All right, we're gonna get started with our next presenter of the morning. I would like to introduce Mike Mathews from Aspen Group. Welcome.
Yeah. Let's go. Just wait a minute. Just wait for a few people to sit. Good morning, everyone. My name is Mike Mathews. I'm the Executive Chairman of Aspen Group, and we're here to talk about how Aspen Group is transforming higher education in the United States. First thing I wanna talk about is the fact that Aspen Group, from a strategic point of view, we have really one significant reason for being, okay? We believe that higher education in the United States is fundamentally broken. What we mean by that is tuition rates have risen by over 500% since early 2000s. If you think about it, how are students today, how do they do business with higher education systems?
What they do is they force students to sign up for a complete semester before they begin. As a consequence, it requires that they pay the tuition upfront before they begin each semester. Unless you're independently wealthy and have significant cash reserves, you have to take a federal financial aid loan. That's why, over 85%-90% of students in America today have to go deeply into debt in order to achieve their degree. Aspen Group was founded in 2012, first with Aspen University. We acquired Aspen University in 2012, subsequently acquired a second university, United States University, in 2018. Okay?
We have basically, we announced in 2014, a little over 10 years ago, that we're the first education system in the history of the United States to offer working professionals the ability to pay month to month. This is what's called a RIC. It's a retail installment contract. The reason this is such an unusual approach, is not only because monthly payment plans had never been done before, but more importantly is we decoupled the academic program from the financial plan. What does that mean? What it means is that we tell our students that they can make their first monthly payment the day they begin the program, and they're gonna make that same payment for years until they pay off their liability, okay? The average duration of our payment plan is about five years, okay?
Students complete their program around about 2.5 years. There's a 2.5 year tail. We're taking risk on the back end after a student graduates. One of the key decisions that we made in 2014 is that we made a decision to only focus our advertising dollars against registered nurses. Why did we do that? Well, first of all, registered nurses always have a job if they decide that they wanna work, right? There's a terrible nursing and medical shortage, as you guys, I'm sure, are aware. The other thing is that nurses, if you think about it, they're probably have the best ethics and morals of any human beings on the planet. We made the decision that we're gonna always focus our advertising on the registered nursing sector.
We have three levels of programs. We have a bachelor's program. A lot of folks don't understand that in nursing, 45% of nurses in America only have a two-year degree, an AA. Our biggest program historically has been our RN to BSN program. We're bridging a two-year nurse to a four-year degree, to a bachelor's degree. We also have a master's level degree, and we have a doctoral level degree as well. Why are we focused on the nursing sector? First and foremost, obviously, you guys know that there's a significant aging workforce. There's elevated attrition. There's a significant educational bottlenecks. Of course, you know, the baby boomers are aging, we have a situation where we have significant demand growth.
It's kind of a perfect storm. Matt, our CEO, is gonna come up in a moment, and he's gonna talk about where the future of medicine is going. What's happening is because MDs, there's such a shortage of MDs, that when you go to, for whatever reason, to your medical provider, to a hospital, you're almost always gonna see a PA or an FNP before you end up with the MD. Our biggest program today is our family nurse practitioner program, which is a master's level program. It's about a $45,000 program. When a bachelor level RN gets an FNP degree, it's a life-changing event. They go from an average income of about $75,000 to $130,000.
They can go, of course, into private practice themselves and open up their own, you know, put up their own shingle. Again, monthly payment plans, retail installment contracts, this is our reason for being, and we focus entirely on the registered nursing sector from a historical perspective. I'll turn it over to Matt now. Come on up, and you'll take it from here. That's the forward button.
Okay, thanks. Hi, everyone. I'm Matt LaVay. I'm the Aspen Group CEO. I'm gonna talk a little bit about, I'm gonna elaborate on what Mike said and talk a little bit about the recent financials that we put out. As Mike said, you know, our focus is on post-licensure nursing world, where there has been, you know, a lot of demand for those post-licensure degrees. Nurses make more money when they get a post-licensure, you know, designation of a master's or a doctorate or a family nurse practitioner. Not only is there a structural shortage, but it's in the nurse's own personal interest to get these advanced degrees because their compensation will automatically increase every time they move up a level. That puts in this fundamental demand for post-licensure. We've historically had great success in recruiting nurses into our programs.
We have a very low cost of enrollment. The cost of enrollment has run with our typical advertising spend between, say, $1,200 and $1,800 per enrollment. That's an industry-low number. We are able to accomplish that goal through a very good CRM that we've, it's proprietary software we put into place that really helps our enrollment advisors become efficient. They've learned how to use it, and so we've been able to use our advertising dollars effectively, run the leads through that CRM, and effectively enroll nurses for a low cost of enrollment. You know, this has driven the financial metrics that we've had in history. We just had actually a record quarter. This is from a bottom-line standpoint.
We did $10.4 million of revenue this quarter, which is comparable to the same quarter last year. What we've done, though, is we've really focused the company on profitability. We had net income last quarter of $1.4 million. That is a company record. That is a net income margin of 14%. We've achieved this through maintaining the top-line revenue, but at the same time becoming more efficient in both cost of sales or cost of revenue and our G&A spend. From a cost of revenue standpoint, we've really focused on using adjunct professors as opposed to full-time employees. As revenue fluctuates, we're able to fluctuate the instructional costs to correspond to the students that we're teaching. This enables us to be quite nimble in our profitability.
We're running a gross margin of upwards of over 75%. That all trickles down to the bottom line. On top of that, we have a very good G&A result recently. This is all kind of the infrastructure that supports the nursing, you know, the academic operations. Everything from the corporate back office to folks like academic advisors, the enrollment people, those types of functions. What we've done is we announced in it's been almost a year, but let's just say at last of September, let's say, the merger of our two universities. As Mike said, we have Aspen University and United States University.
We decided to bring the two together and leverage one kind of infrastructure to serve both universities as opposed to having a duplicate infrastructure and two separate entities. We are already realizing the benefits of this. We had a restructuring last, it was last fall around October, November timeframe that enabled us to cut a significant amount of our G&A out. It was about $1.5 million a quarter. That again all went down to the bottom line, and the result is this positive net income. We are now on a track going forward to consistently produce net income into the future. The challenge is to come up with the dollars to really pump up the marketing engine and start to grow the revenue and leverage that nice efficient base that we have. That is where we are going.
Just some other metrics. Our adjusted EBITDA was $3 million, another very high number for us. We've had operating cash flow for the quarter of a million dollars. You know, we put the company in a position where it can sustainably grow on its own. What our goal is to grow faster than just what we could do at a sustainable kind of organic position, which I'll talk about in a minute. Our student body today is almost 4,500 students. Again, as Mike said, there's a heavy focus on the family nurse practitioner program. 83% of our students are enrolled in nursing programs. We do have other programs, such as teacher credentialing. We do, you know, a master's in business and so forth.
We as Mike said, we do focus on the nursing. Just a little bit of additional perspective. We've had four quarters now in a row of net income. Historically, the company was growing quickly and had losses. We've done the repositioning, so we've consistently shown that we can be net income positive. We've had five quarters in a row of positive operating cash flow. As I said, our operating cash flow is $1 million. We do expect the goal here is consistent growth. You know, we're in the process right now of we have a loan that we took out, and we just extended it for a year. It became due in May.
We extended it for one year under the same terms, except we actually decreased our quarterly amortization payments. The goal for us is to get a new loan with a lower interest rate and give us about $5 million-$10 million of additional capital to spend on the marketing programs that I talked about. We have a lot of history on spending marketing dollars. We know exactly how much we can grow per dollar of incremental marketing spend. That cost of enrollment that I mentioned earlier is very substantiated and predictable through past history. We know if we spend a certain amount of incremental marketing dollars, we will grow our revenue and our bottom line where we are today. It's a very exciting future that we have all the infrastructure in place.
We've got the financials in place. Now it's just a matter of us really kind of ramping up, ramping up the marketing engine. We are positioned for future growth. The merger of Aspen United States University is going quite well. As you all probably know, we're in a regulated sector. We have to get a couple of layers of regulatory approval before the merger can become effective. The most critical are for our accreditors to approve. We have the Aspen accreditor who has approved. The United States University accreditor will be approving within the next month or so, we believe. Then we have the Department of Education. That approval will follow a few months after, at best case, a year after, worst case. The merger's going quite well. We do expect that to be completed in the short term.
Just some additional highlights. This is the year-to-date financial numbers. Year-to-date, we're at $33 million of revenue. Just for some perspective, last year for our fiscal year, ended April 30. For fiscal 2025, ended last April, we did $45 million. We're on pace to do something similar this year. Net income to date, $2.5 million. Again, we expect that to sustainably continue. We've got almost $2 million of operating cash flow for the year. Really the only reason that we don't, you know, the one thing that we do as a debt service payment, so we were able to reduce that debt service payment, as I mentioned.
For that, the debt service payment reduction that we're gonna have for the next year under the current loan will be funneled into marketing programs. We already have a path to start marketing. We really just wanna ramp it up more than that. We're actively engaged in looking for other lending opportunities. The last thing I'll just say is, you know, we have an upward trajectory that we've laid the groundwork for. As Mike said, we've got a large market opportunity. You know, we've got the structural nursing shortage and, you know, we provide that affordable education with the flexibility of the MPP program. By the way, I will say we don't just offer the monthly payment plan, but we do offer financial aid and other cash options as well.
The idea here is to give students maximum flexibility on how they pay and how they take their coursework. With the online programs that we have today, we offer an incredible amount of flexibility for working professionals. We have differentiated models, of course, as I just mentioned. We are at a profitable place right now, sustainable profitability. We've made that inflection. We're consistently going forward that, with that. Finally, we have the refinancing catalyst. This is what we really need to start growing quickly, and that will be the result of direct marketing spend, mostly, focused on, you know, Google and, you know, online platforms like that. We'll expect a result of marketing spend plus the low cost of enrollment.
We've got a really good existing lead flow converting into good enrollment today. We expect to raise that. As a result, we expect to return to student body growth pretty rapidly from the 4,500 students where we're at today. That's it for me. Mike and I are both available for questions. Yes.
Can you give us more color on the marketing spend? Is it just advertising across all platforms or other things involved?
Up to this point in time, it's been focused on the family nurse practitioner program in recent history. In the past, it's been more broadly focused on, you know, like Mike said, you know, the BSN, the RN to BSN programs, the doctoral programs, other master's level programs. The family nurse practitioner we have found today is in extremely high demand, and it's a very high LTV, so very high value program for us, over $40,000 per student. Given those dynamics with the limited marketing dollars we have today, we think that's the best place to focus. With a new loan and some more available cash, we do plan to expand into other, you know, broaden that out into the other post-licensure nursing programs we mentioned.
Are your sales pretty lumpy or are they, like, pretty steady across quarters, you know?
Yeah
Obviously tuition's kind of due at the beginning or, you know, the semester to semester or something.
Yes, that's a good question. We kind of evaluate, you know, sales as students starting into a class. Historically, it's pretty steady through the year except for our fiscal third quarter, which is where the holidays take place. There's a little bit of a lull there. It doesn't mean we're actually losing students. They're just not registering for that one timeframe, and we usually see a rebound in the next quarter, in the Q4, you know. During the summer, there might be a little lull as well. Overall, the, you know, the active student body will maintain itself, and it's just there's a little bit of lumpiness on those course registrations. Just so you to make something clear that we didn't talk about before, we recognize revenue as students take courses.
Over the 2.5 years, let's say, that a student's in school, as they take courses, we recognize the revenue according to that coursework that's taking place. They pay all the way through. On their Monthly Payment Plan, let's just say, or their financial aid. When they graduate, what we'll have done is we'll have built up some accounts receivable for the tail that Mike mentioned. They'll pay that off subsequent to graduation for another 2.5 y ears. That's where we, you know, we use a little bit of working capital to actually educate the student to fund that tail and then that drop, you know, that comes off over time.
As we grow, the base of students that are in school becomes large enough that we can self-fund. You know, providing for that tail, right? In the interim, while we're a little bit smaller, that's why we need the marketing dollars.
Would you also consider raising equity to either fund the marketing efforts or are you just gonna raise debt or something or to finance it?
Yeah
Free cash flow basically?
No, definitely we're open to various funding mechanisms. We've used equity in the past. Yeah, we're looking at multiple options for funding.
We currently have a Series A preferred instrument outstanding for $10 million. It's converted convertible at $0.50 a share. Five million of the 10 is held by a Mr. Lee Cooperman, formerly head of Goldman Sachs, and Richard Strong, who's up in Milwaukee. He's retired, he ran a very successful wealth management company for years. We have some really famous and well-heeled, you know, investors in our company. We've had some interest recently where folks are asking us if we can add to that, we're open to it.
Yeah.
Are there any physical properties for teacher, or were there legacy physical assets?
There are some legacy physical assets out there. We've sublet probably half of those assets as of today. We're working on subleases for the remaining assets. The, you know, those leases expire anywhere from 2028 through to 2031. They're built into the current cash flow. When we say we're, you know, cash flow positive, we're obviously kind of trying to work with the landlords and maintain those leases as we run through them.
There's no teaching done at the classes. It's not online.
Correct. It's all online. We have some administrative offices as well, right? some corporate offices in Phoenix.
Just so you know, the, there's a couple programs that require clinical components. What happens is we manage to get those students placed into their local, their preferred local location. For FNP program, you have to conduct 1,000 hours, in your, you know, in your. That piece of it's not, you know, we're not doing academics, but it's being done by a preceptor along with the student at that location.
Like at a lab location or something like that?
Yeah, Well.
It's a hospital.
It's a real live, you know, healthcare location, whether it's a hospital or whatever, yeah.
From the company's perspective under the model where we're at today, within a few years, we'll be completely virtual without any physical presence needed. That's where we're headed. Any other? Yes.
Do NCLEX scores play at all into post-licensure or, you know, like?
No, they do not. NCLEX is only related to the pre-licensure programs. There are various requirements around you know, in the states you know, becoming a family nurse practitioner and so on, but it's not an NCLEX test.
Thank you.
Yes.
How many shares are out, fully diluted right now?
Right now, fully diluted, it's 35 million, I believe, is the latest count in there. You know, we have the typical, you know, RSUs outstanding for our employees. We have some warrants outstanding for our lenders. I mean, that's really about it. It's mostly the warrants for the loans and the employee-related, you know, stock that's out there. The debt that we have currently outstanding is convertible at $0.50 a share, as well as the preferred stock that Mike mentioned before. It's convertible also at $0.50 a share. Right now, our stock price is about $0.30, we're not quite at the level where conversion would make sense.
Our stock price has increased steadily over the last few months, largely as a result of the financial, you know, information I just shared with you. There is a potential that there could be some, you know, future dilution related to, you know, the debt and the preferred out there. We're not there yet.
How much total debt do you have again?
The total debt right now is about $5 million. The loan that we have, started three years ago, it was a $12.4 million loan. We've been making quarterly amortization payments. For the last couple of years, they've been at $500,000 a quarter. We've worked that down to $5 million. We keep for the next four quarters during this extension period, those amortization payments are $350,000. Our cash flow, our operating cash flow won't be affected, but of course, our bottom line cash flow will be affected by the savings, and that's what we plan to put into the marketing programs.
Okay. Thank you.
Sure.
It's $5 million of a loan, and you're asking for another $5. You're looking to raise another $5 million.
Well, no, we would like to replace the current debt with something, you know. I mean, we're open to varying amounts.
Right.
It, we'd really like to be in the 10 range to give ourselves, you know, the room, the room to refinance out the current loan and then give us a few million for the marketing spend.
We also intend, later this calendar year to uplist back to NASDAQ again. Don't be surprised the second half of the year we do that.
Yeah.
You'd have to be above a dollar to-
Yeah
to consider that.
$3.
$4 now.
The last time you guys were above $1 was 2022.
Yeah. Yeah.
You're making some strides obviously.
Well, I mean, the history of our company, if anybody followed us, is we were the fastest growing education company for six years straight. We had a CAGR of 50%. We got into the pre-licensure business in Arizona, and we had NCLEX issues, we taught that out, that business. We're out of that business. Doesn't mean we won't come back again, we basically restructured the company, now it's a different looking company. We're not trying to grow at 50% a clip. We're trying to generate cash, we think this is a really smart, sustainable approach.
You did, Bob?
Yeah, like three years, twto years ago, three years ago. Yeah.
Obviously there's a little bit of a lag when you start spending the marketing dollars, you know, before the leads convert into the enrollments. That's part of the reason we need this extra little bit of money is just to kind of work through that lag, and it's a very short lag, you know, a quarter or two. That's what we're kind of trying to work through right now.
How much do you need in marketing capital? How much are you looking for?
Historically what we found out is if we spend about half a million a quarter, we can grow sustainably. We can start growing the student body and maintain our profitability. That's the starting point. That's where our minds are. Now, as I said before, we can grow faster with more money. It really kind of depends on the appetite of the lender or, you know, if there's an investor, whoever it might be, like what the objective is, right? Like a lender's gonna be much more conservative than somebody who's like just looking for growth. That's what we can be flexible with that.
Yeah, 'cause I was kind of thinking, I don't know if it makes sense to raise equity capital at this valuation because you're essentially trading at like.
No, you're-
two times earnings or something like that.
You're exactly right. You're exactly right. I mean, the stock price has been going up, so we'd need to see more of that before we do anything.
The higher education sector historically has been about 5x EBITDA. Our 12, trailing 12 months is a little over $7 million. The company should be valued in like $35 million range, not $10 million. Again, we're getting there.
Thank you for your time, gentlemen. All right. Thanks. We are out of time. Thank you.