Grand Canyon Education Q2 2024 10-Q Filed

TL;DR

GCPE filed 10-Q: financials updated, stock activity detailed. Looks stable.

AI Summary

Grand Canyon Education, Inc. filed its 10-Q for the period ending June 30, 2024. The company reported on its financial performance, including details on common stock, additional paid-in capital, and treasury stock transactions for the second quarter and year-to-date periods of 2024 and 2023. The filing also mentions operating lease information.

Why It Matters

This filing provides investors with an update on Grand Canyon Education's financial health and capital structure, crucial for understanding its ongoing operations and future prospects.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report and does not indicate any immediate or significant new risks.

Key Numbers

• 2024-06-30 — Reporting Period End Date (Indicates the end of the financial quarter being reported.)
• 2024-08-06 — Filing Date (The date the 10-Q was officially submitted to the SEC.)

Key Players & Entities

• Grand Canyon Education, Inc. (company) — Filer of the 10-Q
• 2024-06-30 (date) — End of reporting period
• 2024-08-06 (date) — Filing date

FAQ

Filing Documents

• lope-20240630x10q.htm (10-Q) — 1136KB
• lope-20240630xex31d1.htm (EX-31.1) — 11KB
• lope-20240630xex31d2.htm (EX-31.2) — 11KB
• lope-20240630xex32d1.htm (EX-32.1) — 8KB
• lope-20240630xex32d2.htm (EX-32.2) — 8KB
• 0001558370-24-011082.txt ( ) — 5020KB
• lope-20240630.xsd (EX-101.SCH) — 33KB
• lope-20240630_cal.xml (EX-101.CAL) — 55KB
• lope-20240630_def.xml (EX-101.DEF) — 140KB
• lope-20240630_lab.xml (EX-101.LAB) — 325KB
• lope-20240630_pre.xml (EX-101.PRE) — 260KB
• lope-20240630x10q_htm.xml (XML) — 670KB

– 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 20

Quantitative and Qualitative Disclosures About Market Risk

Item 3 Quantitative and Qualitative Disclosures About Market Risk 28

Controls and Procedures

Item 4 Controls and Procedures 28

– OTHER INFORMATION

PART II – OTHER INFORMATION 29

Legal Proceedings

Item 1 Legal Proceedings 29

Risk Factors

Item 1A Risk Factors 29

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 29

Defaults Upon Senior Securities

Item 3 Defaults Upon Senior Securities 30

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 30

Other Information

Item 5 Other Information 30

Exhibits

Item 6 Exhibits 30

SIGNATURES

SIGNATURES 32 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 Six Months Ended June 30, June 30, (In thousands, except per share data) 2024 2023 2024 2023 Service revenue $ 227,463 $ 210,577 $ 502,138 $ 460,702 Costs and expenses: Technology and academic services 41,001 38,957 80,126 76,469 Counseling services and support 78,107 72,392 160,991 145,741 Marketing and communication 52,895 50,806 108,248 103,700 General and administrative 10,636 10,875 21,366 20,663 Amortization of intangible assets 2,105 2,105 4,210 4,210 Total costs and expenses 184,744 175,135 374,941 350,783 Operating income 42,719 35,442 127,197 109,919 Interest expense ( 2 ) ( 7 ) ( 4 ) ( 26 ) Investment interest and other 4,112 2,590 7,841 4,743 Income before income taxes 46,829 38,025 135,034 114,636 Income tax expense 11,951 9,052 32,146 26,099 Net income $ 34,878 $ 28,973 $ 102,888 $ 88,537 Earnings per share: Basic income per share $ 1.19 $ 0.96 $ 3.50 $ 2.92 Diluted income per share $ 1.19 $ 0.96 $ 3.48 $ 2.91 Basic weighted average shares outstanding 29,285 30,183 29,372 30,321 Diluted weighted average shares outstanding 29,415 30,287 29,527 30,462 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Balance Sheets June 30, December 31, (In thousands, except par value) 2024 2023 (Unaudited) ASSETS: Current assets Cash and cash equivalents $ 241,317 $ 146,475 Investments 100,498 98,031 Accounts receivable, net 29,454 78,811 Income tax receivable 5,504 1,316 Other current assets 13,052 12,889 Total current assets 389,825 337,522 Property and equipment, net 173,827 169,699 Right-of-

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. In the healthcare field, we work in partnership with a number of top universities and healthcare networks, 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 June 30, 2024, GCE provides education services to 22 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 accordance with U.S. generally accepted accounting principles and pursuant to the rules

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