Aspen Group, Inc.

Total revenue was $13.8 million, down from $17.1 million, a decrease of 19%. Gross profit was $8.7 million and gross margin was 63%, versus $10.2 million and 60% last year. Net loss was $1.6 million, or $0.06 per basic and diluted share, versus a net loss of $2.3 million, or $0.09 per share. Consolidated EBITDA was positive $419,000 versus an EBITDA loss of $603,000, and consolidated adjusted EBITDA was $1.1 million versus $537,000. Cash from operations was positive $409,000 in Q2, and unrestricted cash and cash equivalents were $1.9 million with restricted cash of $4.1 million as of October 31, 2023. Management said it is not providing guidance at this time, but expects to receive a $3.9 million DOE reimbursement prior to the end of January 2024 and said unrestricted cash is projected to exceed $2 million after that receipt.

Michael Mathews emphasized that the quarter showed financial stability, improving academic outcomes, and progress on the pre-licensure wind-down. He pointed to four consecutive quarters of positive EBITDA, positive operating cash flow in Q2, and rising enrollments at Aspen University and United States University despite reduced marketing spend. He also highlighted stronger NCLEX first-time pass rates in Arizona and other states, framing that as evidence of improved program rigor and student preparation.

Matt LaVay focused on the drivers behind the quarter’s profitability improvement: lower marketing spend, cost controls from prior restructurings, and reduced instructional costs as the pre-licensure program wound down. He said G&A expense fell 23% year over year, gross margin expanded to 63% from 60%, and EBITDA was positive $419,000; cash from operations for the first six months was negative $4.2 million, but Q2 alone generated $409,000. He also noted unrestricted cash of $1.9 million, restricted cash of $4.1 million, the expected $3.9 million DOE reimbursement, the $1.5 million principal repayment on the senior secured loan, and that quarterly cash interest payments should be about $750,000 after that repayment.

There was no substantive analyst Q&A in the transcript, so the main discussion came from management’s prepared remarks. The most notable issues addressed were the timing of the DEAC show-cause and reaccreditation decision, which management expects in about 60 days, and the HCM2 reimbursement process, where four reimbursements have already been received and a fifth $3.9 million payment is expected by the end of January 2024. Management also addressed the Arizona class action settlement, saying the court approved a $550,000 settlement, with $500,000 covered by E&O insurance and $50,000 paid by Aspen University.