Oct. 29, 2020, 03:15 AM

CHARLES TOWN, W.Va., Oct. 28, 2020 /PRNewswire/ — American Public Education, Inc. (Nasdaq: APEI) (“APEI”) – parent company of online learning provider American Public University System (“APUS”) and on-ground, pre-licensure Hondros College of Nursing (“Hondros”) – announced that it has entered into a definitive agreement to acquire Rasmussen University (“Rasmussen”), a nursing- and health sciences-focused institution serving over 18,000 students at its 24 campuses across six states and online.

Angela Selden, chief executive officer of APEI, stated, “We are very enthusiastic about the acquisition of Rasmussen, as it will add another #1 market position — pre-licensurenursing (ADN/RN and PN/LPN) — to our current #1 market position with APUS in serving military and veteran students. Collectively, Rasmussen and Hondros will be a nursing education powerhouse serving over 10,000 students. The transaction creates scale and diversifies APEI’s revenue with a mix that will consist of approximately one-third military and veterans, one-third nursing, and one-third online adult learners. From cultural alignment on affordable, inclusive, and high-quality education to strong regulatory track records, we believe the combination will be unparalleled in the industry. This acquisition amplifies our brand promise to provide our students with a Higher Education Return on Investment or ‘HEROITM‘.”

The acquisition of Rasmussen represents a significant step in positioning APEI that began a year ago and has included a return to growth at APUS and a turnaround at Hondros. This transaction provides important scale benefits and helps establish APEI as a platform for additional transactions that can create meaningful synergy opportunities over time.

Rasmussen is regionally accredited by the Higher Learning Commission (HLC) and offers a full complement of degree programs in Nursing, Health Sciences, Business, Technology, Design, Education and Justice Studies. Rasmussen offers both traditional and competency-based programs online and through its 24 on-ground campuses in six states.  With over 8,200 nursing students, Rasmussen is one of the largest providers of pre-licensure nursing programs in the United States. Rasmussen’s pre-licensure nursing programs have grown at a 16% five-year compound annual growth rate.

“Rasmussen University has a 120-year heritage of educating adult learners, and a comprehensive laddered nursing curriculum. Our emphasis on affordability and student outcomes with a strong connectedness to the employment market are attributes that strongly align with APEI’s overall mission, service to its students and its value creation strategy,” said Tom Slagle, CEO of Rasmussen University. 

Ms. Selden added, “The entire leadership team, led by Tom Slagle for the last 10 years, has developed Rasmussen into a dynamic and growing institution through its student-centric approach and focus on delivering a high-quality education that meets the needs of students and employers. We at APEI look forward to working with Rasmussen to further the mission of the University and deliver value for all of its stakeholders.”

“This transaction represents a unique opportunity for Rasmussen to combine forces with a respected leader in higher education creating a platform to meaningfully increase the number of licensed and highly-qualified nursing professionals in our communities and create more academic programs at scale,” said Atif Gilani, founding partner of Renovus Capital Partners, which acquired Rasmussen in 2019. “We are pleased to have assisted in growing Rasmussen University’s best-in-class nursing and high-end healthcare programs and improving Rasmussen’s operating results.”  Renovus Capital Partners is a Philadelphia-area based private equity firm specializing in the Knowledge & Talent sectors.

Transaction Details:

  • APEI will acquire 100% ownership of Rasmussen University for $329 million, consisting of $300 million in cash and $29 million of non-voting preferred stock, which represents the estimated value of tax step-up benefits. APEI may substitute cash for the preferred shares at the time of closing, at its election.
  • APEI expects to fund the transaction with a combination of cash on hand of approximately $125 million, not including transaction costs, and up to $175 million of fully committed debt financing from Macquarie Capital.
  • Rasmussen generated $256 million of net revenue, $19 million of net income and $40 million of Adjusted EBITDA3 for its fiscal year ended September 30, 2020.
  • Rasmussen is expected to generate approximately $7 million of net income and approximately $44 million of EBITDA3 on an Annual Pro Forma Basis in 2021. 1
  • On an Annual Pro Forma Basis, the acquisition is expected to be accretive to earnings per share for the full-year 2021.1
  • APEI expects annual synergies to be approximately $5 million in the first year after closing and more than $10 million in each of the following two years.
  • The transaction is expected to close by the middle of the third quarter of 2021, subject to closing conditions that include review by the Department of Education, approval by the Higher Learning Commission and approval of or notices to other regulatory and accrediting bodies.
  • Rasmussen will continue to operate as a separately accredited institution after closing. In addition, APEI and Rasmussen will enter into a shared services arrangement for certain corporate, administrative and support activities upon closing.

Macquarie Capital provided committed debt financing to APEI. Hogan Lovells is providing legal counsel to APEI. 

Lincoln International acted as exclusive advisor to Rasmussen University.

APEI Provides Preliminary Third Quarter 2020 Results:

APEI is sharing certain preliminary results of its operations for the three months ended September 30, 2020.  Although complete details are not yet available, APEI is able to provide the following financial update:

  • Consolidated revenue was $79.1 million, an increase of 16.6% compared to the third quarter of 2019.
  • Net course registrations by new students at APUS increased 25% and total net course registrations increased 18% as compared to the third quarter of 2019.
  • New student enrollment at Hondros College of Nursing increased 88% and total student enrollment increased 38% as compared to the third quarter of 2019.
  • Consolidated net income was $2.6 million, or $0.18 per share, compared to a net loss of $1.6 million in the third quarter of 2019.

Complete third quarter 2020 financial results will be announced on Monday, November 9, 2020, as previously disclosed.