Moody’s upgrades APEI’s credit rating on improved earnings
Investing.com -- Moody’s Ratings has upgraded American Public Education, Inc.’s (NASDAQ:APEI) corporate family rating to B1 from B2, citing sustained revenue growth and margin expansion.
The rating agency also upgraded APEI’s probability of default rating to B1-PD from B2-PD and its senior secured credit facility rating to B1 from B2. The company’s speculative grade liquidity rating was improved to SGL-1 from SGL-2. Moody’s assigned a stable outlook to all ratings.
The upgrade recognizes APEI’s stronger cash generation, driven by accelerating nursing enrollments at Rasmussen and Hondros institutions and solid military-affiliated demand at APUS. Despite facing a short-term headwind in Q4 from federal shutdown impacts on Tuition Assistance processing, Moody’s expects the company to enter 2026 with a more flexible capital structure and solid enrollment momentum.
APEI has restructured its operations into two newly branded divisions: APUS Global and RU Health Plus. In 2025, the company delivered online instruction to nearly 89,000 students through APUS Global and enrolled approximately 20,000 students across its nursing-focused institutions.
Moody’s projects APEI will maintain organic revenue and earnings growth in the mid-to-high single digits over the next 12 to 18 months while operating with a debt/EBITDA ratio between 1.5x-2.5x. The company is expected to generate annual free cash flow exceeding $50 million during this period.
The improved liquidity rating reflects higher operating cash flow, increased unrestricted cash balances, and strategic actions to simplify the balance sheet. APEI’s annual free cash flow more than doubled over the past year, reaching approximately $56 million for the 12 months ended September 30, 2025, compared to about $22 million in 2024.
The company has redeemed all outstanding preferred stock for $43.2 million, eliminating annual dividend payments of approximately $6 million, and sold certain non-core assets. Additionally, the Department of Education removed restrictions on a $25.4 million letter of credit related to the Rasmussen acquisition, making that cash unrestricted.
Moody’s noted that APEI’s rating reflects both strengths and challenges. While the company has established a presence in the for-profit post-secondary education market with focus on military personnel and nursing education, it remains vulnerable to regulatory changes affecting for-profit higher education and relies significantly on Title IV funding, Tuition Assistance and Veterans Affairs programs.
As of September 30, 2025, APEI had approximately $193 million in balance sheet cash and full access to a $20 million revolving credit facility due September 2026.
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