Grand Canyon Education, Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Grand Canyon Education, Inc. filed its Q1 2024 10-Q report detailing financial positions and equity transactions.</b>

AI Summary

Grand Canyon Education, Inc. (LOPE) filed a Quarterly Report (10-Q) with the SEC on May 7, 2024. Grand Canyon Education, Inc. filed a 10-Q report for the period ending March 31, 2024. The filing includes data related to common stock repurchase authorizations as of March 31, 2024. Information on Additional Paid-In Capital is provided for the periods January 1, 2024 - March 31, 2024, and January 1, 2023 - March 31, 2023. Data for Common Stock, Treasury Stock, Retained Earnings, and Accumulated Other Comprehensive Income are presented as of March 31, 2024, and prior periods. Details regarding equity incentive plans, including restricted stock, are included for the period ending March 31, 2024.

Why It Matters

For investors and stakeholders tracking Grand Canyon Education, Inc., this filing contains several important signals. This filing provides an update on the company's financial health and equity structure, which is crucial for investors to assess performance and potential future stock movements. The detailed breakdown of equity components and stock repurchase information can inform investment decisions and provide insights into management's capital allocation strategies.

Risk Assessment

Risk Level: low — Grand Canyon Education, Inc. shows low risk based on this filing. The filing is a standard quarterly report (10-Q) with no immediate red flags, indicating routine financial disclosure.

Analyst Insight

Review the detailed equity and financial position data in the 10-Q to understand the company's capital structure and recent performance trends.

Key Numbers

• 2024-03-31 — Period of Report (10-Q filing)
• 2024-05-07 — Filing Date (10-Q filing)
• 0001434588 — Central Index Key (Company identifier)
• 8200 — Standard Industrial Classification (Services-Educational Services)

Key Players & Entities

• Grand Canyon Education, Inc. (company) — Filer name
• 2024-03-31 (date) — Period of report
• 2024-05-07 (date) — Filing date
• 0001434588 (company) — Central Index Key
• 8200 (industry) — Standard Industrial Classification
• DE (jurisdiction) — State of incorporation
• 1231 (fiscal_year) — Fiscal year end
• LOPE (ticker) — Ticker symbol

FAQ

Industry Context

Grand Canyon Education operates within the educational services sector, focusing on providing higher education programs.

Regulatory Implications

The filing is made under the Securities Exchange Act of 1934, requiring regular disclosures from public companies like Grand Canyon Education.

What Investors Should Do

1. Analyze the balance sheet details for changes in equity accounts like Additional Paid-In Capital and Retained Earnings.
2. Examine disclosures related to stock repurchase authorizations and their impact on outstanding shares.
3. Review any notes or supplementary information regarding equity incentive plans and their associated costs.

Key Dates

• 2024-03-31: Period End Date — End of the reporting quarter for the 10-Q filing.
• 2024-05-07: Filing Date — Date the 10-Q report was officially submitted to the SEC.

Year-Over-Year Comparison

This is the first 10-Q filing for the fiscal year 2024, providing an update from the previous year's filings.

Filing Documents

• lope-20240331x10q.htm (10-Q) — 956KB
• lope-20240331xex31d1.htm (EX-31.1) — 11KB
• lope-20240331xex31d2.htm (EX-31.2) — 11KB
• lope-20240331xex32d1.htm (EX-32.1) — 8KB
• lope-20240331xex32d2.htm (EX-32.2) — 8KB
• 0001558370-24-007046.txt (&nbsp;) — 4600KB
• lope-20240331.xsd (EX-101.SCH) — 33KB
• lope-20240331_cal.xml (EX-101.CAL) — 55KB
• lope-20240331_def.xml (EX-101.DEF) — 133KB
• lope-20240331_lab.xml (EX-101.LAB) — 320KB
• lope-20240331_pre.xml (EX-101.PRE) — 253KB
• lope-20240331x10q_htm.xml (XML) — 598KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3

Financial Statements

Item 1 Financial Statements 3

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Quantitative and Qualitative Disclosures About Market Risk

Item 3 Quantitative and Qualitative Disclosures About Market Risk 25

Controls and Procedures

Item 4 Controls and Procedures 25

– OTHER INFORMATION

PART II – OTHER INFORMATION 25

Legal Proceedings

Item 1 Legal Proceedings 25

Risk Factors

Item 1A Risk Factors 26

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 26

Defaults Upon Senior Securities

Item 3 Defaults Upon Senior Securities 26

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 26

Other Information

Item 5 Other Information 26

Exhibits

Item 6 Exhibits 27

SIGNATURES

SIGNATURES 28 2 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements GRAND CANYON EDUCATION, INC. Consolidated Income Statements (Unaudited) Three Months Ended March 31, (In thousands, except per share data) 2024 2023 Service revenue $ 274,675 $ 250,125 Costs and expenses: Technology and academic services 39,125 37,512 Counseling services and support 82,884 73,349 Marketing and communication 55,353 52,894 General and administrative 10,730 9,788 Amortization of intangible assets 2,105 2,105 Total costs and expenses 190,197 175,648 Operating income 84,478 74,477 Interest expense ( 2 ) ( 19 ) Investment interest and other 3,729 2,153 Income before income taxes 88,205 76,611 Income tax expense 20,195 17,047 Net income $ 68,010 $ 59,564 Earnings per share: Basic income per share $ 2.31 $ 1.96 Diluted income per share $ 2.29 $ 1.94 Basic weighted average shares outstanding 29,459 30,461 Diluted weighted average shares outstanding 29,639 30,638 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Balance Sheets March 31, December 31, (In thousands, except par value) 2024 2023 (Unaudited) ASSETS: Current assets Cash and cash equivalents $ 196,208 $ 146,475 Investments 94,485 98,031 Accounts receivable, net 111,710 78,811 Insurance receivable 25,500 — Income tax receivable 38 1,316 Other current assets 16,512 12,889 Total current assets 444,453 337,522 Property and equipment, net 172,186 169,699 Right-of-use assets 90,135 92,454 Amortizable intangible assets, net 166,276 168,381 Goodwill 160,766 160,766 Other assets 1,755 1,641 Total assets $ 1,035,571 $ 930,463 LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities Accounts payable $ 29,827 $ 17,676 Accrued compensation and benefits 24,785 3

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) 1. Nature of Business Grand Canyon Education, Inc. (together with its subsidiaries, the "Company" or "GCE") is a publicly traded education services company dedicated to serving colleges and universities. GCE has developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale. GCE's most significant university partner is Grand Canyon University ("GCU"), an Arizona non-profit corporation, a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across ten colleges both online, on ground at its campus in Phoenix, Arizona and at six off-campus classroom and laboratory sites. We also provide education services to numerous university partners across the United States. GCE has continued to add additional university partners. In the healthcare field, we work in partnership with a growing number of top universities and healthcare networks across the country, offering healthcare-related academic programs at off-campus classroom and laboratory sites located near healthcare providers and developing high-quality, career-ready graduates who enter the workforce ready to meet the demands of the healthcare industry. In addition, we have provided certain services to a university partner to assist them in expanding their online graduate programs. As of March 31, 2024, GCE provides education services to 23 university partners across the United States. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements of the Company have been prepared in acc

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) Arrangements with GCU On July 1, 2018, the Company consummated an Asset Purchase Agreement (the "Asset Purchase Agreement") with GCU. In conjunction with the Asset Purchase Agreement, the Company and GCU entered into a long-term master services agreement pursuant to which the Company provides identified technology and academic services, counseling services and support, marketing and communication services, and several back-office services to GCU in return for 60 % of GCU's tuition and fee revenue. Except for identified liabilities assumed by GCU, GCE retained responsibility for all liabilities of the business arising from pre-closing operations. Internally Developed Software The Company capitalizes certain costs related to internal-use software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation or operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of design, coding, integration, and testing of the software developed. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which we expect to benefit from the use of that software. Once the software is placed in service, these costs are amortized straight-line over the estimated useful life of the software, which is generally three years . These assets are a component of our property and equipment, net in our consolidated balance sheets. Capitalized Content Development The Company capitalizes certain costs to fulfill a contract related to the development and digital creation of content on

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) Leases The Company determines if an arrangement is a lease at inception and evaluates the lease agreement to determine whether the lease is a finance or operating lease. Right-of-use ("ROU") assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement to determine the present value of lease payments over the lease term. At lease inception, the Company determines the lease term by assuming no exercises of renewal options, due to the Company's constantly changing geographical needs for its university partners. Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and are recognized as lease expense on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, and the non-lease components are accounted for separately and not included in our ROU assets and lease liabilities. Leases primarily consist of off-campus classroom and laboratory site locations and office space. Goodwill and Amortizable Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the tangible and intangible assets acquired and liabilities assumed. Goodwill is assessed at least annually for impairment during the fourth quarter, or more frequently if circumstances indicate potential impairment. Goodwill is allocated to our reporting unit at the education services segment, which is the same as the entity as a whole (entity level reporting unit). The Company has concluded there is one operating segment and one reporting unit for goodwill impairment consideration. The Financial Accounting Standards Board has issued guidance that permits an entity to first assess qualitative factors t

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) -Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. -Level 2 – inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in non-active markets; and model-derived valuations whose inputs are observable or whose significant valuation drivers are observable. -Level 3 – unobservable inputs that are not corroborated by market data. Investments are comprised of corporate bonds, commercial paper and agency bonds. Revenue Recognition The Company generates all of its revenue through services agreements with its university partners ("Services Agreements"), pursuant to which the Company provides integrated technology and academic services, marketing and communication services, and back-office services to its university partners in return for a percentage of tuition and fee revenue. The Company's Services Agreements have initial terms ranging from 7 - 15 years , subject to renewal options, although certain agreements may give the university partners the right to terminate early if certain conditions are met. The Company's Services Agreements have a single performance obligation, as the promises to provide the identified services are not distinct within the context of these agreements. The single performance obligation is delivered as our partners receive and consume benefits, which occurs ratably over a series of distinct service periods (daily or semester). Service revenue is recognized over time using the output method of measuring progress towards complete satisfaction of the single performance obligation. The output method provides a faithful depiction of the performance toward complete satisfaction of the performance obligation and can be tied to the time elapsed which is consumed evenly over the service period and is a direct measurement of the value provided to our pa

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) are reflected as a current liability on our consolidated balance sheets. We generally receive payments for our services billed within 30 days o