American Public Education, Inc., Hondros College, Nursing Programs - M&A Call

Aug.28.13 | About: American Public (APEI)

American Public Education, Inc. (NASDAQ:APEI)

August 28, 2013 5:00 pm ET

Executives

Christopher L. Symanoskie - Vice President of Investor Relations and Vice President of Corporate Communications

Wallace E. Boston - Chief Executive Officer, President and Director

Harry T. Wilkins - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Peter P. Appert - Piper Jaffray Companies, Research Division

Jeffrey M. Silber - BMO Capital Markets U.S.

Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division

David Warner - First Analysis Corporation

Trace A. Urdan - Wells Fargo Securities, LLC, Research Division

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

Timo Connor

Operator

Good day, ladies and gentlemen, and welcome to the American Public Education, Inc. corporate conference call. My name is Crystal, and I will be your coordinator for today. [Operator Instructions]

I will now turn the presentation over to your host for today's conference, Mr. Chris Symanoskie, Vice President of Investor Relations. Please proceed, sir.

Christopher L. Symanoskie

Thank you, operator. Good evening, and welcome to our conference call to discuss American Public Education's plan to acquire Hondros College, Nursing Programs. Presentation materials for today's call are available in the Webcasts section of our Investor Relations website and are included as an exhibit to our current report on Form 8-K filed earlier today.

Please note that statements made in this conference call regarding American Public Education or its subsidiaries that are not historical facts are forward-looking statements based on current expectations, assumptions, estimates and projections about American Public Education and the industry.

These forward-looking statements are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Forward-looking statements can be identified by words such as anticipate, believe, could, estimate, expect, intend, may, should, will and would.

These forward-looking statements include without limitation, statements regarding the timing and ability to close the transaction, post-closing approvals, the expected benefits of the transaction and future financial results, as well as other statements regarding expected future growth.

Actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described in the Risk Factors section and elsewhere in the company's Annual Report on Form 10-K filed with the SEC, the company's quarterly reports on Form 10-Q filed with the SEC and the company's other SEC filings or adverse licensing regulatory or creditor actions.

The company undertakes no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.

This evening, it's my pleasure to introduce Dr. Wallace Boston, our President and CEO; And available for questions today is Harry Wilkins, our Executive Vice President and Chief Financial Officer.

Now at this time, I'll turn the call over to Dr. Boston.

Wallace E. Boston

Thank you, Chris. Good evening, everyone. Thank you for joining our call to discuss APEI's agreement to acquire the Hondros College, Nursing Programs. Our ongoing research in the pathways for improved student retention and blended educational delivery systems have led us to evaluate opportunities the schools that offer dual-mode education delivery.

In addition, we have a keen interest in Health Science and Technology programs, as well as Science, Technology, Engineering and Mathematics programs, also known as STEM programs. Understanding that there's increasing demand for in shortages of nurses, research for quality nursing programs that might be available for partnership or acquisition.

Hondros College, Nursing Programs, an Ohio-based School of Nursing with 4 campus locations and an online RN to BSN completion program was identified as a potential partner. After a thorough review process, we are pleased to announce that we have signed a definitive agreement to acquire 100% ownership interest in National Education Seminars, Inc., which operates this Hondros College, Nursing Programs in exchange for approximately $46 million in cash subject to adjustments.

Hondros College's Nursing Programs are being acquired by APEI. The remaining Hondros brands will continue to be controlled and owned by founders John and Linda Hondros. We expect the transaction to close in the fourth quarter of 2013, subject to various closing conditions, including accreditor and regulatory approvals. After closing, the change of control will also be subject to further approval of its accreditor and the U.S. Department of Education, as well as other bodies. Furthermore, APEI is currently expected to have more than $80 million in cash and cash equivalents remaining on its balance sheet after the close.

Moving on to Slide #4. The Hondros College, Nursing Programs included Diploma in Practical Nursing, PN, an Associate Degree in Nursing, ADN, and an online RN to BSN completion program to more than 1,500 students at 4 campus locations in Cincinnati, Columbus, Dayton and Cleveland, Ohio. In addition, the RN to BSN completion program is available online.

Hondros College is nationally accredited by the Accrediting Council for Independent Colleges and Schools, ACICS, to award diplomas, Academic Associate Degrees and Bachelor's Degrees.

Recently, Hondros College was notified to receive a programmatic accreditation by the Commission on Collegiate Nursing Education or CCNE, for its online RN to BSN completion program. Hondros College received a 5-year grant of programmatic accreditation, the maximum duration for a grant of initial accreditation.

Moving on to Slide #5. John and Linda Hondros began operating their first school in 1981 under the name, The Ohio Real Estate Preparatory School, originally offering courses to help candidates pass the Ohio real estate exam. The College grew to offer other preparatory courses and prelicensing education for real estate, insurance and mortgage professionals.

The school's name was changed to Hondros Career Centers in 1986. In 1991, Hondros Career Centers received initial accreditation from the Accrediting Council for Independent Colleges and Schools or ACICS. The name was changed to Hondros College in 1996, and over the next 10 years, the institution expanded to offer a wide variety of certification and continuing education programs.

In 2006, the college received approval from the Ohio Board of Nursing to offer Practical Nursing Diploma and Associate Degree in Nursing programs. Today, it offers -- operates separately from the other schools.

The successful completion of their classroom and clinical programs results in the ability to take the exams required to practice as an OPN or an RN. Hondros College, Nursing Programs also has relationships with several Ohio hospitals and health care facilities and was honored as a Top Workplace in 2013 by the Dayton Daily News and the Columbus C.E.O. magazine.

The school shares our passion for building relationships to drive awareness and to build relationships with key organizations within the disciplines they teach. For example, the school has memberships and affiliations with The Center for Health Affairs, National Library of Medicine, National League of Nursing, Northeast Ohio Nursing Initiative and Ohio League of Nursing, to name a few.

Moving on to Slide #6. This strategic acquisition represents an attractive use of cash by APEI and is expected to be accretive to earnings per share for the full year of 2014. We believe that our existing management team currently has the bandwidth and depth to effectively lead both Hondros and APEI.

In addition, we believe that we have the experience to run campus-based schools. You may recall that our Chief Financial Officer, Harry T. Wilkins, served as the CFO and Chief Operating Officer of Strayer University in the 1990s during a period when that company grew from 2 to 22 campuses. Moreover, my 17 years of experience in the health care industry should be advantageous to our overall approach in health care education.

Harry Wilkins will be leading and managing our first major acquisition. We currently expect all of the senior leadership of the school to remain, with John and Linda Hondros maintaining active roles during the transition. Linda Hondros, who currently serves as President of Hondros College, has agreed to remain active with the School of Nursing for 2 years, and John Hondros is expected to remain on the Board.

Long term, we expect Hondros College, Nursing Programs to benefit from access our broad academic expertise and advanced educational technologies, including our state-of-the-art online learning management system, innovative student services, award-winning library services, proprietary technologies and other university resources.

For the foreseeable future, Hondros College, Nursing Programs will continue to move forward, fulfilling its mission by serving nursing professionals through their 4 campuses and online. At the same time, we look forward to working with our new subsidiary to broaden APEI's emphasis on health science and STEM programs, as well as evaluating a blended educational platform, which is on campus and online.

Our long-term strategy is further advanced by this acquisition because it creates greater program diversification and addresses the educational needs of a growing profession. We also believe that Hondros can serve as a platform for future health care program expansion and that APEI is now positioned as an emerging leader in the areas of nursing, health care and public health education.

In closing, we believe that the founders of Hondros College, John and Linda Hondros, along with their team led by Carol Thomas, President of Nursing Programs, and Tammy Fancelli, CFO, has built a quality school with a solid team of educators and administrators. We look forward to a successful close to the transaction and working with them to fulfill our respective missions.

Now at this time, Harry Wilkins and I are available to answer questions from the audience. Operator, please open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Peter Appert with Piper Jaffray.

Peter P. Appert - Piper Jaffray Companies, Research Division

Wally, can you give us any more details in terms of the financials around Hondros, and I'm thinking about current level of margins, what the growth trajectory has been? And also do you have any statistics in terms of what their track record has been in terms of the pass rate on the nurses exam?

Wallace E. Boston

I don't think we're going to go too deep into the levels of the financials right now, Peter. We did state what the revenues were in 2012, and that the transaction is expected to be accretive for all of 2014. But they operate pretty effectively and efficiently. We do have the nursing pass rate, I think in some of our data, but I don't have it off of the tip of my fingers here. So maybe Harry can locate that and we'll get back to you in a second.

Peter P. Appert - Piper Jaffray Companies, Research Division

Okay. How about what the growth trajectory has been? Can you give us any color on that? And then maybe related to that, your expectations in terms of how you're going to scale this and how fast you'd like to grow it from here?

Harry T. Wilkins

Yes. So we're probably not going to get into that on this call, Peter. We still have to go through a regulatory process to get this approved, which could take 6 to 7 weeks. And we'll give more -- we plan on giving more color on our call, next earnings call, which is November 8, after we get through the regulatory process. So we paid $46 million for the school. We thought that was a fair valuation. We really think given the quality institution, its profitability and the acquisition multiples of similar recent deals that, that was a fair price. And we're going to go -- we'll kind of probably going to leave it at that for this call, if you allow us to.

Peter P. Appert - Piper Jaffray Companies, Research Division

Sure. Well, let me -- one more try. How about the expectation that you are going to look to add new physical locations to this operation?

Wallace E. Boston

Yes, I think that there is an expectation. We will -- we have to get through our approval processes, and there are at least 1 or 2 opportunities for campuses in Ohio and we'll see how effectively we can run this campus and blended RN to BSN program and if we find other opportunities, as you know, this is a notch up in the regulatory side. You're not just approved as a school by your accrediting body in the U.S. Department of Education and the state licensing authority, but then you have the Nursing Licensing Board and it gets a lot more complicated for every different program you offer for the Nursing Licensing Board. So we're actually excited though. We think that the Hondros team is a good team and they've had some good successes in expanding their campuses and so we look forward to assessing all the opportunities and talking more about it after we can get the transaction approved.

Harry T. Wilkins

Yes, Peter, also there's about 10% of the people in the military are involved in health care profession. We've never really had a lot of programs to offer them, and we're trying to build that to enhance our ability to serve the military.

Operator

Our next question comes from the line of Jeff Silber with BMO Capital Markets.

Jeffrey M. Silber - BMO Capital Markets U.S.

If we can get just a bit more details on Hondros in terms of the breakdown of enrollment between on campus and online and between the diploma and associate in the RSN -- RN to BSN program?

Wallace E. Boston

Sure. Currently, their PN program is about 64% of the 2012 revenue, the ADN program is about 34% and their online RN to BSN is about 2%.

Jeffrey M. Silber - BMO Capital Markets U.S.

Okay, great. And then in terms of tuition costs for the programs, just roughly, how do they vary?

Wallace E. Boston

Harry?

Harry T. Wilkins

Yes. They're on a quarter system, and on a per quarter credit hour basis, the PN program has $230 tuition charge per quarter credit hour, which equates to about $345 for a semester credit hour. The ADN program, the Associate's Degree has a cost of $250 per quarter credit, which is about $375 per semester hour. And the RN to BSN program is $175 per quarter credit or about $262.50 per semester credit. So their tuition is fairly similar to ours.

Jeffrey M. Silber - BMO Capital Markets U.S.

All right, great. I'm glad you were prepared to answer that one, Harry, I appreciate that. And just one more question. You talked about generally the acquisition price and you looked at other transactions. And given that we really haven't had too many transactions recently, I'm just wondering if you can give us a little bit more color how you came up with the price, because when we look at it on a revenue multiple or a per student multiple, it's a bit ahead of where your stock is trading in.

Wallace E. Boston

So we actually looked at the comparable transactions, Jeff, and you're right, there aren't -- haven't been too many transactions recently. But we also worked with an outside investment banking firm to get a fairness opinion, which looks at not just comparable multiples but market value, discounted cash flow, et cetera. So the Board and our team think that the price is fair, given the quality of this acquisition.

Operator

Our next question comes from the line of Jeff Volshteyn with JPMorgan.

Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division

Could you give us a little more detail on how the institution is going to operate, with Hondros family operating the rest of the business? Will it be changing the name? Will it be renewed under your umbrella or you're like how -- what is the strategy there?

Wallace E. Boston

Harry?

Harry T. Wilkins

Yes. Well, the strategy is to continue to run the college with the current management team in place. Linda Hondros is currently the President. Tammy -- I mean, Carol Thomas will become the President. She's running the nursing programs right now. I'll be acting as the CEO until we make a determination as to who the full-time CEO will be. But Linda has agreed to a consulting arrangement where she will be advising the management team and us during this transition for several years. John Hondros has agreed to stay on the Board, and he'll be actively advising us and as we try to continue to expand the presence of the school in Ohio. we really think it's a quality school, and we really think that there's great opportunity to work with us to further enhance their online capabilities.

Wallace E. Boston

As far as the name goes, we have an agreement to work -- to differentiate the names from just Hondros College to something like Hondros College of Nursing or Hondros College of Health Care, and they might be Hondros College of Business. So that's something we've agreed to agree to and we intend to have it all worked out by the time we're able to close the transaction.

Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division

Okay. When we look at the timeline of approvals, you mentioned 6 to 7 weeks. Is that from the U.S. Department of Education? Will nursing boards with there'll be sort of beyond that or is that or you're including all of the agencies in that timeline?

Harry T. Wilkins

Yes, some of the agencies, it's a notification to them when we have to actually get their approval. The Department of Ed, we get a preapproval. We asked for a preapproval, we submitted an application this afternoon. Statutorily, they have 45 days to respond to that and we should hear back from them. Then that's their preapproval, then we have to submit additional information from the accrediting agencies and the state licensing bodies back to the department after we get their preapproval and our same-day audited balance sheet at closing to get their final approval. So that -- we expect that process will happen sometime during the fourth quarter, we just don't know when.

Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division

Understood. And does the school currently have approvals for nursing programs outside of the state of Ohio?

Wallace E. Boston

Yes, we have. They currently only have programs in Ohio, but they do have 1-line only licensing agreements in several other states.

Jeffrey Y. Volshteyn - JP Morgan Chase & Co, Research Division

Okay. And last question. What does it do to your 90/10? What is the breakdown of their 90/10 revenues?

Harry T. Wilkins

Right now in 2011, they were 72%, and in 2012, they were 75% on the 90/10 calculation.

Wallace E. Boston

Okay. I have some pass rates here that were asked for and I've got them for the last 5 years. The pass rates for ADNs in 2008 were 71.4%, going up to 80% in '09; 84.3% in 2010; 78.3% in 2011; 89.6% in 2012. The PN pass rates were 91.5% in 2008; 88.7% in 2009; 94% in 2010; 94.9% in 2011; and 92.1% in 2012.

Operator

Our next question comes from the line of Corey Greendale with First Analysis.

David Warner - First Analysis Corporation

This is David Warner for Cory. Could you just maybe talk a little bit about the decision to purchase an on-ground campus? And why now and because this maybe a signal of shift in -- do we see more of these types of transactions? And I guess you mentioned that's currently about 2% online. Would that -- could we read into that, that you plan to expand the online component from here?

Wallace E. Boston

Well, we'll certainly see how the online component goes, but I think our thinking along this line really is driven by 2 things: One, our continued focus on ways to improve persistence. And we've known for a while that literature shows that blended programs have a higher persistence rate than either online or face-to-face. And as far as our ability or having the resources to do a total startup with an on-ground situation, we looked at that. At the same time, we were looking for schools that offered opportunities to expand in the health care arena. And most of those agrees because of the clinical practicums required are on-ground programs. With Hondros, we found a school that not only had the on-ground programs, but had a new but approved online RN to BSN, and we thought it would be a nice beginning opportunity for us to evaluate how well blended works as well as for us to evaluate how well we can fit in a market health care that has growing workplace needs over the next 10 years. And I think it was the right opportunity. As far as expanding, I would say that anyone who's been in the health care business knows that, that it is highly regulated. We think the Hondros has done a good job in Ohio. And we'd like to think that there's opportunities to expand. But right now, we're focused primarily on getting acquisition approval and working with the team, which they have a great management team, as well as a great team of clinicians teaching their programs and we'll see how that goes.

Harry T. Wilkins

And I also think that it's part of our growing strategies as we become a larger business that to try to put our balance sheet to work. We have a very strong balance sheet. We're sitting on $130 million in cash, that's getting very little return, because it's very safely invested. But we think it's an opportunity to use that to continue to grow the business that this transaction will be accretive next year. It's a good deal for our shareholders.

David Warner - First Analysis Corporation

Okay. And can you just talk a little bit about the position to purchase a nationally accredited institution and whether you think that you might try to get regional accreditation for Hondros?

Wallace E. Boston

Yes, I think it's a little too soon to tell. A lot of the for-profit nursing programs are nationally accredited and they just achieved their reaccreditation. So from our perspective, they do a lot of things like the pass rates that I just gave you. Those are standards that when you're offering degrees or certificates to lead to a professional licensure, that's something new for us, and so we thought that both Hondros and their accrediting body have a lot of experience with that as far as where we go with the long term. I think that's up to the new Board and the management team at Hondros to decide where they -- whether they want to pursue something different or just keep it the way it is.

David Warner - First Analysis Corporation

Okay. And there's -- and then finally, just real quick, what's the churn exposure to nursing in the U.S. system?

Wallace E. Boston

It's small. We have an RN to BSN degree, which I think we received CCNE approval for a little more than a year ago. So I believe it's less than 1% of our enrollments.

Operator

Our next question comes from the line of Tracy Urdan with Wells Fargo Securities.

Trace A. Urdan - Wells Fargo Securities, LLC, Research Division

So just following up on that last point. I mean, are you going to be in the market promoting a nationally accredited online BSN program while you're also in the market promoting a regionally accredited online BSN program?

Wallace E. Boston

I think the answer is yes. Hondros is going to operate as Hondros and APUS will operate as APUS.

Trace A. Urdan - Wells Fargo Securities, LLC, Research Division

And as far as the prospective student is concerned, you see no conflict there in terms of offering exactly the same program with a lower price in a generally considered different caliber of accreditation in the market? I just, I don't understand that.

Harry T. Wilkins

Yes. I mean, I think the price is fairly competitive, Trace. And we're going to do -- we're going to -- as we transition this company into ours, we're going to see where we have the best economies of scale. We'll be able to better compare the quality of programs with each other, and we'll do it in the best interest of our students overall.

Wallace E. Boston

But I think it's important to note that it is a standalone entity, different accreditation, has different licensure. So it really has to operate independently, and over time, we may be able to look at ways where the 2 companies can operate effectively or symbiotically. But right now, it will operate separately.

Harry T. Wilkins

Yes, and they have a feeder program for their RN to BSN program and we really don't. So that's one of the reasons why ours has been a little slow to get off the ground. So we're going to do it in the best interest of the company.

Trace A. Urdan - Wells Fargo Securities, LLC, Research Division

Do you anticipate, when you say it's going to be accretive in 2014, do you think it will be accretive in all 4 quarters of 2014 or is that contingent on some changes that you're thinking about making?

Harry T. Wilkins

We don't like to give forward guidance but the anticipation is it will be accretive in all 4 quarters.

Operator

Our next question comes from the line of Jason Anderson with Stifel.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

You mentioned it will be accretive in '14. Is there any way we could get you to give us an idea how much accretive?

Harry T. Wilkins

I'm afraid you'll have to try to compute that from the valuation.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Could you also maybe give us some color on the demographics of the Hondros student base, may between traditional or working adult, maybe age, average age, that sort of thing?

Harry T. Wilkins

Yes. I mean, they're all full-time right now. Their programs are primarily directed to full-time students.

Wallace E. Boston

And they're a suburban nursing school, they're not an intercity nursing school. They're located in the suburbs of the 4 cities of Ohio that we read out in the announcement. So they're pretty serious students who are younger in age than our students who are online working adults.

Harry T. Wilkins

Yes. And then -- but they seem to do a good job with their students. The cohort default rate historically are fairly low. They have a 5.1% cohort default rate, 2-year default rate in 2009, a 4.7 cohort default rate for 2010. For 2-year and a 3-year rate, the most recently published was 6.4%. So they -- it's a well-run, clean school that we really like their programs.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

Great. I presume any color on completion rates or grad rates, I presume those are probably pretty good too then, judging by the full-time status?

Wallace E. Boston

Yes. And I think you can also look at those pass rates that I read out too, are pretty indicative of the completion rates.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

And then I want to touch on to the change in control approvals you'll have after the transaction closes. I guess, one, I think it's been asked a couple of different ways. Do you have any expectations on the timeline for that? And while that is pending, are there any restrictions you have on enrollment or any kind of development into Hondros?

Wallace E. Boston

Well, the Hondros family and their management team have to run Hondros until this transaction closes. So they currently have no restrictions and they'll run it the way they've always run it. And we don't anticipate -- we'd really like to have this transaction close sometime in the fourth quarter but it is beyond our control. There's a number of different regulatory and accrediting bodies that are going to look at it. So it's just our job to work with the Hondros family to submit all the applications and do the notifications and hope that it closes expeditiously. They are, as we said before, they're on a quarter system. Their next quarter would start October 1. We don't anticipate any issues related to that, and we would hope the transaction would close sometime between then and the end of the year.

Jason P. Anderson - Stifel, Nicolaus & Co., Inc., Research Division

Okay, great. And then one last one. The campuses now, are they, from a capacity utilization standpoint, are they maxed out or is there room for growth within those on the ground site?

Wallace E. Boston

Yes, they -- their only one of their campuses is getting to the point where they could use some expansion and the plan is to move that campus, it's the one in Cleveland, and which was referred to as their independent campus. That we will probably try to relocate that campus in the Cleveland area very close by and a larger facility sometime next year. But the other campuses have room to expand.

Operator

Our next question comes from the line of Tim Connor with William Blair.

Timo Connor

You've always been 100% online. Does this signal a larger shift in your view on the online education opportunity? Or your -- or have your views of on the on-ground opportunity changed in some way? I guess trying to get some understanding of what changed in your thinking?

Wallace E. Boston

Well, I think just as we expand from an educational perspective, we wanted to have more of a role in health care and many of those programs really require an on-ground presence. We also wanted to look at blended programs, working on ground and online. As we continue to do research and best practices and retention, that keeps coming out as ways to improve student retention. And this offered us an opportunity to do both, to get into the health care with the online practicum program -- I mean, with the on-ground practicum programs, as well as to have the blended offering with the online and the on ground. So I don't see us going out and establishing a whole bunch of physical campuses. But I do think that if our research and practice in blended programs works, that we'll look for other opportunities to try some blended programs.

Harry T. Wilkins

And while APUS has online programs only at this point, there's no reason why APEI can't make investments in other entities and that's what's happened in this case.

Timo Connor

Okay. And you mentioned some overlap with the military channel potentially but sounds like you're keeping most of the senior management. Are there any other synergies that we should think about either top or bottom line?

Harry T. Wilkins

Yes, we'll have to give more color in future calls. We've -- until we get through the approval process, that's going to be our primary concern and concentration and keep the business doing what they're currently doing, keep APUS doing what it's currently doing and get this deal done and brought to a conclusion and we'll be able to expand on our going-forward strategy, I think, in future calls.

Timo Connor

Okay. And then final one for me. What is your view on the competitive dynamics in the nursing market, both for-profit and not-for-profit?

Wallace E. Boston

I think there's, right now, at least in the state of Ohio, it's a market where there's still unmet need. And so we found a provider in that state that where there's certainly opportunities. And we'll look inside of Ohio for any physical location expansion initially. But it is -- I mean, we have looked pretty extensively at the nursing regulation state-by-state, as you might do if you're going to have a strategic acquisition in an area that you haven't operated before and the states are different. Some states don't have unmet need, other states have a met need. Some states restrict the number of seats you can have for nursing programs, some states don't. So it's a little complicated, and I agree with Harry that what we'll do is -- our focus is really to try to get this acquisition approved, and then we'll look at options to familiarize all of you with more of the rationale, more of our strategy going forward once we get it approved.

Harry T. Wilkins

Yes, we certainly believe there's a national need for -- to enhance nursing education. There's a shortage of nurses right now. It's projected to be that way for some time. And we think this is one of the premier nursing schools in the country really and certainly in Ohio and we would hope that we could help fill that need.

Operator

Our next question comes from the line of Jeff Silber with BMO Capital Markets.

Jeffrey M. Silber - BMO Capital Markets U.S.

The passing rates on the exam, I was wondering if you could have any placement statistics?

Harry T. Wilkins

I don't have one on the call right now. We'll try to give some color to that.

Wallace E. Boston

Yes. We'll see if we can find them.

Jeffrey M. Silber - BMO Capital Markets U.S.

Okay, great.

Harry T. Wilkins

I think -- I actually think that information is available. The Consumer data is available on hondros.edu website.

Operator

[Operator Instructions]

Wallace E. Boston

That will conclude our call for today. We wish to thank all of our callers for participating and for your interest in American Public Education. Thank you, and have a great evening.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.

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