What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-02-18 compared with 2025-02-19 · 81 added, 93 removed, 585 unchanged (23% of the section changed)

2 unchanged sentences

As of December 31, 2025, we have no derivative financial instruments or derivative commodity instruments.

Although we do not currently have any investments, we have historically, and may in the future invest cash in excess of current operating requirements in short term certificates of deposit and money market instruments, municipal bond portfolios, or municipal mutual funds at multiple financial institutions.

We invest cash in excess of current operating requirements in money market instruments, municipal and corporate bond portfolios or commercial paper at multiple financial institutions.

Interest rate risk .

1 unchanged sentence

Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities before their maturity date that have declined in market value due to changes in interest rates.

At December 31, 2024, we do not currently have any investments, and therefore a 10% increase or decrease in interest rates would not have a material impact on our future earnings, fair values, or cash flows.

At December 31, 2025 a 10% increase or decrease in interest rates would not have a material impact on our future earnings, fair values, or cash flows.

Consolidated Financial Statements and Supplementary Data

84 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive gain

Retained earnings

12 unchanged sentences

General and administrative

Impairment and other

Litigation settlement

Lease termination, impairment and other

Amortization of intangible assets

1 unchanged sentence

Operating income

Interest expense

Investment interest and other

13 unchanged sentences

Realized gains on available-for-sale securities, net of taxes of $ 17 for the year ended December 31, 2024

Unrealized gains (losses) on available-for-sale securities, net of taxes of $ 151 and $ 168 for the years ended December 31, 2023 and 2022, respectively

Unrealized gains on available-for-sale securities, net of taxes of $ 160 and $ 151 for the years ended December 31, 2025 and 2023

Comprehensive income

12 unchanged sentences

Share-based compensation

Exercise of stock options

Balance at December 31, 2023

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Deferred income taxes

Other, including impairment and fixed asset disposals

Lease termination, impairment and other

Other, including fixed asset disposals

Changes in assets and liabilities:

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Income taxes receivable/payable

Deferred revenue

Net cash provided by operating activities

Cash flows provided by (used in) investing activities:

Cash flows (used in) provided by investing activities:

Capital expenditures

Additions of amortizable content

Purchase of equity investment

Loss on equity investment

Purchases of investments

Proceeds from sale or maturity of investments

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows used in financing activities:

1 unchanged sentence

Net cash used in financing activities

Net increase in cash and cash equivalents and restricted cash

Net (decrease) increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of period

12 unchanged sentences

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 that operates 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 eight off-site classroom and laboratory sites.

We also provide education services to numerous university partners across the United States.

1 unchanged sentence

In addition, we have provided certain services to a university partner to assist them in expanding their online graduate programs.

As of December 31, 2024, GCE provides education services to 22 university partners across the Unites States.

As of December 31, 2025, GCE provides education services to 20 university partners across the United States.

GCE was formed in Delaware in November 2003 as a limited liability company, under the name Significant Education, LLC, for the purchase of acquiring the assets of the University from a non-profit foundation on February 2, 2004.

15 unchanged sentences

As of December 31, 2024 the Company had no investments.

As of December 31, 2023 the Company considered investments in corporate bonds, agency bonds, treasury bills and commercial paper as available-for-sale securities based on the Company’s intent for the respective securities .

Available-for-sale securities are carried at fair value, determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of quoted market prices and inputs other than quoted prices that are observable for the assets.

As of December 31, 2025 the Company considered its investments in corporate bonds, agency bonds, treasury bills and commercial paper as available-for-sale securities based on the Company’s intent for the respective securities .

Available-for-sale securities are carried at fair value, determined using Level 1 of the hierarchy of valuation inputs, with the use of quoted market prices and inputs other than quoted prices that are observable for the assets.

Unrealized investment gains and losses, net of tax, are reported as a separate component of other comprehensive income.

66 unchanged sentences

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and benefits and accrued liabilities approximate their fair value based on the liquidity or the short-term maturities of these instruments.

The fair value of investments was determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets.

The fair value of investments was determined using Level 1 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets.

The unit of account used for valuation is the individual underlying security.

72 unchanged sentences

This category also includes an allocation of depreciation, amortization, lease expense, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations.

Impairment and other

Impairment and other primarily includes the write-off of an internal use software project that has been terminated that it had been attempting to develop for its other university partners and costs relating to exiting from certain off-campus classroom and laboratory sites.

Litigation settlement

A litigation settlement of $ 35,000 was recorded in the year ended December 31, 2025 related to the settlement of the qui tam lawsuit.

Lease termination, impairment and other

The Company incurred $ 2,411 in lease termination and impairment charges in the year ended December 31, 2025 related to leases.

The Company agreed to pay a termination fee of $ 1,308 for our Indiana office space to early terminate our lease effective in June 2027.

An additional $ 1,103 lease impairment was recorded for the two off-campus classroom and laboratory sites that were closed during the third quarter of 2025.

For the year ended December 31, 2024, impairment and other primarily includes the write-off of an internal use software project that has been terminated that it had been attempting to develop for its other university partners and costs relating to exiting from certain off-campus classroom and laboratory sites.

Insurance/Self-Insurance

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To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed.

Our dependence on our most significant university partner, with 88.9 % and 87.8 % of total service revenue for the years ended December 31, 2024 and 2023, respectively, subjects us to the risk that declines in our customer’s operations would result in a sustained reduction in service revenue for the Company.

Our dependence on our most significant university partner, with 89.5 % and 88.9 % of total service revenue for the years ended December 31, 2025 and 2024, respectively, subjects us to the risk that declines in our customers’ operations would result in a sustained reduction in service revenue for the Company.

Segment Information

5 unchanged sentences

The CODM uses consolidated net income to monitor budget versus actual results, which is used to evaluate headcount and compensation decisions.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure,” effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

This ASU adds disclosure requirements for segment expense information and clarifies that single reportable segment entities are subject to Topic 280 in its entirety.

The Company adopted this standard effective January 1, 2024 and the adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No.

1 unchanged sentence

Improvements to Income Tax Disclosures.” This ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company does not expect the adoption of this guidance to have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

ASU 2023-09 is effective for fiscal years beginning after December 31, 2024, with early adoption permitted.

The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements retrospectively.

Prior period disclosures have been adjusted to reflect the new disclosure requirements.

See Note 10 Income Taxes in the accompanying notes to the consolidated financial statements for further detail.

The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

4 unchanged sentences

The Company does not expect the adoption of this guidance to have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40)”.

ASU 2025-06 removes all references to project stages throughout ASC 350-40 and clarifies the applicable threshold to begin capitalizing costs.

ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods.

Early adoption is permitted as of the beginning of an annual reporting period.

Adoption of this ASU should be applied using a prospective transition approach, a modified transition approach based on project status or a retrospective transition approach.

The Company is currently evaluating the impact of this new standard on our financial statements and disclosures.

The Company has determined that no other recent accounting pronouncements apply to its operations or could otherwise have a material impact on its consolidated financial statements.

1 unchanged sentence

The Company sold all its investments in the third quarter of 2024 and the proceeds were invested in cash and cash equivalents.

For the year ended December 31, 2024, the net realized gains were $ 57 and for the years ended December 31, 2023 and 2022, unrealized gains and losses were $ 476 and $ 533 , respectively, net of taxes.

As of December 31, 2025

Corporate bonds

Commercial paper

Total investments

For the year ended December 31, 2024, the net realized gains were $ 57 and for the years ended December 31, 2025, 2024 and 2023, unrealized gains were $ 511 , $ 0 and $ 476 , respectively, net of taxes.

Available-for-sale securities are carried at fair value on the consolidated balance sheets.

1 unchanged sentence

If our assessment indicates that an expected credit loss exists, we determine the portion of the unrealized loss attributable to credit deterioration and record a reserve for the expected credit loss in the allowance for credit losses in technology and academic services in our consolidated income statements.

Based on the nature of securities there is no allowance recorded for available-for-sale debt securities.

Available-for-sale securities maturing as of December 31:

Property and Equipment

20 unchanged sentences

The Company has operating leases for off-campus classroom and laboratory site locations, office space, office equipment, and optical fiber communication lines.

These leases have terms that range from one month to ten years and four months.

These leases have terms that range from one month to 10 years and nine months.

At lease inception, we determine the lease term by assuming no exercises of renewal options, due to the Company’s constantly changing geographical needs for its university partners.

1 unchanged sentence

The Company has operating lease costs of $ 17,793 , $ 16,694 and $ 13,496 for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2024, the Company had $ 17,029 of non-cancelable operating lease commitments for four off-campus classroom and laboratory sites that had not yet commenced.

As of December 31, 2025, the Company had $ 15,542 of non-cancelable operating lease commitments for three off-campus classroom and laboratory sites that had not yet commenced.

The Company’s weighted-average remaining lease term relating to its operating leases is 7.24 years, with a weighted-average discount rate of 4.44 % .

The cash paid

for operating lease liabilities was $ 14,895 , $ 11,391 and $ 9,537 for the years ended December 31, 2024, 2023 and 2022, respectively.

The cash paid for operating lease liabilities was $ 17,111 , $ 14,895 and $ 11,391 for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2025, the Company had no financing leases.

8 unchanged sentences

When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure.

If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company records a liability for the loss.

If it is probable that a loss will result and the amount of

the loss can be reasonably estimated, the Company records a liability for the loss.

If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material.

3 unchanged sentences

Pending Litigation Matters

False Claims Act Matter .

In May 2020, the Company was served with a qui tam lawsuit that had been filed against us in 2019 in the U.S.

District Court for the District of Massachusetts by a former employee on behalf of the federal government.

All proceedings in the lawsuit had been under seal until February 2020, when the U.S.

government decided to not intervene in the lawsuit, and the complaint was then unsealed by the court.

The suit, United States ex rel Mackillop v.

Grand Canyon Education, Inc.

, alleges that we violated the False Claims Act by improperly compensating certain of our enrollment counselors in violation of the Title IV law governing compensation of such employees (the “incentive compensation rule”), and as a result, improperly received Title IV program funds.

In response to a second amended complaint filed in September 2020, we filed a motion to dismiss and a motion to transfer the matter to the U.S.

District Court for the District of Arizona.

In December 2020, the court granted our motion to dismiss as to one of three counts and granted the motion to transfer but only upon conclusion of pretrial proceedings.

In September 2021, we filed a motion for summary judgment which the Massachusetts court denied in September 2022.

Subsequently, the matter was transferred to the Arizona court and trial was scheduled for late April 2024.

In the interim, we filed a motion for reconsideration of the summary judgment ruling in September 2023;

that motion remains pending.

Prior to trial commencing, we and the relator reached an agreement to stay trial while the parties attempt to finalize the terms upon which the litigation could be concluded.

Having been unsuccessful in reaching terms with the relevant parties, which would have avoided litigation, the Court has rescheduled the trial for October 2025.

For any future settlement to be affected, all parties to the litigation will need to agree on acceptable terms, both monetary and non-monetary.

In this regard, because this matter involves claims under the False Claims Act, any such terms would also need to be approved by the applicable U.S.

government agencies.

We believe that the compensation practices at issue in the complaint, which were developed with the guidance of outside regulatory counsel specifically to comply with Title IV and its regulations and relevant case law interpreting the

incentive compensation rule, do not violate applicable law.

The Company intends to defend itself vigorously in this legal proceeding.

The outcome of this legal proceeding is uncertain at this point.

At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company.

Accordingly, the Company has not accrued any liability associated with this action.

Matters Related to GCU Graduate Program Disclosures and Related Matters.

The Company is a party to several matters alleging that, in the performance of its marketing services provided on behalf of GCU, it made false or misleading representations regarding the time to complete and the costs associated with and/or accreditation issues related to certain Grand Canyon University graduate programs, and (in the case of the FTC matter noted below) also made false or misleading representations regarding Grand Canyon University’s non-profit status and made telemarketing calls to phone numbers on do not call lists.

These matters include:

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On September 20, 2024, the plaintiffs amended their complaint, and on November 4, 2024, the Company moved to dismiss the case.

The motion to dismiss is pending with the court.

There is currently no trial date scheduled in this matter.

● Federal Trade Commission v.

Grand Canyon Education, Inc., et al .

This suit was filed in late December 2023 in United States District Court for the District of Arizona and asserts claims under the FTC Act and Telemarketing Sales Rule.

In February 2024, GCE filed a partial motion to dismiss, which was denied in August 2024.

Discovery in this matter has commenced and is ongoing, with fact and expert discovery scheduled to conclude in May 2025 and October 2025 respectively.

There is currently no trial date scheduled in this matter.

The court granted in part and denied in part the motion to dismiss.

Specifically, the court dismissed one of the plaintiff’s RICO counts but allowed the other RICO count and the consumer protection claims to proceed to discovery.

Discovery is ongoing, and there is currently no trial date scheduled in this matter.

Grand Canyon Education, Inc., et al .

3 unchanged sentences

The defendants include the Company along with our chief executive officer, chief operating officer and chief financial officer.

On May 27, 2022, after significant motions practice, the Company filed an amended motion to dismiss and a motion to strike certain allegations in Plaintiff’s amended complaint.

On August 8, 2023, the court presiding over the dispute entered two orders:

(1) an order granting in part the Company’s motion to dismiss as to Ogdon’s RICO claim from the case and to dismiss the individual Defendants;

and (2) an order granting in part the Company’s motion to strike scandalous and impertinent allegations in Ogdon’s complaint about our business.

Shortly thereafter on August 22, 2023, Plaintiff moved the court to reconsider its dismissal of the RICO claim.

Though discovery had commenced, and the Company substantially completed its discovery obligations on the state-law claims, discovery was stayed on March 18, 2024, pending mediation and the disposition of Ogdon’s motion for reconsideration.

On March 29, 2024, the court issued an order reinstating Plaintiff’s RICO claim.

On September 26, 2024, the court lifted the stay on discovery, and discovery resumed, with class certification briefing to conclude in September 2025.

There is currently no trial date scheduled in this matter.

In July 2025, the plaintiff filed a Second Amended Complaint and added an additional plaintiff.

The Company filed a motion to dismiss the Second Amended Complaint on August 19, 2025.

The court has not yet ruled on the motion.

Discovery is ongoing, and there is currently no trial date scheduled in this matter.

● Valerio, et al.

2 unchanged sentences

The plaintiffs assert various claims, including claims for violations of state law consumer protection statutes.

The Company’s response to the complaint is due on April 10, 2025.

The Company filed a motion to dismiss the complaint on May 12, 2025.

On September 17, 2025, the court denied the motion to dismiss.

The court held a status conference on October 9, 2025, to address issues of case management.

The court ordered plaintiffs to file individual complaints for each plaintiff.

The plaintiffs filed their individual complaints on December 11, 2025, and Defendants filed answers to each complaint on January 30, 2026.

The court has not yet issued a case management conference.

There is currently no trial date scheduled in this matter.

We believe that the Company’s representations made in marketing materials or by our employees regarding Grand Canyon University’s non-profit status and doctoral program requirements were at all times accurate and not false or misleading, and thus did not violate applicable law.

In addition, to the extent the representations we made or actions we took that are at issue in these proceedings were done or taken after July 1, 2018 at the direction of GCU and/or based on written instructions, or advertising or web materials, provided to us for use by GCU, GCU has agreed to indemnify us in part under the terms of the Master Services Agreement for our losses and expenses arising from these matters.

regard to the FTC’s claims under the Telemarketing Sales Rule, we only make telemarketing calls to individuals who have demonstrated interest in speaking to us about educational opportunities at Grand Canyon University, which are permitted by the rule.

We believe that the Company’s representations made in marketing materials or by our employees regarding GCU’s doctoral program requirements were at all times accurate and not false or misleading and thus did not violate applicable law.

The Company intends to defend itself vigorously in each of these legal proceedings.

23 unchanged sentences

Treasury Stock

On January 29, 2025 the Board of Directors approved a $ 200,000 increase under its existing stock repurchase program reflecting an aggregate authorization for share repurchases since the initiation of the program of $ 2,245,000 .

On December 10, 2025 the Board of Directors approved a $ 300,000 increase under its existing stock repurchase program reflecting an aggregate authorization for share repurchases since the initiation of the program of $ 2,545,000 .

The expiration date on the repurchase authorization is March 1, 2027 .

3 unchanged sentences

During the year ended December 31, 2025, the Company repurchased 1,479 shares of common stock at an aggregate cost of $ 255,294 .

As of December 31, 2024, there remained $ 99,648 available under its current share

repurchase authorization (which authorization was increased to $ 299,648 in January 2025).

As of December 31, 2025, there remained $ 344,354 available under its current share repurchase authorization.

Shares repurchased in lieu of taxes are not included in the repurchase plan totals as they were approved in conjunction with the restricted share awards.

12 unchanged sentences

Year Ended December 31,

Statutory U.S.

federal income tax rate

State income taxes, net of federal tax benefit

State tax credits, net of federal effect

Excess tax benefits

Nondeductible expenses

Effective income tax rate

Federal Statutory Tax Rate

State & Local Income Taxes, net of federal income tax effect (1)

Enactment of New Tax Laws

Nontaxable or Nondeductible Items

Changes in Unrecognized Tax Benefits

Other Adjustments

Effective Tax Rate

(1) The states and local jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category include Arizona, Massachusetts, Oregon, New York and New Jersey .

Significant components of the Company’s deferred income tax assets and liabilities, included in Deferred income taxes, non-current on the consolidated balance sheets are as follows:

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At both years ended December 31, 2025 and 2024 the Company had accrued $ 0 , in interest and $ 0 , in penalties.

It is reasonably possible that the amount of the unrecognized tax benefit will change during the next 12 months, however management does not expect the potential change to have a material effect on the results of operations or financial position.

The Company’s uncertain tax positions were related to tax years that remained subject to examination by tax authorities.

As of December 31, 2025, the earliest tax year still subject to examination for federal and state purposes is 2022 and 2020, respectively.

The amount of cash income taxes paid by the Company were as follows:

Year Ended December 31,

State and local

Income taxes, net of amounts refunded

Share-Based Compensation Plans

55 unchanged sentences

The Company is not the primary beneficiary of GCECF, and accordingly, the Company does not consolidate GCECF’s activities with its financial results.

The Company made a voluntary charitable contribution of $ 500 for the year ended December 31, 2025, of which no amounts were owed as of December 31, 2025.

No donations were made during the year ended December 31, 2024.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk