−Removed: The following additional risk factors should be read in conjunction with the risk factors previously disclosed in Part 1, Item 1A, “Risk Factors,” of the 2019 Form 10-K and the information contained in this Quarterly Report on Form 10-Q and our other reports and registration statements filed with the SEC.
−Removed: The developments described in these
−Removed: additional risk factors have heightened, or in some cases manifested, certain of the risks disclosed in the “Risk Factors” section of the 2019 Form 10-K, and such risk factors are further qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q, including in the additional risk factor below.
+Added: The following additional risk factors should be read in conjunction with the risk factors previously disclosed in Part 1, Item 1A, “Risk Factors,” of the 2019 Form 10-K, Item 1A.
+Added: “Risk Factors” of our quarterly report on Form 10-Q for the period ended March 31, 2020, and the information contained in this Quarterly Report on Form 10-Q and our other reports and registration statements filed with the SEC.
+Added: The developments described in these additional risk factors have heightened, or in some cases manifested, certain of the risks disclosed in the “Risk Factors” section of the 2019 Form 10-K, and such risk factors are further qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q, including in the additional risk factor below.
Except as described herein, there have been no material changes with respect to the risk factors disclosed in the 2019 Form 10-K.
−Removed: Occurrence of natural or man-made catastrophes could materially and adversely affect our business, financial condition, results of operations and prospects.
−Removed: Natural events, health epidemics (including the outbreak of the COVID-19 pandemic), acts of God, terrorist attacks and other acts of violence, computer cyber-terrorism or other catastrophes could result in significant worker absenteeism, increased student attrition rates for our university partners, lower asset utilization rates, voluntary or mandatory closure of facilities, our inability to meet dynamic employee health and safety requirements, our inability to meet contractual service levels, our inability to procure essential supplies, travel restrictions on our employees and other disruptions to our business.
−Removed: In addition, these events could adversely affect the economy, financial markets and activity levels of our university partners.
−Removed: Any of these events, their consequences or the costs related to mitigation or remediation could have a material adverse effect on our business, financial condition, results of operations and prospects.
COVID-19 Risk Factor
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This contagious outbreak, which has continued to spread, and the related adverse public health developments, including orders to shelter-in-place, travel restrictions and mandated non-essential business closures, have adversely affected workforces, organizations, customers, economies and financial markets globally, leading to an economic downturn and increased market volatility.
−Removed: It has also disrupted the normal operations of many businesses, including ours, and our most significant university partner.
+Added: It has also disrupted the normal operations of many businesses, including ours, and those of our university partners.
The Company has a long-term master services agreement pursuant to which the Company provides education services to its most significant university partner, GCU, in return for 60% of GCU’s tuition and fee revenues, which includes fee revenues from room, board, and other ancillary businesses including a student-run golf course and hotel.
−Removed: GCU has three types of students, traditional ground university students attending class on its campus in Phoenix, Arizona and of which approximately 70% live on campus in university owned residence halls, professional studies students which are working adult students that attend class one night a week on the Phoenix campus, and online students that attend class fully online.
−Removed: This outbreak, as well as measures taken to contain the spread of COVID-19, has impacted GCU’s students and its business in a number of ways, including the closure of dormitories, GCU’s hotel and golf course, and various ancillary businesses.
−Removed: These actions have served to reduce GCU’s non-tuition revenue and, consequently, the service revenues we earn under the master services agreement.
−Removed: If GCU is not able to fully open its campus to its traditional residential ground university students for the Fall semester commencing in late August 2020, then our service revenues would be further materially impacted.
+Added: GCU has three types of students, traditional ground university students attending class on its campus in Phoenix, Arizona and of which approximately 70% live on campus in university owned residence halls, professional studies students who are working adult students that attend class one night a week on the Phoenix campus, and online students that attend class fully online.
+Added: This outbreak, as well as measures taken to contain the spread of COVID-19, has impacted GCU’s students and its business in a number of ways, including the closure of dormitories and GCU’s hotel and various ancillary businesses near the end of the Spring 2020 semester.
+Added: It has limited the number of residential students, doctoral residencies and the various ancillary businesses in the summer months and it has caused the university to move back the start of its Fall 2020 ground traditional student semester including when residential students can move on to campus.
+Added: These actions have served to reduce GCU’s non-tuition revenue and, consequently, the service revenue we earn under the master services agreement.
+Added: If GCU is not able to fully open its campus to its traditional residential ground university students for the Fall semester or if a greater than expected number of these students choose to take the Fall semester online rather than live on campus, then our service revenue would be further materially impacted.
The COVID-19 outbreak could cause disruptions to our other university partners as well, including, but not limited to:
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harming our business, results of operations and financial condition.
−Removed: The outbreak also presents challenges as approximately 90% of our entire workforce is currently working remotely and this could cause increased risks in the areas of internal control, cyber security and the use of remote technology, which could result in interruptions or disruptions in normal operational processes.
+Added: The outbreak also presents challenges as approximately 90% of our entire workforce is currently, and is expected to continue for the foreseeable future, working remotely and this could cause increased risks in the areas of internal control, cyber security and the use of remote technology, which could result in interruptions or disruptions in normal operational processes.
We have eliminated all non-essential travel as a result of the pandemic and as a result are seeing a decrease in travel costs.
−Removed: The COVID-19 pandemic may also have the effect of heightening many of the other risks identified in the “Risk Factors” section of the 2019 Form 10-K, such as those related to disruption or failures of our learning platform.
−Removed: It is not possible for us to completely predict the duration or magnitude of the adverse results of the outbreak and its effects on our business, results of operations or financial condition at this time, but such effects may be material.
+Added: The COVID-19 pandemic presents material uncertainty and risk with respect to our financial condition, results of operations, cash flows and performance and it is not possible for us to completely predict the duration or magnitude of the adverse results of the outbreak and its effects on us.
+Added: The COVID-19 pandemic may also have the effect of heightening many of the risks factors identified in the “Risk Factors” section of the 2019 Form 10-K, such as those related to disruption or failures of our learning platform.
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.