American Public Education : Amendment to Annual Report - Form 10-K/A

apei-20211231

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 1)

(Mark One)

☒Annual Report Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2021

or

☐ Transition report pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to ______

Commission file number:001-33810

American Public Education, Inc.

(Exact name of registrant as specified in its charter)

Delaware	01-0724376
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
111 West Congress Street,Charles Town,West Virginia	25414
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: [phone]

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	APEI	Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes oNoþ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes oNoþ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNo o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YesþNo o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	þ	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of

the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐No þ

The aggregate market value of the registrant's common stock held by non-affiliates as of June 30, 2021, the last business day of the registrant's most recently completed second fiscal quarter, computed by reference to the price at which the common stock was last sold on the Nasdaq Global Select Market on that date, was approximately $525 million.

The total number of shares of common stock outstanding as of February 28, 2022 was 18,856,210.

DOCUMENTS INCORPORATED BY REFERENCE

None.

EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 10-K of American Public Education, Inc. for the year ended December 31, 2021 as filed with the Securities and Exchange Commission on March 2, 2022, or the Original Form 10-K, is being filed only for the purpose of (i) including a revised report of our independent registered public accounting firm to correct a typographical error in order to expressly cover the schedule listed in Item 15(c) and (ii) filing new certifications by our Chief Executive Officer and Chief Financial Officer. The schedule listed in Item 15(c) was previously referenced in the consent of the independent registered public accounting firm filed with the Original Form 10-K.

Except as otherwise expressly noted herein, this Amendment No. 1 does not modify or update in any way the Original Form 10-K, nor does it reflect events occurring after the filing of the Original Form 10-K. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Form 10-K.

1

AMERICAN PUBLIC EDUCATION, INC.

FORM 10-K

INDEX

PART II
Item 8	Financial Statements and Supplementary Data	3
PART IV
Item 15	Exhibits and Financial Statement Schedule	39

2

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

American Public Education, Inc. and Subsidiaries

	Page
American Public Education, Inc. and Subsidiaries:
Report of Independent Registered Public Accounting Firm (PCAOB ID 34)	4
Consolidated Balance Sheets as of December 31, 2020 and 2021	6
Consolidated Statements of Income for the years ended December 31, 2019, 2020, and 2021	7
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2020, and 2021	8
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2019, 2020, and 2021	9
Consolidated Statements of Cash Flows for the years ended December 2019, 2020 and 2021	10
Notes to Consolidated Financial Statements	11

3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of American Public Education, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of American Public Education, Inc. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in Item 15(c) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Acquisition of Rasmussen University - Refer to Note 3 to the financial statements

Critical Audit Matter Description

As discussed in Note 3 of the financial statements, the Company acquired Rasmussen University on September 1, 2021 for a total purchase price of $325.5 million. The Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their respective fair values, resulting in goodwill of approximately $216.9 million.

Given the significant estimates and assumptions made by management to estimate the fair value of net identifiable assets and the sensitivity of the estimated fair value to changes in those estimates and assumptions, performing audit procedures to evaluate the reasonableness of management's estimates and assumptions utilized in its fair value analysis, particularly the revenue growth rates and the selection of discount rates, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists. These assumptions related to the future performance of the acquired business, are forward-looking and could be affected by future economic and market conditions.

4

As part of the acquisition of Rasmussen we assessed the reasonableness of managements assumptions used to determine the purchase price allocated to identifiable assets. The fair value of the identified intangible assets including the trade name, student roster, and lead conversions were determined using the income-based approach. The fair value of curricula and accreditation, licensing, and Title IV identified intangible assets were determined using the cost approach.

How the Critical Audit Matter Was Addressed in the Audit

We tested the effectiveness of internal controls over management's valuation analysis, including those over the forecasts of future sales and selection of the discount rate.

To test the estimated fair value of the net identifiable assets, we evaluated the appropriateness of the valuation methodologies utilized and evaluated the reasonableness of the significant assumptions, such as growth rates, by comparing management's estimates with:

•Historical results;

•internal communications to the Company's management and the board of directors; and

•forecasted information included in the Company's press releases as well as in analyst and industry reports of the Company and companies in its peer group.

With the assistance of our fair value specialists, we evaluated the valuation methodology and discount rates used, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

McLean, VA

March 2, 2022

We have served as the Company's auditor since 2018.

5

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Balance Sheets

As of December 31,
	2020	2021
	(In thousands)
Assets
Current assets:
Cash, cash equivalents, and restricted cash (Note 2)	$	227,686	$	149,627
Accounts receivable, net of allowance of $5,983 in 2020 and $11,396 in 2021.	17,652	36,026
Prepaid expenses	6,472	11,681
Income tax receivable	-	5,303
Total current assets	251,810	202,637
Property and equipment, net	68,434	102,417
Operating lease assets, net	8,743	77,943
Intangible assets, net	3,721	85,082
Goodwill	26,563	243,486
Other assets, net	11,747	14,043
Total assets	$	371,018	$	725,608
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,757	$	13,497
Accrued compensation and benefits	15,660	15,131
Accrued liabilities	10,967	10,819
Deferred revenue and student deposits	22,104	21,776
Income tax payable	178	-
Operating lease liabilities, current	2,392	13,705
Long-term debt, current	-	8,750
Total current liabilities	55,058	83,678
Operating lease liability, long term	6,455	69,488
Deferred income taxes	2,580	5,059
Long-term debt, net	-	151,771
Total liabilities	64,093	309,996
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred Stock, $.01 par value; authorized shares - 10,000; no shares issued or outstanding	-	-
Common Stock, $.01 par value; authorized shares - 100,000; 14,809 issued and outstanding in 2020; 18,709 issued and outstanding in 2021	148	187
Additional paid-in capital	195,597	286,385
Accumulated other comprehensive income	-	108
Retained earnings	111,180	128,932
Total stockholders' equity	306,925	415,612
Total liabilities and stockholders' equity	$	371,018	$	725,608

The accompanying notes are an integral part of these consolidated statements.

6

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Income

Year Ended December 31,
	2019	2020	2021
	(In thousands, except per share amounts)
Revenue	$	286,270	$	321,785	$	418,803
Costs and expenses:
Instructional costs and services	111,916	122,161	172,622
Selling and promotional	60,028	72,989	93,317
General and administrative	78,082	88,043	103,379
Loss on disposals of long-lived assets	556	851	1,282
Impairment of goodwill	7,336	-	-
Depreciation and amortization	15,596	12,984	17,832
Total costs and expenses	273,514	297,028	388,432
Income from operations before interest and income taxes	12,756	24,757	30,371
Interest income (expense)	3,908	1,092	(4,277)
Income from operations before income taxes	16,664	25,849	26,094
Income tax expense	5,187	7,020	7,511
Equity investment loss	(1,464)	(7)	(831)
Net income	$	10,013	$	18,822	$	17,752
Net income per common share:
Basic	$	0.62	$	1.27	$	0.98
Diluted	$	0.62	$	1.25	$	0.97
Weighted average number of shares outstanding:
Basic	16,094	14,876	18,085
Diluted	16,255	15,047	18,255

The accompanying notes are an integral part of these consolidated statements.

7

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Comprehensive Income

2019	2020	2021
(In thousands)
Net income	$	10,013	$	18,822	$	17,752
Other comprehensive income, net of tax:
Unrealized gain on hedging derivatives, net of taxes	-	-	108
Comprehensive income	$	10,013	$	18,822	$	17,860

The accompanying notes are an integral part of these consolidated statements.

8

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Stockholders' Equity

(In thousands)
			Additional Paid-In Capital	Accumulated Other Comprehensive Income (loss)	Retained Earnings	Total Stockholders' Equity
	Common Stock
	Shares	Amount
Balance as of December 31, 2018	16,425	$	164	$	187,172	-	$	133,930	$	321,266
Issuance of common stock under employee benefit plans	252	3	(3)	-	-	-
Deemed repurchased shares of common and restricted stock for tax withholding	(83)	(1)	(2,509)	-	-	(2,510)
Stock-based compensation	-	-	5,960	-	-	5,960
Repurchased and retired shares of common stock	(1,416)	(14)	-	-	(37,982)	(37,996)
Net income	-	-	-	-	10,013	10,013
Balance as of December 31, 2019	15,178	152	190,620	-	105,961	296,733
Issuance of common stock under employee benefit plans	258	2	(2)	-	-	-
Deemed repurchased shares of common and restricted stock for tax withholding	(79)	(1)	(2,096)	-	-	(2,097)
Stock-based compensation	-	-	7,075	-	-	7,075
Repurchased and retired shares of common stock	(548)	(5)	-	-	(13,603)	(13,608)
Net income	-	-	-	-	18,822	18,822
Balance as of December 31, 2020	14,809	148	195,597	-	111,180	306,925
Issuance of common stock in public offering	3,680	37	86,168	-	-	86,205
Issuance of common stock under employee benefit plans	319	3	(3)	-	-	-
Deemed repurchased shares of common and restricted stock for tax withholding	(99)	(1)	(3,031)	-	-	(3,032)
Stock-based compensation	-	-	7,654	-	-	7,654
Unrealized gain on hedging derivatives, net of taxes	-	-	-	108	-	108
Net income	-	-	-	-	17,752	17,752
Balance as of December 31, 2021	18,709	$	187	$	286,385	$	108	$	128,932	$	415,612

The accompanying notes are an integral part of these consolidated statements.

9

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Cash Flows

Year Ended December 31,
	2019	2020	2021
	(In thousands)
Operating activities
Net income	$	10,013	$	18,822	$	17,752
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	15,596	12,984	17,832
Amortization of debt issuance costs	-	-	885
Stock-based compensation	5,960	7,075	7,654
Equity investment loss	1,464	7	831
Deferred income taxes	(1,973)	(811)	5,530
Loss on disposal of long-lived assets	556	851	1,282
Impairment of goodwill	7,336	-	-
Other	145	24	15
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for bad debt	2,734	(6,327)	(7,637)
Prepaid expenses	(1,149)	320	(614)
Income tax receivable/payable	(859)	1,935	(5,481)
Operating lease assets, net	120	(16)	2,606
Other assets	550	(165)	(1,517)
Accounts payable	(5,564)	(86)	8,026
Accrued compensation and benefits	653	1,907	(3,406)
Accrued liabilities	3,672	3,612	(4,432)
Deferred revenue and student deposits	(884)	4,678	(23,061)
Net cash provided by operating activities	38,370	44,810	16,265
Investing activities
Cash paid for acquisition, net of cash acquired	-	-	(325,509)
Capital expenditures	(7,255)	(4,926)	(11,828)
Proceeds from the sale of real property	-	767	672
Net cash used in investing activities	(7,255)	(4,159)	(336,665)
Financing activities
Cash paid for repurchase of common/restricted stock	(40,506)	(15,705)	(3,032)
Cash received from issuance of common stock	-	-	86,205
Cash paid for principal on borrowings	-	-	(2,188)
Cash received from borrowings	-	-	175,000
Cash paid for debt issuance costs	-	-	(13,644)
Net cash used in financing activities	(40,506)	(15,705)	242,341
Net increase (decrease) in cash, cash equivalents, and restricted cash	(9,391)	24,946	(78,059)
Cash, cash equivalents, and restricted cash at beginning of period	212,131	202,740	227,686
Cash, cash equivalents, and restricted cash at end of period	$	202,740	$	227,686	$	149,627
Supplemental disclosures of cash flow information
Interest paid	$	-	$	-	$	3,676
Income taxes paid	$	8,019	$	5,898	$	7,464

The accompanying notes are an integral part of these consolidated statements.

10

Notes to Consolidated Financial Statements

Note 1. Nature of 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 students through the following 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, as an Open Pathways institution.

•Rasmussen College, LLC, which is referred to herein as Rasmussen University, or RU, a nursing- and health sciences-focused institution, provides postsecondary education to students at its 23 campuses across six states and online. The Company completed the acquisition of Rasmussen University, or the Rasmussen Acquisition, on September 1, 2021, or the Closing Date. Please refer to "Note 3. Acquisition Activity" for more information on this acquisition. The Consolidated Financial Statements do not include the operating results or financial position of RU for any periods prior to the Closing Date. RU is institutionally accredited by HLC as an Open Pathways institution.

•National Education Seminars, Inc., which is referred to herein as Hondros College of Nursing, or HCN, provides nursing education to students enrolled at six campuses in Ohio, including a campus in Akron that opened in April 2021, and one 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.

The Company's institutions are licensed or otherwise authorized 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. During the third quarter of 2021, the Company revised its reportable segments, as discussed further in "Note 14. Segment Information". Prior period segment disclosures have been restated to conform to the current period presentation.

The Company's operations are organized into three reportable segments:

•American Public University System, orAPUS Segment. This segment reflects the operational activities of APUS.

•Rasmussen University Segment, or RU Segment. This segment reflects the operational activities of RU.

•Hondros College of Nursing Segment, orHCN Segment.This segment reflects the operational activities of HCN.

Adjustments to reconcile segment results to the Consolidated Financial Statements are included in "Corporate and Other", which primarily includes unallocated corporate activity and eliminations, which generally were previously reported within the APEI Segment.

Note 2. Significant Accounting Policies

A summary of the Company's significant accounting policies follows:

Basis of presentation and accounting.The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. Certain prior year amounts have been reclassified for comparative purposes to conform with the 2021 presentation. Specifically, at December 31, 2021, Intangible assets, net are presented on the Consolidated Balance Sheet as a separate financial statement line item, and investments are no longer separately presented and are now presented in other assets, net. Prior to December 31, 2021, intangible assets, net, were presented in other assets, net on the Consolidated Balance Sheet, and investments were presented as a separate financial statement line item.

Business combinations.The Company accounts for business combinations in accordance with FASB, ASC 805, Business Combinations, which requires the acquisition method to be used for all business combinations. Under ASC 805, the assets and liabilities of an acquired company are reported at business fair value along with the fair value of acquired intangible assets at the date of acquisition. Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed, and the fair value assigned to identifiable intangible assets.

11

On September 1, 2021, the Company completed the Rasmussen Acquisition. Accordingly, the financial results of the Company as of and for any periods ended prior to September 1, 2021 do not include the financial results of RU and therefore are not directly comparable.

Principles of consolidation. The accompanying consolidated financial statements include the accounts of APEI and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

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 those estimates under different assumptions or conditions, and the impact of such differences may be material to the Company's Consolidated Financial Statements.

Cash and cash equivalents. The Company considers all short-term highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of demand deposits with financial institutions, money market funds, and U.S. Treasury bills. Cash and cash equivalents are Level 1 assets in the fair value reporting hierarchy.

Restricted cash. Cash and cash equivalents include funds held for students for unbilled educational services that were received from Title IV programs. As a trustee of these Title IV program funds, the Company is required to maintain and restrict these funds pursuant to the terms of the program participation agreement with ED. Cash and cash equivalents also includes amounts to secure letters of credit, including $24.2 million in a restricted certificate of deposit account to secure a letter of credit for the benefit of the ED on behalf of RU in connection with RU's 2020 composite score, which is used by ED for determining compliance with financial responsibility standards, being below the minimum required, and a $0.6 million restricted certificate of deposit to secure a letter of credit in lieu of a security deposit for a RU leased campus. Restricted cash on the Company's Consolidated Balance Sheets as of December 31, 2020 and 2021, excluding the restricted certificates of deposit, was $1.2 million and $2.2 million, respectively. Total restricted cash as of December 31, 2020 and 2021 is $1.2 million and $27.0 million, respectively.

Accounts receivable.The Company accounts for receivables in accordance with FASB ASC 310, Receivables. Course tuition is recorded as accounts receivable and deferred revenue at the time students begin a course or term. Students may remit tuition payments upon enrollment or they may elect various other payment options with payment terms extending beyond the start of the course or term. These other payment options include payments by sponsors, financial aid, alternative loans, or tuition assistance programs that remit payments directly to the subsidiary. HCN also offers an extended payment plan option.

When a student remits payment after a course or term has begun, accounts receivable is reduced. If payment is made prior to the start of a course or term, the payment is recorded as a student deposit, and the student is provided access to the online classroom when courses start, in the case of APUS, or allowed to start the term, in the case of RU and HCN. If a payment option is confirmed, the student is allowed to start the course or term. Generally, if no receipt is confirmed or payment option secured, the student will be dropped from the online course or not allowed to start the term. Therefore, billed amounts represent charges that have been prepared and sent to students or the applicable third-party payor according to the terms agreed upon in advance.

TA is billed by branch of service on a course-by-course basis when a student starts a course, whereas Title IV programs are billed based on the courses included in a student's term. Billed accounts receivable are considered past due if the invoice has been outstanding for more than 30 days.

Allowance for doubtful accounts. 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 and RU do not charge interest on past due accounts receivable. HCN charges interest on payment plans when a student leaves the payment plan program upon graduation or exits the program.

Property and equipment.All property and equipment is carried at cost less accumulated depreciation, except the acquired assets of RU, which were recorded at fair value at the Closing Date. Depreciation and amortization are calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvement depreciation is calculated on a straight-

12

line basis over the lesser of the estimated useful life of the asset or the term of the lease. For tax purposes, different methods are used. Maintenance and repairs are expensed as incurred, while other costs are capitalized if they extend the useful life of the asset.

The Company's Partnership At a Distance system, or PAD, is a customized student information and services system used by APUS to manage admissions, online orientation, course registrations, tuition payments, grade reporting, progress toward degrees, and various other functions. Costs associated with this system have been capitalized in accordance with FASB ASC 350-40, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, and classified as property and equipment. These costs are amortized over the estimated useful life of five years. The Company also capitalizes certain costs for academic program development, and these costs are amortized over an estimated life not to exceed three years.

Leases. The Company accounts for lease arrangements in accordance with FASB ASC 842, Leases. The Company determines if there is a lease at inception. Operating lease assets are right-of-use, or ROU assets, which represent the right to use an underlying asset 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 as of December 31, 2020 and 2021. 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 asset includes all lease payments and excludes lease incentives. The Company has elected the following practical expedients and elected the following accounting policies related to this standard:

•carry forward of historical lease classification;

•short-term lease accounting policy election allowing lessees to not recognize ROU assets and lease liabilities for leases with a term of 12 months or less; and

•not to separate lease and non-lease components for office space and campus leases.

Goodwill and indefinite-lived intangible assets. Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Goodwill is not amortized. The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles Goodwill and Other, and in 2018 adopted Accounting Standards Update, or ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The Company annually assesses goodwill for impairment, or more frequently if events and circumstances indicate that goodwill might be impaired. The Company's goodwill and intangible assets are deductible for tax purposes.

In connection with the Company's September 1, 2021 acquisition of RU, the Company recorded $217.2 million of goodwill, representing the excess of the purchase price over the amount assigned to the assets acquired, and the fair value assigned to intangible assets and liabilities assumed. The Company also recorded identified intangible assets with an indefinite useful life in the aggregate amount of $51.0 million respectively, which includes trade name, accreditation, licensing and Title IV, and recorded $35.5 million respectively, of identified intangible assets with a definite useful life which includes student roster, curricula, and lead conversions.

The Company previously recorded goodwill in the amount of $38.6 million in connection with its acquisition of HCN, and later recorded charges reducing the carrying value of our goodwill to $26.6 million. The Company also recorded $3.7 million of indefinite-lived intangible assets as part of the HCN acquisition.

APEI utilizes the services of an independent valuation firm to estimate fair value of goodwill and indefinite-lived intangibles. In completing their analysis, the valuation firm uses a discounted cash flow analysis as well as other valuation methods. The discounted cash flow analysis includes significant estimates and assumptions from management, including revenue growth rates, operating margins and future economic and market conditions, among others. Additionally, the valuation firm's analysis includes significant assumptions with respect to discount rates and assumed royalty rates. If the fair value is less than the carrying value, the asset is reduced to fair value.

During the year ended December 31, 2019, the Company used an independent valuation firm to complete interim assessments of goodwill after qualitative analysis indicated that goodwill at HCN might be impaired. The valuations performed during the first and third quarters of 2019, determined that the fair value was less than the carrying value. As a result, the Company recorded pretax, non-cash impairment charges of $7.3 million at HCN during the year ended December 31, 2019.

13

The Company completed its annual assessment of goodwill as of October 31, 2021 and concluded that HCN's fair value was more than the carrying value. This annual assessment concluded that the fair value of HCN exceeded the carrying value by approximately $20.1 million, or 51.8%.

The Company evaluated events and circumstances related to the valuation of goodwill through the year ended December 31, 2021 and determined there were no 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.

Indefinite-lived intangible assets are tested at least annually for impairment by comparing the fair value of the asset to the carrying value. Interim and annual testing concluded that the indefinite-lived assets were not impaired.

For additional details regarding goodwill and indefinite-lived intangible assets, please refer to "Note 6. Goodwill and Intangible Assets" below in these Consolidated Financial Statements.

Valuation of long-lived assets. The Company accounts for the valuation of long-lived assets under FASB ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets.ASC 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

Investments. The Company accounts for its investments in less than majority owned companies in accordance with FASB ASC 323, Investments - Equity Method and Joint Ventures and FASB ASC 321,Investments - Equity Securities.The Company applies ASC 323, Investments - Equity Method and Joint Venturesto investmentswhen it has the ability to exercise significant influence but does not control the operating and financial policies of the company. This is generally represented by equity ownership of at least 20 percent but not more than 50 percent. Investments accounted for under the equity method are initially recorded at cost and subsequently adjusted by the Company's share of equity in income or losses after the date of acquisition. The pro-rata share of the operating results of the investee is reported in the Consolidated Statements of Income as equity investment loss. Investments that do not meet the equity method requirements are accounted for under ASC 321, Investments - Equity Securities, with changes in the fair value of the investment reported in the Consolidated Statements of Income as equity investment loss.

The Company periodically evaluates its equity method investment for indicators of other-than-temporary impairments. Factors the Company considers when evaluating for other-than-temporary impairments include the duration and severity of the impairment, the reasons for the decline in value, including the impact of COVID-19, 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 loss, and the equity investment balance is reduced to its fair value accordingly.

In each reporting period, the Company evaluates its cost method investments for observable prices 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, including the impact of the COVID-19 pandemic.

Management must exercise significant judgment in evaluating the potential impairment of its equity investments.

The Company's equity investments are included in other assets on the accompanying Consolidated Balance Sheets.

Derivatives and Hedging.Derivative financial instruments are recorded on the Consolidated Balance Sheet as assets or liabilities and re-measured at fair value at each reporting date. For derivatives designated as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings.

14

Self-Insured Liabilities. RU has a partially self-insured health plan, or the Plan, for employee health benefits and records self-insurance liabilities based on claims filed and an estimate of claims incurred but not yet reported. The Plan carries insurance with a yearly loss limit per person of $225,000 and a maximum claims expense of 125% of the average claim value. Self-insurance liabilities for employee health benefits claims are recorded in the accrued compensation and benefits line item of the Consolidated Balance Sheet and are $1.0 million as of December 31, 2021.

Deferred revenue and student deposits.Deferred revenue and student deposits at December 31, 2020 and 2021 was $22.1 million and $21.8 million, respectively. Deferred revenue includes payments that have been received from students for courses or terms that are still in process and student deposits represent cash received from students prior to the commencement of a course or term and are refundable to the student in the event the student withdrawals before the start of the course or term. Student deposits at December 31, 2020 and 2021 were $8.4 million and $8.9 million, respectively.

Revenue recognition. The Company recognizes revenue in accordance with accounting standard, ASC 606, Revenue from Contracts with Customers. Under ASC 606, revenue is recognized when evidence of a contract exists, delivery has occurred or as instructional services are delivered, the price is determinable, and collectability is reasonably assured. Revenue from fees is recognized as information or services are delivered to students, assuming all other revenue recognition criteria are met. For additional information regarding revenue recognition, please refer to "Note 4. Revenue" below in these Consolidated Financial Statements.

The Company provides scholarships and grants and, in the case of APUS, technology fee grants to certain students to assist them financially and promote their enrollment. Scholarship assistance and technology fee grants of $26.1 million, $45.6 million, and $54.6 million were provided for the years ended December 31, 2019, 2020 and 2021, respectively, and are included as a reduction to revenue in the accompanying Consolidated Statements of Income.

Advertising costs.Advertising costs are expensed as incurred during the year. Advertising expenses for the years ended December 31, 2019, 2020 and 2021 were $40.9 million, $51.3 million, and $60.3 million, respectively, and are included in selling and promotional expenses in the accompanying Consolidated Statements of Income.

Income taxes.Deferred taxes are determined using the liability method, whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. As these differences reverse, they will enter into the determination of future taxable income. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment of such changes.

Under ASC 740, the Company is required to determine whether uncertain tax positions should be recognized within the Company's financial statements. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. Uncertain tax positions are recognized when a tax position, based solely on its technical merits, is determined more likely than not to not be sustained upon examination. Upon determination, uncertain tax positions are measured to determine the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. An uncertain tax position is reversed if it no longer meets the more likely than not threshold of being sustained. There were no material uncertain tax positions as of December 31, 2019, 2020 or 2021. The Company has not recorded any material interest or penalties during any of the years presented.

Stock-based compensation.The Company accounts for stock-based compensation in accordance with FASB ASC 718, Stock Compensation, which requires companies to expense share-based compensation based on fair value, and adopted ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accountingin January 2017. 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. It 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 that uses certain assumptions. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of the Company's common stock. In addition, the Company determines the risk-free interest rate by selecting the U.S.

15

Treasury constant maturity for the same maturity as the estimated life of the option quoted on an investment basis in effect at the time of grant for that business day.

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 Companyestimates 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 made under ASC 718. For additional information regarding stock-based compensation, please refer to "Note 11. Stockholders' Equity" in these Consolidated Financial Statements.

Common Stock: On March 1, 2021, the Company completed an underwritten public offering of 3,680,000 shares of its common stock at a price to the public of $25.00 per share for net proceeds of approximately $86.2 million, after deducting underwriting discounts and commissions and other offering expenses.

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 options, warrants, and restricted stock.

Fair value of financial instruments.The Company measures certain financial assets at fair value for disclosure purposes, as well as on a nonrecurring basis when they are deemed to be other-than-temporary impairments.

Fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities;

Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly; or

Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company's cash, cash equivalents, and restricted cash, accounts receivable, accounts payable and accrued liabilities are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The valuation of the interest rate cap is measured as the present value of all expected future cash flows based on the LIBOR-based yield curves. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparty. As such, the Company's interest rate cap falls within Level 2 of the fair value hierarchy. The carrying value of long-term debt approximates fair value as it is based on a variable rate index.

Concentration of credit risk.The Company maintains its cash, cash equivalents, and restricted cash in bank deposit accounts with various financial institutions. Cash, cash equivalents, and restricted cash balances may exceed the FDIC insurance limit. The Company has historically not experienced any losses in such accounts.

Recent Accounting Pronouncements. The Company considers the applicability and impact of all ASUs. ASUs issued but not listed were assessed and determined to be either not applicable or expected to have minimal impact on its consolidated financial position and/or results of operations.

16

Note 3. Acquisition Activity

On September 1, 2021, the Company completed the Rasmussen Acquisition. The Rasmussen Acquisition was completed pursuant to a Membership Interest Purchase Agreement, or the Purchase Agreement, dated October 28, 2020, by and among the Company, FAH Education, LLC, or Seller, Rasmussen, LLC, or Rasmussen, and Rasmussen College, LLC, or Rasmussen College, a wholly owned subsidiary of Rasmussen.

Pursuant to the Purchase Agreement, on the Closing Date, the Company purchased from Seller all membership interests in RU for an adjusted aggregate purchase price, subject to post-closing working capital adjustments, and net of cash acquired, of $325.5 million in cash. Upon completion of the Rasmussen Acquisition, Rasmussen merged into Rasmussen College and Rasmussen College became a wholly owned subsidiary of the Company.

The Company applied the acquisition method of accounting to the Rasmussen Acquisition, whereby the excess of the acquisition date fair value of consideration transferred over the fair value of identifiable assets and liabilities assumed was allocated to goodwill. Goodwill reflects the fair value associated with the RU workforce and synergies expected from cost savings, operations, and revenue enhancements of the combined company that are expected to result from the acquisition. The goodwill recorded as part of the acquisition was allocated to the RU reportable segment in the amount of $216.9 million and is deductible for tax purposes.

For the year ended December 31, 2021, the Company incurred approximately $6.3 million of acquisition-related expenses, respectively, which are included in general and administrative on the Consolidated Statements of Income.

The preliminary opening balance sheet is subject to adjustment based on a final assessment of the fair values of certain acquired assets and liabilities, primarily intangible assets and goodwill. The Company has up to one year from the Closing Date, or the measurement period, to complete the allocation of the purchase price. As the Company finalizes its assessment of the fair values of certain acquired assets and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments occur. During the fourth quarter of 2021, the Company recorded a $0.3 million reduction in goodwill recorded in connection with the RU Acquisition.

17

The following table summarizes the components of the estimated consideration along with the purchase price allocation (in thousands):

Purchase Price Allocation	Amount
Cash and cash equivalents	$	329,000
Working capital adjustment and additional cash contributions	1,826
Total consideration	330,826
Assets acquired:
Cash and cash equivalents	5,200
Accounts receivable	10,700
Prepaid expenses	4,600
Property and equipment, net	36,996
Operating lease assets	75,800
Deferred tax asset	3,049
Intangible assets	86,500
Other assets	600
Total assets acquired	223,445
Liabilities assumed:
Accounts payable	1,200
Accrued expenses	6,142
Deferred revenue	22,700
Operating lease liabilities, current	11,200
Operating lease liabilities, long-term	67,000
Other liabilities	1,300
Total liabilities assumed	109,542
Net assets acquired	113,903
Goodwill	$	216,923

The fair value of the identified intangible assets, including the trade name, student roster, and lead conversions were determined using the income-based approach. The fair value of curricula and accreditation, licensing, and Title IV identified intangible assets were determined using the cost approach. The table below presents a summary of intangible assets acquired and the useful lives of these assets (in thousands):

Intangible Assets	Useful life	Amount
Trade name	Indefinite	26,500
Accreditation, licensing and Title IV	Indefinite	24,500
Student roster	2 years	20,000
Curricula	3 years	14,000
Lead conversions	2 years	1,500
$	86,500

18

Pro Forma Financial Information

The following unaudited pro forma information is presented as if the Rasmussen Acquisition occurred on January 1, 2020. In preparing the pro forma results, the Company is required to make estimates and assumption including with respect to underlying financial performance, purchase accounting, appropriate depreciation and amortization methods, effective tax rate, and future interest rates, among other estimates and assumptions. The Company believes that these estimates and assumptions are reasonable under the circumstances. The pro forma results do not represent what may occur in the future as 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. The table below presents the Company's pro forma combined revenue and net income (in thousands):

Year Ended December 31,
2020	2021
(Unaudited)
Revenue	$	583,330	$	600,984
Net Income	25,876	21,933

Graduate School USA

On August 11, 2021, the Company announced that it had entered into an agreement to acquire substantially all of the assets of Graduate School USA, or GSUSA, one of the largest providers of training to the federal government workforce, for approximately $1.0 million. On January 1, 2022, the Company completed its acquisition of GSUSA.

Note 4. Revenue

The following is a description of principal activities from which the Company generates its revenue.

Instructional services. Instructional services revenue includes tuition, technology, and laboratory fees. The Company generally recognizes revenue ratably as instructional services are provided over the period or term, which is, for APUS, either an eight- or sixteen-week period, and for RU and HCN, a quarterly term. Tuition is charged by course or term, technology fees are charged to APUS students on a per course basis, and technology and laboratory fees are charged to RU and HCN students on a per term basis, when applicable. Generally, instructional services are billed when a course or term begins and paid within thirty days of the bill date.

Graduation fees. APUS graduation fee revenue represents a one-time, non-refundable $100 fee per degree, charged to students upon submission of a program graduation application. The fee covers administrative costs associated with completing a review of the student's academic and financial standing prior to graduation. The Company recognizes revenue once graduation review services are completed. Generally, graduation fees are billed and paid when the student submits the graduation application.

Textbook and other course material fees. Textbook and other course materials revenue represent fees related to the sale of textbooks and other course materials to RU and HCN students. Revenue is recognized at the beginning of the term when the textbooks and other course materials fees are billed. Payment is generally received within thirty days of the bill date. Sales tax collected from students on the sale of textbooks and other course materials is excluded from revenue.

Other fees. Other fees revenue represents one-time, non-refundable fees such as application, enrollment, transcript, and other miscellaneous fees. Generally, other fees revenue is recognized when the fee is charged to the student, which coincides with the completion of the specific performance obligation to the student.

APUS provides an APUS-funded tuition grant to support students who are U.S. Military active-duty service members, National Guard members, reservists, military spouses and dependents, and, until January 2020, veterans, as well as a grant to cover the technology fee for students using TA.

RU provides a RU-funded military grant pursuant to which active duty servicemembers receive reduced tuition of $167 per credit hour. In addition, National Guard, Reserve, retired military and veterans enrolling in a degree, Diploma or Certificate program are eligible for a 10% tuition grant through RU. RU also extends the grant to eligible spouses and dependents of active duty military, retired military and veterans.

19

APUS, RU, and HCN also provide grants and scholarships to certain students to assist them financially with their educational goals.

For the years ended December 31, 2020 and 2021, there were no material adverse impacts to revenue, deferred revenue, or accounts receivable due to the COVID-19 pandemic.

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):

Year Ended December 31, 2019
APUS	RU	HCN	Intersegment	Consolidated
Instructional services, net of grants and scholarships	$	255,130	$	-	$	25,369	$	(259)	$	280,240
Graduation fees	1,138	-	-	-	1,138
Textbook and other course materials	-	-	3,650	-	3,650
Other fees	782	-	460	-	1,242
Total Revenue	$	257,050	$	-	$	29,479	$	(259)	$	286,270

Year Ended December 31, 2020
APUS	RU	HCN	Intersegment	Consolidated
Instructional services, net of grants and scholarships	$	283,827	$	-	$	30,346	$	(243)	$	313,930
Graduation fees	1,336	-	-	-	1,336
Textbook and other course materials	-	-	5,197	-	5,197
Other fees	775	-	548	(1)	1,322
Total Revenue	$	285,938	$	-	$	36,091	$	(244)	$	321,785

Year Ended December 31, 2021
APUS	RU	HCN	Intersegment	Consolidated
Instructional services, net of grants and scholarships	$	281,689	$	74,515	$	38,569	$	(183)	$	394,590
Graduation fees	1,309	-	-	-	1,309
Textbook and other course materials	-	13,461	6,695	-	20,156
Other fees	702	1,507	539	-	2,748
Total Revenue	$	283,700	$	89,483	$	45,803	$	(183)	$	418,803

The RU Segment reflects the operations of RU, which was acquired on the Closing Date, through December 31, 2021. The Company did not consolidate the financial results of the RU Segment prior to the Closing Date.

The APUS Segment charges the HCN Segment and corporate employees for the value of courses taken 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 December 31, 2021.

The Company recognizes a contract liability, or deferred revenue, when a student begins an online course, in the case of APUS, or starts a term, in the case of RU and HCN, and revenue is recognized as described earlier in this footnote. Deferred revenue at December 31, 2020 was $22.1 million and includes $13.7 million in future revenue that has not yet been earned for courses and terms that are in progress, as well as $8.4 million in consideration received in advance for future courses or terms,

20

or student deposits, and represents the Company's performance obligation to transfer future instructional services to students. Deferred revenue at December 31, 2021 was $21.8 million and includes $12.9 million in future revenue that has not yet been earned for courses and terms that are in progress as well as $8.9 million in student deposits.

The Company has elected, as a practical expedient, not to disclose additional information about unsatisfied performance obligations for contracts with students that have an expected duration of one year or less.

When the Company begins providing the performance 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 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 and RU do not charge interest on past due accounts receivable. HCN charges interest on payment plans when a student leaves the payment plan program upon graduation or exit of the program. Interest charged by HCN on payment plans was not material for the periods presented.

Refund Policies

The Company provides a stated period of time during which students may withdraw from a course for APUS, or a term for RU and HCN, without further financial obligation resulting in a refund liability. The refund policy for each subsidiary is as follows:

American Public University System

APUS's tuition revenue varies from period to period based on the number of students enrolled, the number of net course registrations, the volume of undergraduate versus graduate registrations, and student payor source. Students may remit tuition payments through the online registration process upon enrollment or they may elect various payment options, including payments by sponsors, alternative loans, financial aid, or TA, which remits payments directly to APUS. If one of the various other payment options is confirmed as secured, the student is allowed to start the course. These other payment options can delay the receipt of payment up until the course starts or longer, resulting in the recording of an account receivable at the beginning of each session. Tuition revenue that has not yet been earned by APUS is presented as deferred revenue in the accompanying Consolidated Balance Sheets.

APUS refunds 100% of tuition for courses that are dropped before the conclusion of the week of a course, 75% for courses dropped during week two, and a 50% refund for courses dropped during weeks three and four. No refund is given for courses dropped during weeks five through eight. For sixteen-week courses, APUS refunds 100% of tuition for courses that are dropped before the conclusion of the first two weeks of a course, 75% for courses dropped during weeks three and four, and 50% for courses dropped during weeks five through eight. No refund is given for courses dropped during weeks nine through sixteen. Students affiliated with certain organizations may have an alternate refund policy. The Company does not recognize revenue for dropped courses.

If a student withdraws during the academic term, APUS calculates the portion of instructional services and technology fees that are non-refundable based on the tuition refund policy and recognizes it as revenue in the period the withdrawal occurs.

Rasmussen University

RU's tuition revenue varies from period to period based on the number of students enrolled and the program type in which they are enrolled. Students may remit tuition payments upon enrollment, or they may elect various payment options that can delay receipt of payment up until the term starts or longer. These other payment options include payments by sponsors, financial aid, and alternative loans.

Generally, financial aid is awarded prior to the start of the term and requests for authorization of disbursement begin in the second week of the term. Tuition revenue that has not yet been earned by RU is presented as deferred revenue in the accompanying Consolidated Balance Sheet.

21

RU allows students to withdraw from a term with no financial obligation through the end of the first week of the term. Any student withdrawals during the second week of the term through the 60% point of the term result in a prorated tuition refund. There are no refunds after the 60% of the term. If a student withdraws during the term, RU calculates the portion of tuition that is non-refundable based on the tuition refund policy and the applicable state laws. RU recognizes the non-refundable tuition as revenue in the period the withdrawal occurs.

Hondros College of Nursing

HCN's tuition revenue varies from period to period based on the number of students enrolled and the program type in which they are enrolled. Students may remit tuition payments upon enrollment, or they may elect various payment options that can delay receipt of payment up until the term starts or longer. These other payment options include payments by sponsors, financial aid, and alternative loans. HCN offers its students an extended payment plan option designed to assist students with educational costs consisting of tuition, textbooks, and fees. The extended payment plan option is only available after all other student financial assistance has been applied to those costs. The payment plan requires monthly payments while the student is enrolled in a program and extends for a period up to six months after the last day of attendance or graduation. To the extent interest is applied, it is generally fixed and does not accrue until the student departs the program or graduates. The extended payment plan option does not impose any origination fees. Borrowers are advised about the terms of the loans and counseled to use all federal funding options. In addition, beginning January 1, 2020, HCN began offering an institutional grant to students demonstrating financial need to cover the difference between the total cost of tuition and fees less the amount of all eligible financial aid resources. The grant is designed to limit a student's monthly payment to $200 through an award of up to $200 per month or $600 per term after consideration of financial aid, employer tuition reimbursement, and other financial resources. HCN awarded approximately $0.2 million and $0.6 million of institutional grants during the years ended December 31, 2020 and 2021, respectively.

Generally, financial aid is awarded prior to the start of the term and requests for authorization of disbursement begin in the second week of the term. Tuition revenue that has not yet been earned by HCN is presented as deferred revenue in the accompanying Consolidated Balance Sheets.

HCN's refund policy for Ohio campuses complies with the rules of the Ohio State Board of Career Colleges and Schools and is applicable to each term. For a course with an on-campus or other in-person component, the date of withdrawal is determined by a student's last attended day of clinical offering, laboratory session, or lecture. For an online course, the date of withdrawal is determined by a student's last submitted assignment in the course. HCN refunds 100% of tuition for courses that are dropped before the first full calendar week of the quarter, 75% for courses dropped during the first full calendar week of the quarter, 50% refund for courses dropped during the second full week of the quarter and a 25% refund for courses dropped during the third full calendar week of the quarter. No refund is given for all withdrawals after the third full calendar week of the quarter.

HCN's refund policy for the Indiana campus complies with the rules of the Indiana Board of Proprietary Education and is determined based upon percentage of completion of the assignments. If a student withdrawals within six days of signing the contract, a full refund of any money paid will be issued and there will be no further obligation owed from the student. Once the student completes 75% of the assignments, the student is responsible for the full amount of tuition. A portion of the tuition will be refunded if a student withdraws after six days of signing the contract and prior to completing 75% of the assignments.

If a student withdraws during the term, HCN calculates the portion of tuition that is non-refundable based on the tuition refund policy and recognizes it as revenue in the period the withdrawal occurs.

Refund Liability

APUS uses the portfolio approach and applies the expected value method to determine if a refund liability exists. This requires management judgment and the use of estimates and historical data to assess the likelihood and magnitude of a revenue reversal due to a refund liability. Due to the short duration of the courses, and the refund policy described above, any uncertainty regarding a student's withdrawal is resolved in a short time period. Based on measurement and analysis, the Company determined that a significant reversal in the cumulative amount of revenue recognized is not expected. The Company includes this estimate in the transaction price. The refund liabilities for APUS, included in deferred revenue, are not material for all periods presented. APUS updates the measurement of the refund liability at the end of each reporting period for changes in expectations, and if the reversal becomes significant, recognizes corresponding adjustments to revenue.

Because RU and HCN's terms coincide with the Company's fiscal quarter period, there are no refund liabilities as of December 31, 2020 and 2021 for RU or HCN.

22

Note 5. Property and Equipment

Property and equipment consisted of the following:

As of December 31,
Useful Life	2020	2021
		(in thousands)
Land	-	$	9,019	$	8,952
Building and building improvements	15 - 39 years	53,309	51,936
Leasehold improvements	up to 15 years	1,569	30,342
Office equipment	5 years	587	1,139
Computer equipment	3 - 5 years	20,227	22,509
Furniture and fixtures	5 - 7 years	8,447	15,433
Other capital assets	5 years	150	168
Software development	3 - 5 years	89,320	79,088
Program development	3 years	13,370	11,062
		195,998	220,629
Accumulated depreciation and amortization		127,564	118,212
		$	68,434	$	102,417

The Company disposed of long-lived assets resulting in a loss of $0.6 million, $0.9 million, and $1.3 million during the years ended December 31, 2019, 2020, and 2021, respectively. The disposals and losses were primarily related to assets no longer in use. The losses on long-lived assets are included as loss on disposals of long-lived assets in these Consolidated Financial Statements.

For the years ended December 31, 2020 and 2021, the Company's APUS Segment sold certain excess real property located in Charles Town, West Virginia, for a net sales price of $0.8 million and $0.7 million, respectively, resulting in a loss on disposals of long-lived assets of $0.4 million and $0.5 million, respectively. The loss was included in loss on disposals of long-lived assets in these Consolidated Financial Statements.

During the years ended December 31, 2019, 2020, and 2021, the Company recorded depreciation expense of $15.3 million, $13.0 million and $12.7 million, respectively.

Note 6. Goodwill and Intangible Assets

In connection with the Rasmussen Acquisition, the Company applied FASB ASC 805, Business Combinations, using the acquisition method of accounting, and recorded $217.2 million of goodwill, representing the excess of the purchase price over the fair value of assets acquired and liabilities assumed, including identifiable intangible assets. The Company previously recorded goodwill in the amount of $38.6 million in connection with its acquisition of HCN, and later recorded impairment charges reducing the carrying value of our goodwill to $26.6 million.

The Company accounts for goodwill and indefinite-lived intangible assets in accordance with FASB ASC 350, Intangibles Goodwill and Other, and in 2018 adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The Company annually assesses goodwill for impairment, or more frequently if events and circumstances, including a review of any impacts related to the COVID-19 pandemic, indicate that goodwill might be impaired. Goodwill impairment testing consists of an optional qualitative assessment as well as a quantitative test. The quantitative test compares the fair value of the reporting unit to its carrying value. If the carrying value of the reporting unit is greater than zero and its fair value is greater than its carrying amount, there is no impairment. If the carrying value is greater than the fair value, the difference between the two values is recorded as an impairment.

During the year ended December 31, 2019, as a result of circumstances that included HCN's continued underperformance against revised 2019 internal targets and overall 2019 financial performance, the Company completed interim goodwill impairment tests during the first and third quarters. The implied fair value of goodwill was calculated and compared to the recorded goodwill, and the Company determined the fair value of goodwill was $26.6 million, or $7.3 million

23

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 $7.3 million to reduce the carrying value of its goodwill in the HCN Segment during 2019. There was no impairment of goodwill or the intangible assets during the years ended December 31, 2020 and 2021.

The Company engaged an independent valuation firm to assist with the valuation and determination of the fair value of HCN for both assessments. The independent valuation firm weighted the results of four different valuation methods: (1) discounted cash flows; (2) guideline company; (3) guideline transaction for comparable transactions; and (4) guideline transaction for private equity transactions. Under the discounted cash flow method, cash flows were discounted by an estimated risk weighted average cost of capital, which was intended to reflect the overall level of inherent risk of HCN. Under the guideline company method, valuation metrics from other education companies were used to determine the value. Under the comparable transaction method, pricing terms from other transactions in the higher education market were used to determine the value. Under the private equity method, pricing terms from private equity transactions were used to determine the value. Values derived under the four valuation methods were then weighted to estimate HCN's enterprise value.

The goodwill impairment charges recorded in 2019 eliminated the difference between the fair value of goodwill and the carrying value of goodwill.

For the year ended December 31, 2020, the Company completed its annual assessment of goodwill and concluded that HCN's fair value was more than the carrying value; consequently, there was no impairment.

For the year ended December 31, 2021, the Company completed its annual assessment of goodwill and concluded that the fair value of HCN exceeded the carrying value by approximately $20.1 million, or 51.8%.

Changes in the carrying amount of goodwill by reportable segment during the years ended December 31, 2020 and 2021 are as follows (in thousands):

APUS Segment	RU Segment	HCN Segment	Total Goodwill
Goodwill as of December 31, 2019	$	-	$	-	$	26,563	$	26,563
Impairment	-	-	-	-
Goodwill as of December 31, 2020	$	-	$	-	$	26,563	$	26,563
Goodwill acquired	-	217,203	-	217,203
Impairment	-	-	-	-
Adjustments	-	(280)	-	(280)
Goodwill as of December 31, 2021	$	-	$	216,923	$	26,563	$	243,486

In addition to goodwill, in connection with the acquisitions of RU and HCN, the Company recorded identified intangible assets with an indefinite useful life in the aggregate amount of $51.0 million and $3.7 million, respectively, which includes trade name, accreditation, licensing and Title IV, and affiliate agreements, and recorded $35.5 million and $4.4 million, respectively, of identified intangible assets with a definite useful life. At the acquisition dates, the useful life assigned to each type of intangible asset with a definite useful life was as follows:

Useful Life
Student contracts and relationships	6 years
Non-compete agreements	5 years
Curricula	3 years
Lead conversions	2 years
Student Roster	2 years

24

The future amortization of finite-lived intangible assets is as follows (in thousands):

Future Amortization of Intangibles	Amortization
2022	$	15,417
2023	11,833
2024	3,111
Total	$	30,361

As of December 31, 2020 and 2021, all HCN Segment recorded identified intangible assets with a definite useful life were fully amortized.

RU Segment Intangible assets consist of the following as of December 31, 2021 (in thousands):

Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Finite-lived intangible assets
Student roster	$	20,000	$	3,333	$	16,667
Curricula	14,000	1,556	12,444
Lead Conversions	1,500	250	1,250
Total finite-lived intangible assets	35,500	5,139	30,361
Indefinite-lived intangible assets
Trade name	26,500	-	26,500
Accreditation, licensing and Title IV	24,500	-	24,500
Total indefinite-lived intangible assets	51,000	-	51,000
Total intangible assets	$	86,500	$	5,139	$	81,361

HCN Segment intangible assets consist of the following as of December 31, 2020 and 2021 (in thousands):

Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
Finite-lived intangible assets
Student contracts and relationships	$	3,870	$	3,870	$	-
Curricula	405	405	-
Non-compete agreements	86	86	-
Total finite-lived intangible assets	4,361	4,361	-
Indefinite-lived intangible assets
Trade name	1,998	-	1,998
Accreditation, licensing and Title IV	1,686	-	1,686
Affiliation agreements	37	-	37
Total indefinite-lived intangible assets	3,721	-	3,721
Total intangible assets	$	8,082	$	4,361	$	3,721

Finite-lived intangible assets are amortized in a manner that reflects the estimated economic benefit of the intangible assets. Student roster, curricula, lead conversions and non-compete agreements are amortized on a straight-line basis. Student contracts and relationships were amortized using an accelerated method.

25

Determining fair value requires judgment and the use of significant estimates and assumptions, including fluctuations in enrollments, revenue growth rates, EBITDA margins, discount rates, and future market conditions, among others. Given the current competitive and regulatory environment, the impact of COVID-19, and the uncertainties regarding the related impact on the business, there can be no assurance that the estimates and assumptions made for purposes of the Company's interim and annual goodwill impairment tests will prove to be accurate predictions of the future. If the Company's assumptions are not realized, the Company may record additional goodwill impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would result or whether such charge would be material.

Note 7. 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.

Operating lease assets are ROU assets, which represent the right to use an underlying asset 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 as of December 31, 2020 and 2021. 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 asset includes all lease payments and excludes 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 years ended December 31, 2019, 2020, and 2021 was approximately $2.6 million, $2.9 million, and $7.5 million, 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 years ended December 31, 2020 and 2021 was $2.9 million and $7.2 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 December 31, 2021 (dollars in thousands):

Maturity of Lease Liabilities	Lease Payments
2022	$	16,036
2023	13,087
2024	11,377
2025	10,150
2026	9,631
2027 and beyond	33,156
Total future minimum lease payments	$	93,437
Less imputed interest	(10,244)
Present value of operating lease liabilities	$	83,193

Balance Sheet Classification
Operating lease liabilities, current	$	13,705
Operating lease liabilities, long-term	69,488
Total operating lease liabilities	$	83,193

Other Information
Weighted average remaining lease term (in years)	7.58
Weighted average discount rate	3.1	%

The Company leases corporate office space in Maryland under an operating lease that expires in May 2022, and until May 2021, the APUS Segment leased administrative office space in Virginia. The RU Segment leases administrative office space in suburban Chicago, Illinois, and Minneapolis, Minnesota, and leases 23 campuses located in six states under operating

26

leases that expire through October 2033. The HCN Segment leases administrative office space in suburban Columbus, Ohio, and leases six campuses located in Ohio and one campus in Indianapolis, Indiana, under operating leases that expire through June 2029.

Note 8. Long-Term Debt

On the Closing Date, APEI, as borrower, entered into a Credit Agreement with Macquarie Capital Funding LLC, or the Credit Agreement, as administrative agent and collateral agent, or the Agent, Macquarie Capital USA Inc. and Truist Securities, Inc., as lead arrangers and joint bookrunners, and certain lenders party thereto, or the Lenders. The Credit Agreement provides for (i) a senior secured term loan facility in an aggregate original principal amount of $175.0 million, or the Term Loan, with a scheduled maturity date of September 1, 2027 and (ii) a senior secured revolving loan facility in an aggregate commitment amount of $20.0 million, or the Revolving Credit Facility, and, together with the Term Loan, is referred to as the Facilities, with a scheduled maturity date of September 1, 2026, the full capacity of which may be utilized for the issuance of letters of credit. The Revolving Credit Facility also includes a $5.0 million sub-facility for swing line loans. The Term Loan, the proceeds of which were used as part of the cash consideration for the Rasmussen Acquisition, was fully funded on the Closing Date and is presented net of the debt issuance costs of $13.1 million in the Consolidated Balance Sheet. The debt issuance costs are being amortized using the effective interest method over the term of the Term Loan. Debt issuance costs of $0.5 million related to the Revolving Credit Facility were recorded as an asset and are being amortized to interest expense over the term of the Revolving Credit Facility. There were no borrowings outstanding on the Revolving Credit Facility at December 31, 2021.

The Credit Agreement provides APEI with the option, subject to certain conditions, including obtaining commitments from one or more lenders, to increase the total commitments under the Revolving Credit Facility, increase the amount of the Term Loan and/or incur incremental term loan facilities in an aggregate amount not to exceed the sum of (A) the greater of (1) $91.0 million and (2) an amount equal to consolidated EBITDA on a pro forma basis for the most recently ended four-quarter period (less the aggregate amount of certain other incremental indebtedness permitted to be incurred by APEI, and plus the aggregate amount of voluntary prepayments of certain other incremental indebtedness permitted to be incurred by APEI) and (B) an amount (1) in the case of secured incremental facilities that rank pari passuwith the Facilities, such that the First Lien Net Leverage Ratio would not be greater than 1.50 to 1.00 and the Total Net Leverage Ratio would not be greater than 2.00 to 1.00, (2) in the case of secured incremental facilities that rank junior to the Facilities, such that the Secured Net Leverage Ratio would not be greater than 1.75 to 1.00 and the Total Net Leverage Ratio would not be greater than 2.00 to 1.00, and (3) in the case of unsecured incremental facilities, such that the Total Net Leverage Ratio would not be greater than 2.00 to 1.00 or the Interest Coverage Ratio would not be less than 2.00 to 1.00. The First Lien Net Leverage Ratio, the Secured Net Leverage Ratio and the Total Net Leverage Ratio are each defined in the Credit Agreement and reflect a ratio of (x) in the case of the First Lien Net Leverage Ratio, consolidated first lien indebtedness (net of unrestricted cash and cash equivalents in excess of $50.0 million) to consolidated EBITDA, (y) in the case of the Secured Net Leverage Ratio, consolidated secured indebtedness (net of unrestricted cash and cash equivalents in excess of $50.0 million) to consolidated EBITDA, and (z) in the case of the Total Net Leverage Ratio, consolidated total indebtedness to consolidated EBITDA. The Interest Coverage Ratio is also defined in the Credit Agreement and reflects a ratio of consolidated EBITDA to consolidated interest expense.

Outstanding borrowings under the Facilities bear interest at a per annum rate equal to LIBOR (subject to a 0.75% floor) plus 5.50%, which shall increase by an additional 2.00% on all past due obligations if APEI fails to pay any amount when due. An unused commitment fee in the amount of 0.50% is payable quarterly in arrears based on the average daily unused amount of the commitments under the Revolving Credit Facility. APEI is also required to make principal payments of the Term Loan on the last day of each quarter, commencing with the quarter ended December 31, 2021, in an amount equal to $2.2 million per quarter.

Subject to certain exceptions, APEI is required to make mandatory prepayments of the Term Loan, with the proceeds of asset sales, casualty and condemnation events, and unpermitted debt issuances.

The Facilities are and will be guaranteed by APEI's subsidiaries and certain of APEI's future subsidiaries that are required to become a party thereto as guarantors (collectively, the "Guarantors"). The obligations of APEI and the Guarantors are secured by a pledge of substantially all of their respective assets pursuant to the terms of the Collateral Agreement dated as of the Closing Date by and among APEI, the Agent and the Guarantors from time to time party thereto (the "Collateral Agreement").

The Credit Agreement contains customary affirmative and negative covenants, including limitations on APEI's and its subsidiaries' abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate

27

transactions, in each case, subject to certain exceptions, as well as customary representations, warranties, events of default, and remedies upon default, including acceleration and rights to foreclose on the collateral securing the Facilities. In addition, the Credit Agreement contains a financial covenant that requires APEI to maintain a Total Net Leverage Ratio of no greater than 2.0 to 1.0. As of December 31, 2021, the Company was in compliance with all debt covenants.

Long-term debt consists of the following as of December 31, 2021 (in thousands):

Credit agreement	$	172,813
Deferred financing fees	(12,292)
160,521
Less: Current portion	(8,750)
$	151,771

Scheduled maturities of long-term debt at December 31, 2021 are as follows (in thousands):

Maturities of Long-Term Debt	Loan Payments
2022	$	8,750
2023	8,750
2024	8,750
2025	8,750
2026	8,750
Thereafter	129,063
Total	$	172,813

Derivatives and Hedging

The Company is subject to interest rate risk as all outstanding borrowings under the Credit Agreement are subject to a variable rate of interest. On September 30, 2021, the Company entered into an interest rate cap agreement to manage its exposure to the variable rate of interest with a total notional value of $87.5 million. This interest rate cap agreement, designated as a cash flow hedge, provides the Company with interest rate protection in the event the LIBOR rate exceeds 2.0%. The interest rate cap is effective October 1, 2021 and will expire on January 1, 2025.

Changes in the fair value of the interest rate cap designated as a hedging instrument that effectively offset the variability of cash flows associated with our variable-rate, long-term debt obligations are reported in accumulated other comprehensive income. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings.

At December 31, 2021, the $0.5 million fair value of the interest rate cap is recorded in other assets in the Consolidated Balance Sheets. The unrealized gain of $0.1 million is included within our other comprehensive income.

As of December 31, 2021, the Company expects to reclassify immaterial gains included in accumulated other comprehensive income (loss) into earnings during the next 12 months.

28

Note 9. Income Taxes

The components of income tax expense were as follows (in thousands):

Year Ended December 31,
	2019	2020	2021
Current income tax expense:
Federal	$	5,803	$	5,685	$	513
State	1,425	2,146	1,535
7,228	7,831	2,048
Deferred tax expense:
Federal	(1,766)	(608)	4,948
State	(275)	(203)	515
	(2,041)	(811)	5,463
Income Tax Expense	$	5,187	$	7,020	$	7,511

The tax effects of principal temporary differences are as follows (in thousands):

As of December 31,
	2020	2021
Deferred tax assets
Operating lease liability	$	2,187	$	20,717
Allowance for doubtful accounts	1,487	2,061
Restricted stock	1,573	1,329
Accrued vacation and severance	695	768
Investment	564	774
Other	596	716
Stock option compensation expense	63	159
Net operating loss	-	3,338
Total gross deferred tax assets	7,165	29,862
Valuation allowance	(536)	(743)
Total net deferred tax assets	6,629	29,119
Deferred tax liabilities
Income tax deductible capitalized software development costs	(2,468)	(2,121)
Operating lease asset	(2,161)	(19,442)
Property and equipment	(1,867)	(10,110)
Prepaid expenses	(1,294)	(1,136)
Goodwill and intangibles	(1,419)	(1,302)
Other comprehensive income- unrealized gain on interest rate cap	-	(67)
Total deferred tax liabilities	(9,209)	(34,178)
Deferred tax liabilities, net	$	(2,580)	$	(5,059)

At December 31, 2021, the Company had net operating loss carryforwards and capital loss carryforwards of $15.9 million and $1.8 million, respectively, which are available to offset future taxable income. The capital loss carryforwards will expire in 2026 while the net operating loss can be carried forward indefinitely. The Company's utilization of net operating loss carryforwards may be subject to annual limitations due to ownership change provisions of Section 382 of Internal Revenue Code of 1986, as amended.

29

Income tax expense differs from the amount of tax determined by applying the United States Federal income tax rates to pretax income and loss due to the application of state apportionment laws, permanent tax differences, and other temporary differences (in thousands):

Year Ended December 31,
	2019	2020	2021
	Amount	%	Amount	%	Amount	%
Tax expense at statutory rate	$	3,192	21.00	%	$	5,427	21.00	%	$	5,305	21.00	%
State taxes, net	852	5.60	%	1,156	4.48	%	1,576	6.24	%
Permanent differences	244	1.61	%	491	1.90	%	678	2.68	%
Equity-based compensation benefits	371	2.44	%	(305)	(1.18)	%	(219)	(0.87)	%
Post-employment benefits	345	2.27	%	(67)	(0.26)	%	-	-	%
Uncertain tax position	93	0.61	%	49	0.19	%	-	-	%
Valuation allowance	213	1.40	%	287	1.11	%	206	0.82	%
Other	(123)	(0.80)	%	(18)	(0.07)	%	(35)	(0.14)	%
	$	5,187	34.13	%	$	7,020	27.17	%	$	7,511	29.73	%

Permanent differences in the table above are mainly attributable to executive and stock compensation, minority investment losses, nondeductible meals and entertainment expenses, and non-deductible employer contributions to the American Public Education, Inc. Employee Stock Purchase Plan.

There were no material uncertain tax positions as of December 31, 2019, 2020, or 2021. Interest and penalties associated with uncertain income tax positions would be classified as income tax expense. The Company has not recorded any material interest or penalties during any of the years presented.

The Company is subject to U.S. federal income taxes as well as income tax of multiple state jurisdictions. For U.S. federal and state tax purposes, tax years 2018-2020 remain open to examination.

Note 10. Other Employee Benefits

The Company has established a tax deferred 401(k) retirement plan that provides retirement benefits to its eligible employees. Participants may elect to contribute up to 60% of their gross annual earnings not to exceed ERISA and IRS limits. The plan provides for Company discretionary profit-sharing contributions at matching percentages. Employees immediately vest 100% in all salary reduction contributions and employer contributions.

The Company made discretionary contributions to the plan of $3.7 million, $4.2 million, and $5.1 million for the years ended December 31, 2019, 2020, and 2021, respectively.

The Company has established the American Public Education, Inc. Employee Stock Purchase Plan, or the ESPP, with quarterly enrollment periods. Eligible participants may only enter the plan and establish their withholdings at the start of an enrollment period. Participating employees may withdraw from the plan and end payroll deductions at any time up to five days before the share purchase date and funds will be returned to them. Under the ESPP, participating employees may purchase shares of the Company's common stock, subject to certain limitations, at 85% of its fair market value on the last day of the quarterly period. The total value of contributions per participant may not exceed $21,000 annually or the value of the common stock purchased per participant cannot exceed $25,000. In 2014 and again in 2020 the Company's stockholders approved amendments to the plan increasing the number of shares available for purchase by participating employees and extended the term of the ESPP. The term of the ESPP is now extended to May 15, 2030, and at December 31, 2021 there remain 80,926 shares available for purchase under the ESPP.

30

Shares purchased in the open market for issuance to employees pursuant to the plan for the years ended December 31, 2019, 2020, and 2021 were as follows:

Purchase Date	Shares	Common Stock Fair Value	Purchase Price	Compensation Expense
March 31, 2019	2,905	$	30.74	$	26.13	$	13,395
June 30, 2019	2,465	$	29.35	$	24.94	$	10,873
September 30, 2019	4,511	$	22.34	$	18.99	$	15,116
December 31, 2019	3,339	$	27.39	$	23.28	$	13,723
Total/Weighted Average	13,220	$	26.77	$	22.75	$	53,107
March 31, 2020	3,922	$	23.93	$	20.34	$	14,078
June 30, 2020	2,737	$	29.60	$	25.16	$	12,152
September 30, 2020	4,015	$	28.19	$	23.96	$	16,977
December 31, 2020	3,550	$	30.48	$	25.91	$	16,231
Total/Weighted Average	14,224	$	27.86	$	23.68	$	59,438
March 31, 2021	3,284	$	35.63	$	30.29	$	17,550
June 30, 2021	3,527	$	28.34	$	24.09	$	14,993
September 30, 2021	5,203	$	25.61	$	21.77	$	19,987
December 31, 2021	5,583	$	22.25	$	18.91	$	18,633
Total/Weighted Average	17,597	$	26.96	$	22.92	$	71,163

Note 11. Stockholders' Equity

Stock Incentive Plans

The American Public Education, Inc. 2017 Omnibus Incentive Plan, or 2017 Incentive Plan, became effective on May 12, 2017, or the Effective Date. Upon effectiveness of the 2017 Incentive Plan, the Company ceased making awards under the American Public Education, Inc. 2011 Omnibus Incentive Plan, or the 2011 Incentive Plan. The 2017 Incentive Plan allows the Company to grant up to 1,675,000 shares, as well as shares of the Company's common stock that were available for issuance under the 2011 Incentive Plan as of the Effective Date. In addition, the number of shares of common stock available under the 2017 Incentive Plan was increased from time to time by the number of shares subject to outstanding awards granted under the 2011 Incentive Plan that terminate by expiration, forfeiture, cancellation or otherwise without issuance of such shares following the Effective Date. On May 15, 2020, the Company's stockholders approved an amendment to the 2017 Incentive 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. Grants under the 2017 Incentive Plan generally vest over a period of three years and the Company recognizes compensation expense over that period. The 2017 Incentive Plan includes a provision that allows individuals who have reached certain service and retirement eligibility criteria on the date of grant an accelerated service period of one year. The Company recognizes compensation expense for these individuals over the accelerated period. As of December 31, 2021, all shares subject to outstanding awards are under the 2017 Incentive Plan.

Restricted Stock and Restricted Stock Unit Awards

The fair value of the Company's restricted stock and restricted stock unit awards is calculated based on the closing price of the Company's stock on the date of grant. The estimated fair value of these awards is recognized as stock-based compensation expense and is expensed over the vesting period using the straight-line method for Company employees and the graded-vesting method for members of the Board of Directors. 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. The Company also 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.

31

The table below sets forth the restricted stock and restricted stock unit activity for the year ended December 31, 2019:

Number of Shares	Weighted Average Grant Price and Fair Value
Non vested, December 31, 2018	490,342	$	24.23
Shares granted	333,635	29.48
Vested shares	(255,918)	22.98
Shares forfeited	(21,119)	26.86
Non vested, December 31, 2019	546,940	$	27.81

The table below sets forth the restricted stock and restricted stock unit activity for the year ended December 31, 2020:

Number of Shares	Weighted Average Grant Price and Fair Value
Non vested, December 31, 2019	546,940	$	27.81
Shares granted	396,976	24.94
Vested shares	(307,937)	26.95
Shares forfeited	(109,179)	26.56
Non vested, December 31, 2020	526,800	$	26.43

The table below sets forth the restricted stock and restricted stock unit activity for the year ended December 31, 2021:

Number of Shares	Weighted Average Grant Price and Fair Value
Non vested, December 31, 2020	526,800	$	26.43
Shares granted	343,851	29.50
Vested shares	(268,329)	26.66
Shares forfeited	(95,535)	28.78
Non vested, December 31, 2021	506,787	$	27.68

There were 37,738, 48,434, and 3,233 shares of restricted stock or restricted stock units excluded in the computation of diluted net income per common share for the years ended December 31, 2019, 2020, and 2021, respectively.

At December 31, 2021, total unrecognized compensation expense in the amount of $9.3 million relates to non-vested restricted stock, restricted stock units, and stock options, which will be recognized over a weighted average period of 1.7 years.

As a result of termination of employment, the Company accepted the following common shares for forfeiture: 17,825 shares for $488,974 in 2019, 73,808 shares for $1,855,784 in 2020, and 89,944 shares for $2,581,284 in 2021.

Option Awards

The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of the Company's common stock. In addition, the Company determines the risk-free interest rate by selecting the U.S. Treasury constant maturity for the same maturity as the estimated life of the option, quoted on an investment basis in effect at the time of grant for that business day. Estimates of fair value are subjective and are not intended to predict actual future events, and

32

subsequent events are not necessarily indicative of the reasonableness of the original estimates of fair value made under FASB ASC Topic 718. Prior to 2012, the Company issued a mix of stock options and restricted stock, but ceased issuing options until 2019. Options currently outstanding vest ratably over a period of three years and expire in ten years from the date of grant.

The table below sets forth stock option activity for the year ended December 31, 2019:

Number of Options	Weighted Average Exercise Price	Weighted Average Contractual Life (years)	Aggregate Intrinsic Value
			(in thousands)
Outstanding, December 31, 2018	-	$	-
Options granted	43,134	23.77	10
Awards exercised	-	-
Options forfeited	-	-
Outstanding, December 31, 2019	43,134	$	23.77	9.73	$	156
Exercisable, December 31, 2019	-	$	-	$	-

The table below sets forth stock option activity for the year ended December 31, 2020:

Number of Options	Weighted Average Exercise Price	Weighted Average Contractual Life (years)	Aggregate Intrinsic Value
			(in thousands)
Outstanding, December 31, 2019	43,134	$	23.77	9.73	$	156
Options granted	17,370	33.11	10	$	-
Awards exercised	-	-
Options forfeited	-	-
Outstanding, December 31, 2020	60,504	$	26.45	8.96	$	264
Exercisable, December 31, 2020	14,378	$	23.77	8.73	$	88

The table below sets forth stock option activity for the year ended December 31, 2021:

Number of Options	Weighted Average Exercise Price	Weighted Average Contractual Life (years)	Aggregate Intrinsic Value
			(in thousands)
Outstanding, December 31, 2020	60,504	$	26.45	8.96	$	264
Options granted	51,230	27.72	10	$	-
Awards exercised	-	-
Options forfeited	(10,214)	30.83
Outstanding, December 31, 2021	101,520	$	26.65	8.39	$	-
Exercisable, December 31, 2021	34,547	$	25.34	7.10	$	-

33

The following table sets forth the assumptions used in calculating the fair value at the date of grant of each option award granted:

Year Ended December 31,
	2019	2020	2021
Expected volatility	47.37	%	48.74	%	44.18	%
Expected dividends	-	%	-	%	-	%
Expected term, in years	10	10	10
Risk-free interest rate	1.74	%	0.68	%	1.35	%
Weighted-average fair value of options granted during the year	$	13.91	$	18.99	$	15.13

For the years ended December 31, 2019, 2020, and 2021, there were 43,134, 60,504, and 101,520 anti-dilutive stock options excluded from the calculation of diluted net income per share, respectively.

Stock-Based Compensation Expense

For the years ended December 31, 2019, 2020, and 2021, the Company recognized stock-based compensation expense as follows:

	Year Ended December 31,
	2019	2020	2021
	(In thousands)
Instructional costs and services	$	1,570	$	1,535	$	1,480
Selling and promotional	766	1,007	771
General and administrative	3,624	4,533	5,403
Total stock-based compensation expense	$	5,960	$	7,075	$	7,654

The Company recognized income tax benefits of $2.0 million, $1.9 million, and $2.3 million from vested restricted stock and restricted stock units for the years ended December 31, 2019, 2020, and 2021, respectively.

Repurchase

On December 9, 2011, the Company's Board of Directors approved a stock repurchase program for our common stock, under which the Company could annually purchase up to the cumulative number of shares issued or deemed issued in that year under our equity incentive and stock purchase plans. Repurchases may be made from time to time in the open market at prevailing market prices or in privately negotiated transactions based on business and market conditions. The stock repurchase program does not obligate the Company to repurchase any shares, may be suspended or discontinued at any time, and is funded using our available cash.

On May 2, 2019, the Company's Board of Directors authorized the repurchase of up to $35.0 million of the Company's shares of common stock, and on December 5, 2019, the Board approved an additional authorization of up to $25.0 million of shares. Subject to market conditions, applicable legal requirements, and other factors, the repurchases may be made from time to time in the open market or in privately negotiated transactions. The authorization does not obligate the Company to acquire any shares, and purchases may be commenced or suspended at any time based on market conditions and other factors the Company deem appropriate. The Company may purchase shares at management's discretion in the open market, in privately negotiated transactions, in transactions structured through investment banking institutions, or a combination of the foregoing. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares under this authorization. The amount and timing of repurchases are subject to a variety of factors, including liquidity, cash flow, stock price and general business and market conditions. The Company has no obligation to repurchase shares and may modify, suspend or discontinue the repurchase program at any time. The authorization under this program is in addition to the Company's repurchase program under which the Company may annually purchase up to the cumulative number of shares issued or deemed issued in that year under our equity incentive and stock purchase plan.

During the years ended December 31, 2019 and 2020 the Company repurchased 1,416,304 and 547,563 shares of the Company's common stock, respectively, for approximately $39.1 million and $13.6 million, respectively.

34

During the year ended December 31, 2021, the Company did not repurchase shares of common stock. As of December 31, 2021, the Company has remaining $8.4 million under its share repurchase authorization.

During the years ended December 31, 2019, 2020, and 2021, the Company was deemed to have repurchased 83,214, 78,847, and 99,469 shares, respectively, of common stock forfeited by employees to satisfy minimum tax-withholding requirements in connection with the vesting of restricted stock grants. These repurchases were not part of the stock repurchase programs authorized by our Board of Directors as described above.

Note 12. 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.

Note 13. Concentration

Our students utilize various payment sources and programs to finance their education expenses, including funds from: Department of Defense, or DoD, tuition assistance programs, or TA, education benefit programs administered by the U.S. Department of Veteran's Affairs, or VA, and federal student aid from Title IV programs, as well as cash and other sources. As of December 31, 2021 approximately 63% 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 APUS Segment revenue derived from students by primary funding source is as follows:

Year Ended December 31,
2019	2020	2021
DoD tuition assistance programs	39%	43%	45%
VA education benefits	23%	22%	21%
Title IV programs	25%	21%	20%
Cash and other sources	13%	14%	14%

A summary of RU Segment revenue derived from students by primary funding source is as follows:

Year Ended December 31,
2019	2020	2021
Title IV programs	78%	77%	76%
Cash and other sources	20%	21%	22%
VA education benefits	2%	2%	2%

A summary of HCN Segment revenue derived from students by primary funding source is as follows:

Year Ended December 31,
2019	2020	2021
Title IV programs	80%	82%	81%
Cash and other sources	18%	16%	17%
VA education benefits	2%	2%	2%

35

Reductions in or changes to TA, VA education benefits, Title IV programs and other payment sources could have a significant impact on the Company's operations and financial condition.

Note 14. Segment Information

In connection with the Rasmussen Acquisition (as further described in Note 3, "Acquisition Activity"), the Company revised its reportable segments to reflect the manner in which the chief operating decision-maker evaluates performance and allocates resources, and to include RU as a separately reportable segment. Prior to the third quarter of 2021, the Company had two reportable segments: the American Public Education, Inc. Segment, or APEI Segment, and the Hondros College of Nursing, or HCN Segment. Post-acquisition, the Company has three reportable segments: the APUS Segment, which was previously included within the former APEI Segment; the RU Segment; and the HCN Segment. The APEI Segment previously reported the results of both APUS and remaining unallocated Company expenses. Adjustments to reconcile segment results to the Consolidated Financial Statements are included in "Corporate and Other", which primarily includes unallocated corporate activity and eliminations, which generally were previously reported within the APEI Segment. Prior periods have been updated to conform to the revised presentation.

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 APUS, RU, and HCN Segments.

The RU Segment reflects the operations of RU, which was acquired on the Closing Date, through December 31, 2021. The Company did not consolidate the financial results of the RU Segment prior to the Closing Date.

36

A summary of financial information by reportable segment is as follows (in thousands):

Year Ended December 31,
2019	2020	2021
Revenue
APUS Segment	$	257,050	$	285,938	$	283,700
RU Segment	-	-	89,483
HCN Segment	29,479	36,091	45,803
Corporate and Other	(259)	(244)	(183)
Total Revenue	$	286,270	$	321,785	$	418,803
Depreciation and Amortization
APUS Segment	$	14,617	$	12,323	$	9,064
RU Segment	-	-	7,989
HCN Segment	937	620	738
Corporate and Other	42	41	$	41
Total Depreciation and Amortization	$	15,596	$	12,984	$	17,832
Income (loss) from operations before interest and income taxes
APUS Segment	$	37,225	$	43,438	$	51,050
RU Segment	-	-	1,630
HCN Segment	(10,768)	722	1,829
Corporate and Other	(13,701)	(19,403)	(24,138)
Total income from operations before interest and income taxes	$	12,756	$	24,757	$	30,371
Interest income (expense)
APUS Segment	$	473	$	303	$	210
RU Segment	-	-	132
HCN Segment	42	17	9
Corporate and Other	3,393	772	(4,628)
Total Interest income (expense)	$	3,908	$	1,092	$	(4,277)
Income Tax Expense (Benefit)
APUS Segment	$	10,312	$	11,127	$	14,023
RU Segment	-	-	509
HCN Segment	(2,567)	193	522
Corporate and Other	(2,558)	(4,300)	(7,543)
Total Income Tax Expense	$	5,187	$	7,020	$	7,511
Capital Expenditures
APUS Segment	$	6,472	$	4,724	$	3,902
RU Segment	-	-	5,987
HCN Segment	776	202	1,939
Corporate and Other	7	-	-
Total Capital Expenditures	$	7,255	$	4,926	$	11,828

37

A summary of the Company's consolidated assets by reportable segment is as follows (in thousands):

As of December 31,
2020	2021
Assets
APUS Segment	$	112,461	$	126,926
RU Segment	-	429,299
HCN Segment	48,474	51,936
Corporate and Other	210,083	117,447
Total Assets	$	371,018	$	725,608

Note 15. Subsequent Events

On August 11, 2021, the Company announced that it had entered into an agreement to acquire substantially all of the assets of Graduate School USA, or GSUSA, one of the largest providers of training to the federal government workforce, for approximately $1.0 million. On January 1, 2022, the Company completed its acquisition of GSUSA.

Note 16. Quarterly Financial Summary (unaudited)

The following unaudited consolidated interim financial information presented should be read in conjunction with other information included in the Company's Consolidated Financial Statements. In the opinion of management, the following unaudited consolidated financial information reflects all adjustments necessary for the fair presentation of the results of interim periods. Historical results are not necessarily indicative of the results of operations to be expected for future periods. The following tables set forth selected unaudited quarterly financial information for each of the Company's last eight quarters:

1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
(in thousands, except per share data)
2020
Revenue	$	74,616	$	82,127	$	79,133	$	85,909
Income (loss) from operations before income taxes	3,395	9,220	3,429	9,805
Net income (loss)	2,420	6,689	2,642	7,071
Net income (loss) per common share:
Basic	$	0.16	$	0.45	$	0.18	$	0.48
Diluted	$	0.16	$	0.45	$	0.18	$	0.47
2021
Revenue	$	88,541	$	78,014	$	98,248	$	154,000
Income (loss) from operations before income taxes	10,751	1,999	(43)	13,387
Net income (loss)	8,107	531	(267)	9,381
Net income (loss) per common share:
Basic	$	0.5	$	0.03	$	(0.01)	$	0.50
Diluted	$	0.49	$	0.03	$	(0.01)	$	0.50

38

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)List of documents filed as part of this Annual Report:

(i)The required financial statements are included in Item 8 of Part II of this Annual Report.

(ii)The required financial statement schedules are included in Item 8 of Part II of this Annual Report.

(iii)See the Index to Exhibits included in this Annual Report and incorporated herein by reference.

(b)See the Index to Exhibits included in this Annual Report and incorporated herein by reference.

(c)See Schedule II: Valuation and Qualifying Accounts included in this Annual Report and incorporated herein by reference.

Other schedules are omitted because they are not required.

39

INDEX TO EXHIBITS
Exhibit No.		Exhibit Description
2.1	Membership Interest Purchase Agreement dated October 28, 2020, by and among American Public Education Inc., FAH Education, LLC, Rasmussen, LLC, and Rasmussen College, LLC (5)
3.1		Fifth Amended and Restated Certificate of Incorporation of the Company (1)
3.2		Fourth Amended and Restated Bylaws of the Company (7)
4.1		Form of certificate representing the Common Stock, $0.01 par value per share, of the Company (2)
4.2	Description of Securities (11)
10.1+	American Public Education, Inc. 2017 Omnibus Incentive Plan (8)
10.2+	Amendment Number One to the American Public Education, Inc. 2017 Omnibus Incentive Plan (12)
10.3+	American Public Education, Inc. Executive Severance Plan (8)
10.4+	American Public Education, Inc. Employee Stock Purchase Plan (2)
10.5+		Amendment to the American Public Education, Inc. Employee Stock Purchase Plan (4)
10.6+	Amendment Number Two to the American Public Education, Inc. Employee Stock Purchase Plan (12)
10.7+		APUS Non-Qualified Plan (6)
10.8+	Form of Indemnification Agreement with directors and executive officers (2)
10.9+		Executive Employment Agreement, dated August 21, 2019, by and between American Public Education, Inc. and Angela Selden (10)
10.10+	Amendment to Executive Employment Agreement, dated September 23, 2020, by and between American Public Education, Inc. and Angela Selden (13)
10.11+		Employment Agreement dated August 1, 2014, by and among American Public University System, Inc., American Public Education, Inc. and Richard W. Sunderland, Jr. (3)
10.12+	Employment Agreement dated May 3, 2018, by and among American Public Education, Inc., American Public University System, Inc. and Patrik Dyberg (9)
10.13+	Executive Employment Agreement, dated June 29, 2020 by and among American Public University System, Inc., American Public Education, Inc. and Wade T. Dyke (13)
10.14*	D2L Master Terms and Conditions Agreement, dated as of October 31, 2019 by and between American Public University System, Inc. and D2L Ltd (14)
10.15	Credit Agreement, dated September 1, 2021, by and among American Public Education, Inc., the Lenders and Issuing Banks from time to time party thereto, Macquarie Capital Funding LLC, Macquarie Capital (USA) Inc., and Truist Securities, Inc. (15)
10.16	Collateral Agreement, dated September 1, 2021, by and among American Public Education, Inc., Macquarie Capital Funding LLC, as administrative agent and collateral agent and the Guarantors from time to time party thereto. (15)
10.17*	Third Amended and Restated Information Technology Services Agreement, dated October 1, 2016, by and between Rasmussen College Inc. and Collegis LLC (16)
10.18*	Statement of Work #4, dated March 15, 2019, by and between Collegis, LLC, and Rasmussen College, LLC, subject to the terms of the Third Amended and Restated Information Technology Services Agreement, dated October 1, 2016. (16)
21.1		List of Subsidiaries (previously filed with the Original Form 10-K)
23.1	Consent of Deloitte & Touche LLP (previously filed with the Original Form 10-K))
24	Power of Attorney (previously filed with the Original Form 10-K)
31.1		Certification of Chief Executive officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

40

EX-101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
EX-101.SCH	Inline XBRL Taxonomy Extension Schema Document
EX-101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
EX-101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
EX-101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
EX-101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

+		Management contract or compensatory plan or arrangement.
*	Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10).
(1)		Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on November 14, 2007.
(2)		Incorporated by reference to exhibit filed with Registrant's Registration Statement on Form S-1 (File No. 333-145185).
(3)	Incorporated by reference to exhibit filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014 (File No. 001-33810), filed with the Commission on August 5, 2014.
(4)	Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on June 17, 2014.
(5)		Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on October 29, 2020.
(6)	Incorporated by reference to exhibit filed with Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-33810), filed with the Commission on February 27, 2014.
(7)	Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on December 15, 2016.
(8)	Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on May 15, 2017.
(9)	Incorporated by reference to exhibit filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 (File No. 001-33810), filed with the Commission on August 8, 2018.
(10)	Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on August 22, 2019.
(11)	Incorporated by reference to exhibit filed with Registrant's Annual Report on Form 10-K/A for the year ended December 31, 2019 (File No. 001-33810), filed with the Commission on March 11, 2020.
(12)	Incorporated by reference to exhibit filed with Registrant's Current Report on Form 8-K (File No. 001-33810), filed with the Commission on May 18, 2020.
(13)	Incorporated by reference to exhibit filed with Registrant's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 (File No. 001-33810), filed with the Commission on November 09, 2020.
(14)	Incorporated by reference to exhibit filed with the Registrant's Annual Report on Form 10-K (File No. 001-33810) filed with the Commission on March 9, 2021.
(15)	Incorporated by reference to exhibit filed with the registrant's Current Report on Form 8-K (File No. 001-33810) filed with the Commission on September 2, 2021.
(16)	Incorporated by reference to exhibit filed with the Registrant's Quarterly Report on Form 10-Q (File No. 001-33810) filed with the Commission on November 8, 2021.

41

AMERICAN PUBLIC EDUCATION, INC.

Schedule II

Valuation and Qualifying Accounts

	Balance at Beginning of Period	Additions/ (Reductions)	Write-Offs	Balance at End of Period
(in thousands)
Year ended December 31, 2021:
American Public University System Segment	$	2,196	$	1,693	$	(2,139)	$	1,750
Rasmussen University Segment1	-	5,902	(2,458)	3,444
Hondros College of Nursing Segment	3,787	4,293	(1,878)	6,202
Allowance for receivables	$	5,983	$	11,888	$	(6,475)	$	11,396
Year ended December 31, 2020:
American Public University System Segment	$	2,240	$	1,276	$	(1,320)	$	2,196
Hondros College of Nursing Segment	3,934	2,526	(2,673)	3,787
Allowance for receivables	$	6,174	$	3,802	$	(3,993)	$	5,983
Year ended December 31, 2019:
American Public University System Segment	$	2,669	$	2,004	$	(2,433)	$	2,240
Hondros College of Nursing Segment	3,979	2,174	(2,219)	3,934
Allowance for receivables	$	6,648	$	4,178	$	(4,652)	$	6,174

1Rasmussen University Segment additions include $3.5 million beginning balance as of September 1, 2021.

42

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICAN PUBLIC EDUCATION, INC.
Date:	August 5, 2022	By:	/s/ Richard W. Sunderland, Jr.
Name:	Richard W. Sunderland, Jr.
Title:	Executive Vice President and Chief Financial Officer

43