions that convey future events, conditions, circumstances, or outcomes to identify these forward-looking statements. Forward-looking statements in this Quarterly Report include, without limitation, statements regarding:
•changes in and our efforts and ability to comply with the extensive regulatory framework applicable to our industry, including the 90/10 Rule and financial responsibility standards, as well as state law and regulations and accrediting agency requirements, and the expected impacts of our efforts to comply and any non-compliance;
•federal appropriations and other budgetary matters, including government shutdowns, and the estimated impact of such matters on us and our prospective and current students, and our efforts to mitigate impacts;
•actions by the U.S. Department of Education, or ED, institutional and programmatic accreditors, and state authorizing agencies and expectations regarding the effects of those actions;
•our ability to manage, grow, and diversify our business and execute our business initiatives and strategy;
•legislative and regulatory changes, shifts in regulatory priorities, restrictions on the function, operations, and budgets of federal agencies, including ED, as a result of U.S. presidential and administration transitions and presidential directives regarding governmental actions;
•our ability to maintain, develop, and grow our technology infrastructure, including with respect to any current or planned use of artificial intelligence or transform our technology infrastructure and realize the benefits of any such transformation;
•our cash needs and expectations regarding cash flow from operations, including the impacts of our debt service;
•our ability to undertake initiatives to improve the learning experience, attract students who are likely to persist, and improve student outcomes;
•changes to and expectations regarding our student enrollment, net course registrations, and the composition of our student body, including the pace of such changes;
•our conversion of prospective students to enrolled students and our retention of active students;
•our ability to update and expand the content of existing programs and develop new programs to meet emerging student needs and marketplace demands, and our ability to do so in a cost-effective manner or on a timely basis;
•the branding and marketing of our institutions;
•our ability to leverage our investments in support of our initiatives, students, and institutions;
•our maintenance and expansion of our relationships and partnerships and the development of new relationships and partnerships;
•actions by the Department of Defense, or DoD, or branches of the U.S. Armed Forces, including actions related to participating in DoD tuition assistance, or TA, programs, our responses to those actions, and expectations regarding the effects of those actions and responses;
•changes in enrollment in postsecondary degree-granting institutions and workforce needs;
•the competitive environment in which we operate;
•our ability to achieve the intended benefits of our cost savings initiatives and revenue-generating efforts;
•the expected benefits of insourcing and outsourcing information technology services to our operations and third-party vendors, respectively;
•the expected impact on our students and our business from campus closures and consolidations;
•our financial performance generally; and
•our expectations and estimates regarding tax and accounting matters.
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Forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance, taking into account information currently available to us, and are not guarantees of future results. There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. Risks and uncertainties involved in the forward-looking statements include, among others:
•potential changes to the ED’s and other federal government agencies’ structure, policies, priorities, and oversight, including as a result of federal elections and the Trump administration’s stated intention and actions to dismantle ED;
•any adverse impacts of government shutdowns on APUS’s net course registrations and our results of operations, and our inability to realize the intended benefits of any efforts to mitigate any such impacts;
•our dependence on the effectiveness of our ability to attract students who persist in our institutions’ programs;
•our inability to effectively market our programs or expand into new markets;
•the loss of our and our students’ ability to receive funds under TA programs, the reduction, elimination, or suspension of TA, or disruptions due to systems used to request TA;
•our inability to maintain enrollments from military students, including due to changes in military activity and deployments, budgets, and government shutdowns;
•our inability to predict whether ED will grant borrower defense to repayment, or BDTR, claims;
•adverse effects of changes our institutions make to improve the student experience and enhance each institution’s ability to identify and enroll students who are likely to succeed;
•our failure to successfully adjust to future market demands;
•risks associated with the combination of American Public University System, or APUS, Rasmussen University, or RU, and Hondros College of Nursing, or HCN, into one consolidated institution encompassing all APUS, RU, and HCN programs, campuses, and operations, or the Combination;
•our failure to comply with regulatory and accrediting agency requirements or to maintain institutional accreditation, the consequences thereof, and risks related to any actions we may take to prevent or correct such failure;
•our failure to meet applicable National Council Licensure Examination, or NCLEX, pass rates and other NCLEX standards, and the consequences thereof;
•our failure to comply with the 90/10 Rule;
•our loss of eligibility to participate in student financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, or Title IV programs, or ability to process Title IV financial aid;
•our inability to recognize the intended benefits of our cost savings and reduction and revenue-generating efforts;
•economic and market conditions in the United States and abroad and changes in interest rates;
•risks related to business combinations, acquisitions, divestitures, and other strategic transactions, including, as applicable, integration challenges, business disruption, dilution of stockholder value, financial charges, and diversion of management attention;
•risks related to our indebtedness; and
•our dependence on and need to continue to invest in our technology infrastructure.
Forward-looking statements should be considered in light of these factors and the factors described elsewhere in this Quarterly Report, in the “Risk Factors” section of this Quarterly Report and our Annual Report, and elsewhere in our various filings with the Securities and Exchange Commission, or the SEC. It is important that you read these factors and the other cautionary statements made in this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance, or achievements may vary materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. You should also read the more detailed description of our business in our Annual Report when considering forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date of this Quarterly Report. We undertake no obligation to publicly update any forward-looking statements after the date of this Quarterly Report, whether as a result of new information, future events, or otherwise, except as required by law.
Overview
Background
We are a provider of online and campus-based postsecondary education to approximately 109,000 students through our subsidiary, American Public University System, Inc., which currently operates American Public University System, or the System. The System offers purpose-built education programs designed to prepare individuals for productive contributions to their professions and society and opportunities designed to advance students in their current professions or to help them prepare for their next career. The System is accredited and licensed or otherwise authorized by state authorities to offer postsecondary education programs to the extent it believes such licenses or authorizations are required and are certified by ED to participate in
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Title IV programs.
In January 2025, we announced the Combination, a process that after two steps resulted in the System, a combined Higher Learning Commission-accredited institution. Effective March 2, 2026, or the Merger Date, we completed the first step of the Combination, the merger of the legal entities that owned and operated our three institutions, with American Public University System, Inc. surviving the merger, or the Legal Merger, and we subsequently notified ED that the Legal Merger occurred. On August 4, 2026, ED approved, and we completed, the second step of the Combination, the combination of APUS, RU, and HCN into one HLC-accredited institution, or the Institutional Combination.
We previously provided our educational services through three reportable segments: the APUS Segment, the RU Segment, and the HCN Segment. Beginning in fiscal 2026, in connection with the Combination, we now provide our educational services through the following two reportable segments:
•Military+ Segment, which was formerly the APUS Segment, provides online postsecondary education to approximately 89,400 adult learners, directed primarily at the needs of the military, veterans, extended military and veteran families, and other public service and service-minded communities through two brands: American Military University, and American Public University. As of June 30, 2026, approximately 62% of Military+ Segment students self-reported that they served in the military on active duty at the time of initial enrollment.
•Health+ Segment, consisting of the businesses that formerly comprised the RU Segment and the HCN Segment, provides nursing- and health sciences-focused and other postsecondary education, including business, technology, and education. Health+ Segment provides these education services to approximately 19,600 students at 27 campuses in eight states and online (excluding one campus being closed as of July 31, 2026) through RU and HCN. As of June 30, 2026, on-ground enrollment was approximately 11,100, and online enrollment was approximately 8,500 students.
Adjustments to reconcile segment results to the Consolidated Financial Statements are included in Corporate and Other. These adjustments include unallocated corporate activity and eliminations, and, prior to July 25, 2025, or the GSUSA Sale Date, the operational activities of Graduate School USA, or GSUSA. Prior period segment disclosures have been recast to conform to the current period presentation.
Legislative and Regulatory Activity
The Combination of APUS, RU, and HCN
We were required to obtain HLC approval prior to effectuating the Combination, and pursuant to ED’s requirements, undertook the Combination in two steps: (i) the Legal Merger and (ii) the Institutional Combination. In February 2026, HLC approved the continuation of accreditation of APUS and RU after the Legal Merger with an acknowledgment that the intent is to consolidate the three institutions into one HLC accreditation. On April 28, 2026, HLC approved the continuation of accreditation after the Institutional Combination, and on June 12, 2026, HLC reaffirmed that approval. HLC has scheduled a site visit in August 2026 in connection with the Legal Merger. On August 4, 2026, ED approved, and we completed, the Institutional Combination. For additional details regarding regulatory treatment of the Combination, see the Regulatory Environment in our Annual Report captioned “Regulatory Environment – Accreditation – Institutional Accreditation” and “Regulatory Environment – Accreditation – The Planned Combination of APUS, RU, and HCN”, and for additional information regarding risks related to the Combination, see the Risk Factor in our Annual Report with the caption beginning “The planned combination of APUS, RU, and HCN...”.
Rasmussen University
In June 2025, the Minnesota Board of Nursing, or MBN, issued a stipulation and consent order requiring RU’s Moorhead, Minnesota ADN program to, among other things, reach applicable NCLEX pass rate standards by June 30, 2026. The Moorhead, Minnesota ADN program was not anticipated to reach the applicable NCLEX pass rates by June 30, 2026, so on June 1, 2026, RU informed MBN that it intends to voluntarily close its Moorhead, Minnesota ADN program effective December 31, 2027. All current students enrolled in the Moorhead, Minnesota ADN program currently have expected graduation dates on or before the date RU intends to close the program, and enrollment currently represents approximately 120 students, or less than 1% of Health+’s current total enrollment. Moorhead ADN students whose expected completion dates extend beyond December 31, 2027, will have several academic pathways available within RU, including: (i) transferring to the
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ADN program at the St. Cloud campus, which offers the same curriculum, or, if academically eligible, (ii) transferring to the BSN program at the Fargo campus.
Borrower Defense to Repayment Claims
Between May 1, 2026 and July 31, 2026, our institutions received 69 BDTR claims from ED, seeking in the aggregate a discharge of approximately $1.5 million in loans. Each of our institutions disputes the validity of these claims and has filed responses to them with ED. We are unable to predict whether ED will grant BDTR relief for the claims, or if so, whether it will seek recoupment from our institutions. For additional information regarding risks related to BDTR claims, see the Risk Factor in our Annual Report captioned “ED rules related to BDTR claims may create significant liability that could have an adverse effect on our business and results of operations”.
The One Big Beautiful Bill Act
On May 1, 2026, ED published a rule, effective July 1, 2026, relating to One Big Beautiful Bill Act, or OBBBA, student loan provisions, defining “professional degree” programs and changing federal student loan programs. The loan changes could reduce student enrollment, increase reliance on private loans, reduce funding for enrolled students, and increase administrative burdens. On June 24, 2026, pending resolution of a court challenge, a U.S. district court preliminarily stayed a portion of the rule’s “professional degree” definition that, among other things, excludes certain advanced nursing degrees. On June 29, 2026, ED reinstated certain advanced nursing degrees as “professional degree” programs during the stay and announced its continued defense of the rule’s definition. There is no assurance as to the stay’s duration or any responsive actions ED may take to the court challenge.
On July 1, 2026, ED published a rule for the OBBBA accountability framework, the Student Tuition and Transparency System, or STATS, and Earnings Accountability framework, generally effective July 1, 2027, with certain reporting changes effective July 1, 2026. Under the rule, for programs to remain eligible for Direct Loans, median annual earnings of graduates must meet specified levels. Programs failing to meet the standard for two of three consecutive years will lose eligibility, and institutions will also lose Title IV eligibility for programs failing to satisfy the measure if at least half their Title IV recipients and half their Title IV funds come from failing programs. Institutions will be required to warn those enrolled in or seeking to enroll in failing programs. Beginning August 31, 2026, ED will amend existing program participation agreements, or PPAs, that condition participation in Title IV programs on compliance with ED regulations and any additional PPA-specified conditions to condition Direct Loan eligibility on incorporation of the STATS and Earnings Accountability framework.
State Authorization/Licensure of Our Institutions
The State of Illinois enacted legislation effective January 2024 that changed the Illinois NCLEX pass rate requirements from a one-year measurement based on first attempts to a three-year average that includes all test attempts, and temporarily removed all nursing programs, including RU’s Illinois ADN program, from probationary status until September 2026, or the probationary status moratorium. On July 10, 2026, the State of Illinois enacted legislation regarding measurement of NCLEX pass rates and of nursing education programs that fail to satisfy the requisite pass rate following expiry of the probationary status moratorium. The legislation prevents programs from being placed on probation until calendar year 2026 NCLEX results can be measured and provides that any program with a calendar year 2026 pass rate below the 75% threshold will receive a written warning of noncompliance from the Illinois Department of Financial and Professional Regulation, or IDFPR, rather than being placed on probationary status. The IDFPR has publicly reported that RU’s Illinois ADN program has not met the required NCLEX pass rate for the prior six years. RU’s Illinois ADN program is currently approved; however, there can be no assurance that IDFPR will not seek to impose different or additional requirements as a result of failures to satisfy the required NCLEX pass rate for consecutive years.
Summary of Results
Consolidated revenue for the three months ended June 30, 2026, increased to $171.7 million from $162.8 million, or by 5.5%, as compared to the prior year period. The growth was primarily driven by increased enrollment in our Health+ Segment and higher net course registrations in our Military+ Segment, partially offset by the absence of revenue from GSUSA due to its sale in July 2025. Our net income for the three months ended June 30, 2026, was $9.8 million, compared to $4.5 million in the prior year period, an increase of $5.3 million. The increase in net income for the three months ended June 30, 2026, was primarily related to the increase in revenue of $8.9 million, partially offset by an increase in operating expenses of $2.5 million, as compared to the prior year period. Our operating margin improved to 7.9% for the three months ended June 30, 2026, as compared to 4.3% in the prior year period.
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Consolidated revenue for the six months ended June 30, 2026, increased to $346.5 million from $327.3 million, or by 5.9%, as compared to the prior year period. The growth was primarily driven by increased enrollment in our Health+ Segment and higher net course registrations in our Military+ Segment, partially offset by the absence of revenue from GSUSA due to its sale in July 2025. Our net income for the six months ended June 30, 2026, was $27.5 million, compared to $13.4 million in the prior year period, an increase of $14.1 million. The increase in net income for the six months ended June 30, 2026, was primarily related to the increase in revenue of $19.2 million, partially offset by an increase in operating expenses of $3.3 million and the extinguishment of debt of $1.7 million, as compared to the prior year period. Our operating margin improved to 10.2% for the six months ended June 30, 2026, as compared to 5.9% in the prior year period.
Military+ Segment net course registrations for the three months ended June 30, 2026, increased to approximately 98,300 from approximately 96,400, an increase of 1,900, or 2.0%, as compared to the prior year period. Military+ Segment revenue for the three months ended June 30, 2026, increased to $85.5 million from $81.7 million, or by 4.7%, as compared to the prior year period. Military+ Segment net course registrations for the six months ended June 30, 2026, increased to approximately 204,900 from approximately 198,900, an increase of 6,000, or 3.0%, as compared to the prior year period. Military+ Segment revenue for the six months ended June 30, 2026, increased to $175.0 million from $165.7 million, or by 5.6%, as compared to the prior year period. Military+ Segment operating margin increased to 27.7% for the three months ended June 30, 2026, from 26.2% in the prior year period, and increased to 31.1% for the six months ended June 30, 2026, from 27.5% in the prior year period.
Health+ Segment total enrollment for the three months ended June 30, 2026, increased to approximately 19,600 from approximately 18,300, an increase of 1,300, or 6.6%, as compared to the prior year period. Health+ Segment revenue for the three months ended June 30, 2026, increased to $86.2 million from $77.7 million, or by 11.0%, as compared to the prior year period. Health+ Segment total enrollment for the six months ended June 30, 2026, increased approximately 7.0%, as compared to the prior year period. Health+ Segment revenue for the six months ended June 30, 2026, increased to $171.6 million from $154.6 million, or by 11.0%, as compared to the prior year period. Health+ Segment operating margin improved to 0.4% for the three months ended June 30, 2026, from negative 3.1% in the prior year period, and increased to 0.5% for the six months ended June 30, 2026, from negative 2.1% in the prior year period.
Our financial results for the three and six months ended June 30, 2025, reflect the financial results of GSUSA in Corporate and Other.
Critical Accounting Estimates
Goodwill and indefinite-lived intangible assets. Goodwill is the excess of the purchase price of an acquired business over the fair value of the assets acquired and liabilities assumed, including identifiable intangible assets. Goodwill is not amortized. Goodwill is reported at the reporting unit level that we have defined as our reportable segments. Before the Merger Date, in connection with our acquisitions of RU and HCN, we recorded $217.4 million and $38.6 million of goodwill, respectively, in our Health+ Segment. We later recorded non-cash impairment charges reducing the carrying value of Health+ Segment goodwill to $33.0 million and $26.6 million for RU and HCN, respectively. No goodwill was recorded in our Military+ Segment.
In addition to goodwill, before the Merger Date, in connection with the acquisitions of RU and HCN, we recorded identified intangible assets with an indefinite useful life in the aggregate amount of $51.0 million and $3.7 million, respectively, in our Health+ Segment, which included intangible assets related to trade name, accreditation, licensing, and Title IV, and affiliate agreements. We later recorded non-cash impairment charges reducing the carrying value of RU indefinite-lived identified intangible assets to $24.5 million. There were no indefinite-lived intangible assets in our Military+ Segment.
We recorded $35.5 million and $4.4 million of identified intangible assets with a definite useful life in connection with the acquisitions of RU and HCN, respectively. There were no definite-lived intangible assets in our Military+ Segment.
We test goodwill and indefinite-lived intangible assets for impairment at least annually, and more frequently if events and circumstances exist that would more likely than not reduce the fair value of the reporting unit below its carrying amount. The process of evaluating goodwill and indefinite-lived intangible assets for impairment is subjective and requires significant judgment and estimates. When performing an optional qualitative analysis, we consider many factors, including general economic conditions, industry and market conditions, certain cost factors, financial performance and key business drivers (for example, student enrollment), long-term operating plans, and potential changes to significant assumptions and estimates used in the most recent fair value analysis. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions and estimates. Actual results may differ and have a material impact on our results of operations and
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financial position, and subsequent events are not necessarily indicative of the reasonableness of the original assumptions or estimates.
We estimate fair value in our quantitative analysis by weighting the results from two different valuation approaches. They are: (i) discounted cash flow and (ii) guideline public company. Under the discounted cash flow method, we determined fair value by discounting the estimated future cash flows of our Health+ Segment, at their estimated weighted-average cost of capital. We incorporate the use of projected financial information and a discount rate that are developed using market participant-based assumptions. The cash-flow projections are based on three-year financial forecasts developed by management that include revenue projections, capital spending trends, and investment in working capital to support anticipated revenue growth, which are updated at least annually and approved by management. Under the guideline public company method, we used pricing multiples from other public companies in the public higher education market to determine the fair value of the reporting unit. Values derived under the two valuation methods are then weighted to estimate the reporting unit enterprise value. If we determine that the carrying amount of a reporting unit exceeds its fair value, we then calculate the implied fair value of the reporting unit goodwill as compared to its carrying amount to determine the appropriate impairment charge. Although we believe our assumptions are reasonable, actual results may vary significantly and may expose us to material impairment charges in the future. Our methodology for determining fair values remained consistent for the periods presented.
In connection with the Combination, we reassessed the reporting unit structure. As a result, RU and HCN reporting units were combined into a single reporting unit, Health+. The change did not result in a reallocation of goodwill and had no impact on the total carrying amount of goodwill.
During the three months ended June 30, 2026, in connection with the preparation of this Quarterly Report, we performed a qualitative assessment of our Health+ Segment goodwill and indefinite-lived intangible assets. As part of the assessment, we considered the events and circumstances expressly required by ASC 350, in addition to other entity-specific factors. Factors considered included financial and enrollment performance against internal targets, economic factors, and the continued favorable growth outlook for nursing education. After completing the qualitative review of goodwill and indefinite-lived intangible assets, the Company concluded it was more likely than not that the fair value of our Health+ Segment was more than the respective carrying value, and therefore, no quantitative impairment test and no impairment charge was necessary.
Significant assumptions inherent to valuation methodologies for goodwill and indefinite-lived intangible assets include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in the higher education market. Future changes, including minor changes in the significant assumption or other factors including revenue, operating income, valuation multiples, and other inputs to the valuation process may result in future impairment charges, and those charges could be material.
For more information regarding our Critical Accounting Policies and Use of Estimates, see the “Critical Accounting Estimates” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
Results of Operations
Below we have included a discussion of our operating results and material changes in our operating results during the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025. Our revenue and operating results normally fluctuate as a result of seasonal or other variations in our enrollments and the level of expenses in our reportable segments. Our student population varies as a result of new enrollments, graduations, student attrition, the success of our marketing programs, and other reasons that we cannot always anticipate. We expect quarterly fluctuations in operating results to continue as a result of various enrollment patterns and changes in revenue and expenses.
Military+ Segment net course registrations for the three months ended June 30, 2026, increased to approximately 98,300 from approximately 96,400, an increase of 1,900, or 2.0%, as compared to the prior year period primarily due to increases in military registrations from students utilizing TA and financial aid. Military+ Segment net course registrations for the six months ended June 30, 2026, increased to approximately 204,900 from approximately 198,900, an increase of 6,000, or 3.0%, as compared to the prior year period primarily due to increases in military registrations from students utilizing TA, financial aid, and military-affiliated students utilizing education benefit programs administered by the U.S. Department of Veterans Affairs, or VA. Operating margin increased to 27.7% for the three months ended June 30, 2026, from 26.2% in the prior year period and increased to 31.1% for the six months ended June 30, 2026, from 27.5% in the prior year period. Operating margin for the three months ended June 30, 2026, increased primarily due to the $3.8 million increase in revenue and a $0.8 million decrease in employee compensation costs, partially offset by a $2.0 million increase in advertising costs, as compared to the prior year period. Operating margin for the six months ended June 30, 2026, increased primarily due to the
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$9.3 million increase in revenue, a $1.5 million decrease in loss on assets held for sale, and a $0.8 million decrease in employee compensation costs, partially offset by increases of $3.3 million in advertising costs and $1.2 million in bad debt expense, as compared to the prior year period.
Health+ Segment total enrollment for the three months ended June 30, 2026, increased to approximately 19,600 from approximately 18,300, an increase of 1,300, or 6.6%, as compared to the prior year period, driven by an 9.2% increase in on-ground enrollment and a 3.4% increase in online enrollment. Health+ Segment total enrollment for the six months ended June 30, 2026, increased approximately 7.0%, as compared to the prior year period, driven by a 9.0% increase in on-ground enrollment and a 4.6% increase in online enrollment. Health+ Segment operating margin improved to 0.4% for the three months ended June 30, 2026, from negative 3.1%, in the prior year period. The improvement in the operating margin for the three months ended June 30, 2026, was primarily due to the $8.6 million revenue increase, partially offset by increases of $3.1 million in advertising costs, $1.4 million in employee compensation costs, and $1.0 million in information technology costs, as compared to the prior year period. Health+ Segment operating margin improved to 0.5% for the six months ended June 30, 2026, from negative 2.1%, in the prior year period. The improvement in the operating margin for the six months ended June 30, 2026, was primarily due to the $17.0 million revenue increase, partially offset by increases of $4.9 million in advertising costs, $3.2 million in classroom and course materials costs, $2.7 million in employee compensation costs, $1.4 million in bad debt expense, and $1.3 million in technology costs, as compared to the prior year period.
For a more detailed discussion of our results by reportable segment, refer to “Analysis of Operating Results by Reportable Segment” below.
Analysis of Consolidated Statements of Income
The following table sets forth statements of income data as a percentage of revenue for the period indicated:
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(Unaudited) (Unaudited)
Revenue 100.0 % 100.0 % 100.0 % 100.0 %
Costs and expenses:
Instructional costs and services 44.6 48.2 43.7 46.9
Selling and promotional 23.4 21.5 22.5 21.5
General and administrative 21.8 23.4 21.3 22.8
Depreciation and amortization 2.3 2.5 2.3 2.5
Loss on assets held for sale — — — 0.5
Total costs and expenses 92.1 95.7 89.8 94.1
Income from operations before interest and income taxes 7.9 4.3 10.2 5.9
Loss on extinguishment of debt — — (0.5) —
Interest income (expense), net 0.4 (0.7) — (0.6)
Income from operations before income taxes 8.2 3.6 9.7 5.3
Income tax expense 2.6 0.9 1.7 1.2
Net income 5.7 2.8 8.0 4.1
Preferred stock dividend — 0.8 — 0.8
Loss on redemption of preferred stock — 2.2 — 1.1
Net income available to common stockholders 5.7 % (0.2) % 8.0 % 2.2 %
Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025
Revenue. Our consolidated revenue for the three months ended June 30, 2026, was $171.7 million, an increase of $8.9 million, or 5.5%, compared to $162.8 million for the three months ended June 30, 2025. Revenue increased primarily due to an $8.6 million, or 11.0%, increase in revenue in our Health+ Segment, and a $3.8 million, or 4.7%, increase in revenue in our
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Military+ Segment, partially offset by a $3.4 million decrease in GSUSA revenue included in Corporate and Other for the period prior to the GSUSA Sale Date. Our Health+ Segment revenue increase was primarily due to a 6.6% increase in total student enrollment and the impact of tuition increases in the second half of 2025. Our Military+ Segment revenue increase was primarily due to a 2.0% increase in net course registrations, as compared to the prior year period.
Costs and expenses. Costs and expenses for the three months ended June 30, 2026, were $158.2 million, an increase of $2.5 million, or 1.6%, compared to $155.7 million for the three months ended June 30, 2025. Costs and expenses for the three months ended June 30, 2026, include $0.9 million in professional fees related to the Combination in Corporate and Other. The results in the prior year period included $1.7 million in professional fees in Corporate and Other relating to the Combination and the sale of GSUSA. Costs and expenses for the three months ended June 30, 2026, as compared to the prior year period, excluding the items noted above, increased $3.3 million, or 2.1%, primarily due to increases of $5.1 million in advertising costs to drive increases in registrations and enrollment, $1.3 million in technology costs, and $1.2 million in bad debt expense, partially offset by a decrease of $6.0 million in Corporate and Other due to the sale of GSUSA. Costs and expenses as a percentage of revenue decreased to 92.1% for the three months ended June 30, 2026, from 95.7% for the three months ended June 30, 2025.
Instructional costs and services expenses. Our instructional costs and services expenses for the three months ended June 30, 2026, were $76.6 million, a decrease of $1.8 million, or 2.3%, compared to $78.4 million for the three months ended June 30, 2025. Instructional costs and services expenses decreased primarily due to the $3.0 million decrease in Corporate and Other due to the sale of GSUSA, and a $1.4 million decrease in employee compensation costs in our Military+ Segment primarily due to a change in its part-time faculty compensation plan, partially offset by increases of $1.5 million in employee compensation costs and $0.4 million in classroom and course material costs in our Health+ Segment related to increased enrollment, and $0.5 million in information technology costs in our Health+ Segment. Instructional costs and services expenses as a percentage of revenue decreased to 44.6% for the three months ended June 30, 2026, from 48.2% for the three months ended June 30, 2025.
Selling and promotional expenses. Our selling and promotional expenses for the three months ended June 30, 2026, were $40.1 million, an increase of $5.1 million, or 14.5%, compared to $35.0 million for the three months ended June 30, 2025. Selling and promotional expenses increased primarily due to an increase of $5.1 million in advertising costs across both segments to further drive enrollment. Selling and promotional expenses as a percentage of revenue increased to 23.4% for the three months ended June 30, 2026, from 21.5% for the three months ended June 30, 2025.
General and administrative expenses. Our general and administrative expenses for the three months ended June 30, 2026, were $37.5 million, a decrease of $0.7 million, or 1.7%, compared to $38.1 million for the three months ended June 30, 2025. For the three months ended June 30, 2026 and 2025, general and administrative expenses included $0.9 million and $1.4 million, respectively, in professional fees relating to the Combination in Corporate and Other. General and administrative expenses decreased primarily due to a $1.9 million decrease in Corporate and Other due to the sale of GSUSA, partially offset by a $1.2 million increase in bad debt expense in both segments. Consolidated bad debt expense for the three months ended June 30, 2026, was $5.9 million, or 3.4% of revenue, compared to $4.8 million, or 3.0% of revenue in the prior year period. General and administrative expenses as a percentage of revenue decreased to 21.8% for the three months ended June 30, 2026, from 23.4% for the three months ended June 30, 2025. As we continue to evaluate enhancements to our business capabilities, we may incur additional costs, and our general and administrative expenses will vary from time to time.
Depreciation and amortization expenses. Depreciation and amortization expenses were $4.0 million for the three months ended June 30, 2026, compared to $4.1 million in the prior year period, a decrease of $0.1 million. Depreciation and amortization expenses as a percentage of revenue were 2.3% and 2.5% for the three months ended June 30, 2026, and 2025, respectively.
Stock-based compensation expenses. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expenses were $2.2 million for each of the three months ended June 30, 2026, and 2025, respectively. Stock-based compensation costs included accelerated expense for retirement-eligible employees and performance stock unit incentive costs.
Interest income (expense), net. Interest income, net of interest expense and other income, was $0.6 million for the three months ended June 30, 2026, compared to interest expense, net of interest income and other income of $1.1 million, in the prior year period. The increase in net interest income in the three months ended June 30, 2026, as compared to the prior year period, was primarily due to a decrease in interest expense due to the refinance of corporate debt and an increase in interest income earned on investment securities, for the comparable periods.
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Income tax expense. We recognized income tax expense of $4.4 million and $1.4 million for the three months ended June 30, 2026, and 2025, respectively, or an effective tax rate of 31.0% in 2026 and 24.0% in 2025. The effective tax rate in 2026 was impacted by higher non-deductible expenses, when compared to the prior period.
Net income. Our net income was $9.8 million and $4.5 million for the three months ended June 30, 2026, and 2025, respectively, an increase of $5.3 million. This increase was due to the factors discussed above.
Preferred stock dividends. There were no preferred stock dividends for the three months ended June 30, 2026 due to the redemption of all outstanding shares of our Series A Senior Preferred Stock in June 2025. Preferred stock dividends for the three months ended June 30, 2025 were $1.3 million.
Loss on redemption of preferred stock. In June 2025, we redeemed all outstanding shares of Series A Senior Preferred Stock for $43.1 million, excluding unpaid and accrued dividends of $1.4 million, resulting in a loss of $3.5 million related to the redemption premium and fees.
Net income (loss) available to common stockholders. The net income available to common stockholders was $9.8 million for the three months ended June 30, 2026, compared to a net loss available to common stockholders of $0.3 million for the three months ended June 30, 2025, an improvement of $10.1 million. This improvement was due to the factors discussed above.
Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025
Revenue. Our consolidated revenue for the six months ended June 30, 2026, was $346.5 million, an increase of $19.2 million, or 5.9%, compared to $327.3 million for the six months ended June 30, 2025. Revenue increased primarily due to a $17.0 million, or 11.0%, increase in revenue in our Health+ Segment, and a $9.3 million, or 5.6%, increase in revenue in our Military+ Segment, partially offset by a $7.1 million decrease in GSUSA revenue included in Corporate and Other for the period prior to the GSUSA Sale Date. Our Health+ Segment revenue increase was primarily due to a 7.0% increase in total student enrollment and the impact of tuition increases in the second half of 2025. Our Military+ Segment revenue increase was primarily due to a 3.0% increase in net course registrations, as compared to the prior year period.
Costs and expenses. Costs and expenses for the six months ended June 30, 2026, were $311.3 million, an increase of $3.3 million, or 1.1%, compared to $308.0 million for the six months ended June 30, 2025. Costs and expenses for the six months ended June 30, 2026, include $1.9 million in professional fees related to the Combination in Corporate and Other. The results in the prior year period included $2.7 million in professional fees in Corporate and Other relating to the Combination and the sale of GSUSA, and a $1.5 million loss on assets held for sale in our Military+ Segment. Costs and expenses for the six months ended June 30, 2026, as compared to the prior year period, excluding the items noted above, increased $5.6 million, or 1.8%, primarily due to increases of $8.2 million in advertising costs, $3.1 million in classroom and course materials costs due to increased vendor costs and enrollment, $2.6 million in bad debt expense, and $1.6 million in technology costs, partially offset by a decrease of $12.0 million in Corporate and Other due to the sale of GSUSA. Costs and expenses as a percentage of revenue decreased to 89.8% for the six months ended June 30, 2026, from 94.1% for the six months ended June 30, 2025.
Instructional costs and services expenses. Our instructional costs and services expenses for the six months ended June 30, 2026, were $151.3 million, a decrease of $2.1 million, or 1.4%, compared to $153.4 million for the six months ended June 30, 2025. Instructional costs and services expenses decreased primarily due to the $6.2 million decrease in Corporate and Other due to the sale of GSUSA, a $2.2 million decrease in employee compensation costs in our Military+ Segment primarily due to a change in its part-time faculty compensation plan, and a $0.8 million decrease in occupancy costs in our Health+ Segment related to campus and office space closures in 2025, partially offset by increases of $3.2 million in classroom and course material costs due to increased vendor costs and enrollment, and $2.9 million in employee compensation costs in our Health+ Segment related to increased enrollment. Instructional costs and services expenses as a percentage of revenue decreased to 43.7% for the six months ended June 30, 2026, from 46.9% for the six months ended June 30, 2025.
Selling and promotional expenses. Our selling and promotional expenses for the six months ended June 30, 2026, were $78.0 million, an increase of $7.7 million, or 11.0%, compared to $70.3 million for the six months ended June 30, 2025. Selling and promotional expenses increased primarily due to an increase of $8.2 million in advertising costs across both segments to further drive enrollment, partially offset by a decrease of $2.1 million in Corporate and Other due to the sale of GSUSA. Selling and promotional expenses as a percentage of revenue increased to 22.5% for the six months ended June 30, 2026, from 21.5% for the six months ended June 30, 2025.
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General and administrative expenses. Our general and administrative expenses for the six months ended June 30, 2026, were $73.8 million, a decrease of $0.8 million, or 1.0%, compared to $74.6 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, general and administrative expenses included $1.9 million in professional fees relating to the Combination in Corporate and Other. For the six months ended June 30, 2025, general and administrative expenses included $2.7 million in professional fees relating to the Combination in Corporate and Other and the sale of GSUSA. General and administrative expenses decreased primarily due to a $3.5 million decrease in Corporate and Other due to the sale of GSUSA, and a $1.2 million decrease in employee compensation costs in Corporate and Other, partially offset by a $2.6 million increase in bad debt expense in both segments. Consolidated bad debt expense for the six months ended June 30, 2026, was $12.2 million, or 3.5% of revenue, compared to $9.8 million, or 3.0% of revenue in the prior year period. General and administrative expenses as a percentage of revenue decreased to 21.3% for the six months ended June 30, 2026, from 22.8% for the six months ended June 30, 2025. As we continue to evaluate enhancements to our business capabilities, we may incur additional costs, and our general and administrative expenses will vary from time to time.
Depreciation and amortization expenses. Depreciation and amortization expenses were $8.1 million for both the six months ended June 30, 2026, and 2025. Depreciation and amortization expenses as a percentage of revenue were 2.3% for the six months ended June 30, 2026, as compared to 2.5% for the six months ended June 30, 2025.
Loss on assets held for sale. There were no losses on assets held for sale in the six months ended June 30, 2026. For the six months ended June 30, 2025, the $1.5 million non-cash loss on assets held for sale was for real property in Charles Town, West Virginia in our Military+ Segment.
Loss on disposals of long-lived assets. The loss on disposal of long-lived assets was $0.2 million for the six months ended June 30, 2026, as compared to $0.3 million for the six months ended June 30, 2025.
Loss on extinguishment of debt. For the six months ended June 30, 2026, we recorded a $1.7 million loss on extinguishment of debt relating to the refinance of our corporate debt. There was no loss on extinguishment of debt in the prior year.
Stock-based compensation expenses. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expenses were $4.6 million for each of the six months ended June 30, 2026, as compared to $4.5 million for the six months ended June 30, 2025. Stock-based compensation costs included accelerated expense for retirement-eligible employees and performance stock unit incentive costs.
Interest income (expense), net. Net interest expense was $0.1 million and $2.0 million for the six months ended June 30, 2026, and 2025, respectively. Net interest expense in the six months ended June 30, 2026, as compared to the prior year period, decreased primarily due to a decrease in interest expense due to the refinance of corporate debt and an increase in interest income earned on investment securities.
Income tax expense. We recognized income tax expense of $5.9 million and $3.9 million for the six months ended June 30, 2026, and 2025, respectively, or an effective tax rate of 17.7% in 2026 and 22.5% in 2025. The effective tax rate in both periods was positively impacted by excess tax benefits related to stock compensation. The impact in 2026 was more significant due to the increase in share price, compared to the prior period.
Net income. Our net income was $27.5 million and $13.4 million for the six months ended June 30, 2026, and 2025, respectively, an increase of $14.1 million. This increase was due to the factors discussed above.
Preferred stock dividends. There were no preferred stock dividends for the six months ended June 30, 2026 due to the redemption of all outstanding shares of Series A Senior Preferred Stock in June 2025. Preferred stock dividends for the six months ended June 30, 2025 were $2.8 million.
Loss on redemption of preferred stock. In June 2025, we redeemed all outstanding shares of Series A Senior Preferred Stock for $43.1 million, excluding unpaid and accrued dividends of $1.4 million, resulting in a loss of $3.5 million related to the redemption premium and fees.
Net income available to common stockholders. The net income available to common stockholders was $27.5 million for the six months ended June 30, 2026, compared to a net income available to common stockholders of $7.1 million for the six months ended June 30, 2025, an improvement of $20.4 million. This improvement was due to the factors discussed above.
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Analysis of Operating Results by Reportable Segment
The following table provides details on our operating results by reportable segment for the respective periods (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
(Unaudited) (Unaudited)
Revenue:
Military+ Segment $ 85,538 $ 81,731 $ 174,981 $ 165,677
Health+ Segment 86,216 77,655 171,572 154,582
Corporate and Other (23) 3,380 (84) 7,058
Total revenue $ 171,731 $ 162,766 $ 346,469 $ 327,317
Income (loss) from operations before interest and income taxes:
Military+ Segment $ 23,723 $ 21,442 $ 54,441 $ 45,568
Health+ Segment 308 (2,378) 825 (3,196)
Corporate and Other (10,505) (12,039) (20,097) (23,101)
Total income from operations before interest and income taxes $ 13,526 $ 7,025 $ 35,169 $ 19,271
Military+ Segment
For the three months ended June 30, 2026, the $3.8 million, or 4.7%, increase to approximately $85.5 million in revenue in our Military+ Segment was primarily attributable to higher net course registrations, as compared to the prior year period. Net course registrations increased 2.0% to approximately 98,300 from approximately 96,400 in the prior year period, primarily due to increases in military registrations from students utilizing TA and financial aid. Income from operations before interest and income taxes improved to $23.7 million during the three months ended June 30, 2026, from $21.4 million in the prior year period, an increase of $2.3 million, or 10.6%, due to the $3.8 million increase in revenue and a $0.8 million decrease in employee compensation costs, partially offset by a $2.0 million increase in advertising costs, as compared to the prior year period.
For the six months ended June 30, 2026, the $9.3 million, or 5.6%, increase to approximately $175.0 million in revenue in our Military+ Segment was primarily attributable to higher net course registrations and modest price increases, as compared to the prior year period. Net course registrations increased 3.0% to approximately 204,900 from approximately 198,900 in the prior year period, primarily due to increases in military registrations from students utilizing TA, financial aid, and military-affiliated students utilizing education benefit programs administered by the VA. Income from operations before interest and income taxes improved to $54.4 million during the six months ended June 30, 2026, from $45.6 million in the prior year period, an increase of $8.9 million, or 19.5%, primarily due to the $9.3 million increase in revenue, a $1.5 million decrease in loss on assets held for sale, and a $0.8 million decrease in employee compensation costs, partially offset by a $3.3 million increase in advertising costs and a $1.2 million increase in bad debt expense, as compared to the prior year period.
Health+ Segment
For the three months ended June 30, 2026, the $8.6 million, or 11.0%, increase to approximately $86.2 million in revenue in the Health+ Segment was primarily due to a 6.6% increase in total student enrollment which was driven by an 9.2% increase in on-ground enrollment, and a 3.4% increase in online enrollment, as compared to the prior year period, and the impact of tuition increases in the second half of 2025. Income from operations before interest and income taxes was $0.3 million for the three months ended June 30, 2026, and a loss of $2.4 million for the three months ended June 30, 2025, respectively, an improvement of $2.7 million. The improvement was primarily due to the $8.6 million revenue increase, partially offset by increases of $3.1 million in advertising costs, $1.4 million in employee compensation costs, and $1.0 million in information technology costs, as compared to the prior year period.
For the six months ended June 30, 2026, the $17.0 million, or 11.0%, increase to approximately $171.6 million in revenue in the Health+ Segment was primarily due to a 7.0% increase in total student enrollment which was driven by a 9.0% increase in on-ground enrollment, and a 4.6% increase in online enrollment, as compared to the prior year period, and the
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impact of tuition increases in the second half of 2025. Income from operations before interest and income taxes was $0.8 million for the six months ended June 30, 2026, and a loss of $3.2 million for the six months ended June 30, 2025, respectively, an improvement of $4.0 million. The improvement was primarily due to the $17.0 million revenue increase, partially offset by increases of $4.9 million in advertising costs, $3.2 million in classroom and course materials costs, $2.7 million in employee compensation costs, $1.4 million in bad debt expense, and $1.3 million in technology costs, as compared to the prior year period.
Liquidity and Capital Resources
Liquidity
Cash, cash equivalents, and restricted cash were $146.5 million and $176.5 million at June 30, 2026, and December 31, 2025, respectively, representing a decrease of $30.0 million, or 17.0%. The decrease was primarily due to the purchase of approximately $75.9 million in short-term investments, repurchases of common stock, and the additional principal paydown of corporate debt, partially offset by the collection of TA accounts receivable in the Military+ Segment. We have historically financed operating activities and capital expenditures with cash provided by operating activities. We expect to continue to fund our costs and expenses through cash generated from operations for the next twelve months and beyond. For more on our material cash requirements from known contractual and other obligations, please refer to the section entitled “Contractual Obligations” in Item 7 of Part II of our Annual Report.
In the second quarter of 2026, we began purchasing short-term highly liquid available-for-sale debt securities, consisting primarily of investment grade commercial paper and U.S. Treasury securities. The Company’s investment policy limits credit exposure by restricting investments to high-quality issuers and by establishing concentration limits.
We derive a significant portion of our revenue from our participation in ED’s Title IV programs, for which disbursements are governed by federal regulations. We have typically received disbursements under Title IV programs within 30 days of the start of the applicable course or term. Another significant source of revenue is derived from TA from the DoD and programs from the VA. Generally, VA funds are received within 60 days of the start of the courses to which they relate, and TA funds received within 30 days of the invoice date. Military+ generally invoices for TA approximately nine weeks after the start of a course, and may change its billing approach as in the past, which has had the effect of delaying payments from one period into another. For example, in July 2025, Military+ delayed billing to certain branches, further delaying payments until 2026, which could have an adverse impact on Military+’s ability to comply with the 90/10 Rule in 2026 or future years. The change in TA billing practice added to our accounts receivable as of December 31, 2025, and resulted in an increase to our leverage ratio as of December 31, 2025, under our Credit Agreement as defined and discussed in “Note 8. Long-term Debt”. During the six months ended June 30, 2026, Military+ collected approximately $33.3 million from TA related to the 2025 delayed billings.
On March 2, 2026, we completed the first step of the Combination, the Legal Merger, and on August 4, 2026, we completed the second step of the Combination, the Institutional Combination. For the years ended December 31, 2025, and 2024, we incurred $3.5 million and $2.2 million in professional fees, respectively, related to the Combination. For the six months ended June 30, 2026, we incurred $1.9 million in professional fees and expect to incur approximately $1.5 million in professional fees during the remainder of 2026 to complete the Combination.
That certain Credit Agreement dated as of September 1, 2021, as amended, by and among the Company, as borrower, the lenders from time to time party thereto, and Macquarie Capital Funding, LLC, as administrative agent and collateral agent, or the Prior Credit Agreement, contained financial covenants that required us to maintain a Total Net Leverage Ratio (as defined in the Prior Credit Agreement) of no greater than 2.00 to 1.00 and 0.75 to 1.00, respectively, which was subject to certain exceptions. The Total Net Leverage Ratio under the Prior Credit Agreement at December 31, 2025, was negative 0.30 due to the growth in both cash and earnings and the reduction in restricted cash.
On March 9, 2026, we entered into a Credit Agreement with PNC Bank, National Association, as administrative agent and collateral agent, PNC Capital Markets LLC as joint lead arranger and bookrunner, and a syndicate of lenders, or the Lenders, or the 2026 Credit Agreement. The 2026 Credit Agreement provides for (i) a $90.0 million senior secured term loan, or the 2026 Term Loan, and (ii) a senior secured revolving credit facility in an aggregate principal amount of up to $40.0 million, or the 2026 Revolving Credit Facility, or, together with the 2026 Term Loan, the 2026 Facilities. The 2026 Revolving Credit Facility replaces our prior $20.0 million senior secured revolving credit facility under the Prior Credit Agreement, and the proceeds of the 2026 Term Loan, together with cash on hand, were used to repay the approximately $96.4 million principal amount outstanding under our prior $175.0 million term loan under the Prior Credit Agreement.
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The 2026 Credit Agreement contains financial covenants that require us to (i) maintain a Consolidated Total Net Leverage Ratio of no greater than 2.50:1.00, (ii) maintain a Consolidated Interest Coverage Ratio of no less than 2.50:1.00 and (iii) maintain a minimum balance of domestic unrestricted cash and cash equivalents of $40.0 million. The Consolidated Interest Coverage Ratio (as defined in the 2026 Credit Agreement) reflects a ratio of consolidated EBITDA to consolidated interest expense. The Consolidated Total Net Leverage Ratio, under the 2026 Credit Agreement, at June 30, 2026, was negative 0.11. For more information on the 2026 Facilities and their terms, please refer to “Note 8. Long-Term Debt”.
Capital expenditures could be higher in the future as a result of, among other things, additional expenditures for technology or other business capabilities, the maintenance of existing campuses at Health+, the opening or closing of campuses or the consolidation of existing campuses at Health+, the acquisition or lease of existing structures or potential new construction projects, and necessary tenant improvements that arise as a result of our ongoing evaluation of our space needs and opportunities for physical growth. We also expect to continue to explore opportunities to invest in the education industry, which could include purchasing or investing in other education-related companies or companies developing new technologies.
Share Repurchase Program
On March 10, 2026, the Board approved a common stock repurchase program of up to $50 million in the aggregate. The program replaces our prior repurchase authorizations. During the three and six months ended June 30, 2026, the Company repurchased 70,365 and 88,205 shares of common stock, respectively. As of June 30, 2026, there remains $45.0 million available under our share repurchase authorization.
Operating Activities
Net cash provided by operating activities was $75.4 million and $51.8 million for the six months ended June 30, 2026, and 2025, respectively. The increase in cash from operating activities was primarily due to the collection of TA accounts receivable in our Military+ Segment, related to the 2025 change in TA billing approach, our improved financial performance, and other changes in working capital due to the timing of receipts and payments. Accounts receivable at June 30, 2026, decreased approximately $30.2 million compared to December 31, 2025, primarily related to TA collections in our Military+ Segment. Cash flow provided by accounts payable, accrued liabilities, and accrued compensation and benefits at June 30, 2026, were approximately $5.6 million, due primarily to increased advertising accruals at June 30, 2026.
Investing Activities
Net cash used in investing activities was $83.2 million for the six months ended June 30, 2026, compared to $15.4 million of net cash provided by investing activities for the six months ended June 30, 2025, mainly due to purchases of short-term investments of $75.9 million during the three months ended June 30, 2026. For the six months ended June 30, 2025, cash provided by investing activities included $23.0 million in proceeds from the sale of assets held for sale.
Financing Activities
Net cash used in financing activities was $22.2 million and $49.5 million for the six months ended June 30, 2026, and 2025, respectively. The decrease in cash used in financing activities in the current year period is primarily due to the refinancing of our corporate debt which included a $6.5 million net principal paydown and $1.8 million for debt issuance costs. Financing activities for the six months ended June 30, 2025, included our redemption of Series A Senior Preferred Stock in June 30, 2025 for $43.1 million and preferred stock dividends paid of $2.8 million.
Contractual Commitments
We have various contractual obligations consisting of operating leases and purchase obligations. Purchase obligations include agreements with consultants, contracts with third-party service providers, and other future contracts or agreements.
During 2026, the Company entered into two operating lease agreements for new campus locations in Florida and Michigan as part of its continued campus expansion efforts. The leases are expected to commence in the fall of 2026 and spring of 2027, respectively, and have aggregate contractual rental commitments of approximately $8.1 million. The Company will recognize the related right-of-use assets and lease liabilities upon lease commencement in accordance with ASC 842. For a summary of our contractual obligations, please refer to Item 7 of Part II of our Annual Report.
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