American Public Education, Inc. engages in the provision of online and on-campus postsecondary education. It operates through the American Public Education and Hondros College of Nursing segments. The American Public Education segment reflects the operational activities of the company's subsidiary American Public University System, Inc., other corporate activities, and minority investments. The Hondros College of Nursing segment concerns health science and technology focused programs. The company was founded by James P. Etter in 1991 and is headquartered in Charles Town, WV.
ED rules now in effect and subsequent rules that take effect July 1, 2020, each setting forth new standards and procedures related to borrower defense-to-repayment claims, and requirements related to dispute resolution, may create significant liability that could have a material adverse effect on our business.
A failure to demonstrate “financial responsibility” may result in the loss of eligibility by one of our institutions to participate in Title IV programs or require the posting of a letter of credit in order to maintain eligibility to participate in Title IV programs.
ED has proposed regulations setting forth new standards and procedures related to institutional eligibility to participate in Title IV and ED’s recognition of accrediting agencies. While the scope of the final regulations remains unclear, the failure of our institutions or their accrediting agencies to comply with any final regulations could affect our institutions’ eligibility to participate in Title IV programs.
Our institutions’ failure to comply with ED’s regulations related to state authorization or regulations of various states, could result in actions that would have a material adverse effect on our enrollments, revenue, and results of operations.
DoD tuition assistance programs offered to service members of the U.S. Armed Forces constituted approximately 37% of APUS’s adjusted net course registrations for 2018, and our revenue and number of students would decrease if APUS is no longer able to receive funds under these tuition assistance programs or if tuition assistance is modified, reduced, eliminated, or suspended.
HCN recently changed accrediting bodies and must satisfy accreditation standards, including specific student achievement indicators, with which it has not historically had to comply, and with which certain HCN programs must come into compliance by a date set by its accrediting body.
If we are unable to attract and retain management, faculty, administrators, and skilled personnel, our business and growth prospects could be severely harmed, and changes in management could cause disruption and uncertainty.
Below we have included a discussion of our operating results and material changes in our operating results during the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018. 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 APEI and HCN 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 expenses.