What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-04 · 80 added, 51 removed, 444 unchanged (23% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except per share data)

47 unchanged sentences

Preferred stock, $ 0.01 par value, 10,000 shares authorized;

0 shares issued and outstanding at March 31, 2022 and December 31, 2021

0 shares issued and outstanding at June 30, 2022 and December 31, 2021

Common stock, $ 0.01 par value, 100,000 shares authorized;

53,826 and 53,637 shares issued and 33,278 and 37,722 shares outstanding at March 31, 2022 and December 31, 2021, respectively

Treasury stock, at cost, 20,548 and 15,915 shares of common stock at March 31, 2022 and December 31, 2021, respectively

53,830 and 53,637 shares issued and 31,963 and 37,722 shares outstanding at June 30, 2022 and December 31, 2021, respectively

Treasury stock, at cost, 21,867 and 15,915 shares of common stock at June 30, 2022 and December 31, 2021, respectively

( 1,635,223 )

9 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Other comprehensive income, net of tax:

Unrealized losses on available-for-sale securities, net of taxes of $ 99 and $ 35 for the three months ended March 31, 2022 and 2021, respectively

Unrealized losses on available-for-sale securities, net of taxes of $ 24 and $ 22 for the three months ended June 30, 2022 and 2021, respectively, and $ 123 and $ 57 for the six months ended June 30, 2022 and 2021, respectively

Comprehensive income

3 unchanged sentences

(In thousands)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Treasury Stock

8 unchanged sentences

( 1,506,766 )

Three Months Ended March 31, 2021

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at June 30, 2022

( 1,635,223 )

Six Months Ended June 30, 2021

Treasury Stock

7 unchanged sentences

Balance at March 31, 2021

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at June 30, 2021

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

(In thousands)

17 unchanged sentences

Additions of amortizable content

Funding to GCU

Purchases of investments

3 unchanged sentences

Principal payments on notes payable

Net borrowings from revolving line of credit

Repurchase of common shares and shares withheld in lieu of income taxes

18 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, a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across nine colleges both online, on ground at its campus in Phoenix, Arizona and at two off-campus classroom and laboratory sites.

In January 2019, GCE began providing education services to numerous university partners across the United States, through our wholly owned subsidiary, Orbis Education, which we acquired, by merger on January 22, 2019 (the “Acquisition”).

1 unchanged sentence

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 provided certain services to a university partner to assist them in expanding their online graduate programs.

As of March 31, 2022, GCE provides education services to 27 university partners across the United States.

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

As of June 30, 2022, GCE provides education services to 27 university partners across the United States.

Summary of Significant Accounting Policies

10 unchanged sentences

These consolidated financial statements should be read in conjunction with the Company’s audited financial statements and footnotes included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 from which the December 31, 2021 balance sheet information was derived.

As of March 31, 2022 and 2021, the Company considered its investments in corporate bonds, commercial paper, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations as available-for-sale securities based on the Company’s intent for the respective securities.

As of June 30, 2022 and 2021, the Company considered its investments in corporate bonds, commercial paper, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations 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 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets, with unrealized gains and losses, net of tax, reported as a separate component of other comprehensive income.

Unrealized losses considered to be other-than-temporary are recognized

Unrealized losses considered to be other-than-temporary are recognized currently in earnings.

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

currently in earnings.

Amortization of premiums, accretion of discounts, interest and dividend income and realized gains and losses are included in interest and other income.

1 unchanged sentence

Arrangements with GCU

On July 1, 2018, the Company consummated as Asset Purchase Agreement (the “Asset Purchase Agreement”) with GCU.

In conjunction with the Asset Purchase Agreement, we received a secured note from GCU as consideration for the transferred assets in the initial principal amount of $ 870,097 (the “Secured Note”).

On July 1, 2018, the Company consummated an Asset Purchase Agreement (the “Asset Purchase Agreement”) with GCU.

In connection therewith, the Company and GCU entered into a long-term master services agreement (the “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.

17 unchanged sentences

The Company has concluded that the most appropriate method to amortize the deferred content assets is on a straight-line basis over the estimated life of the course, which is generally four years which corresponds with course’s review and major revision cycle.

As of March 31, 2022 and December 31, 2021, $ 969 and $ 1,168 , respectively, net of amortization, of deferred content assets are included in other assets, long-term in the Company’s consolidated balance sheets and amortization is included in technical and academic services where the costs originated.

As of June 30, 2022 and December 31, 2021, $ 1,020 and $ 1,168 , respectively, net of amortization, of deferred content assets are included in other assets, long-term in the Company’s consolidated balance sheets and amortization is included in technical and academic services where the costs originated.

Grand Canyon Education, Inc.

33 unchanged sentences

The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable.

There were no indicators that the carrying amount of the finite-lived intangible assets were impaired as of March 31, 2022.

There were no indicators that the carrying amount of the finite-lived intangible assets were impaired as of June 30, 2022.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets.

44 unchanged sentences

The Company utilizes the allowance method to provide for doubtful accounts based on its evaluation of the expected credit losses.

There have been no amounts written off and no reserves established as of March 31, 2022.

There have been no amounts written off and no reserves established as of June 30, 2022.

The Company will continue to review and revise its allowance methodology based on its collection experience with its partners.

1 unchanged sentence

Billings for some university partners do not occur until after the service period has commenced and final enrollment information is available.

Our unbilled revenue of $ 141 and $ 3,841 as of March 31, 2022 and December 31, 2021, respectively, are included in accounts receivable in our consolidated balance sheets.

Our unbilled revenue of $ 7,912 and $ 3,841 as of June 30, 2022 and December 31, 2021, respectively, are included in accounts receivable in our consolidated balance sheets.

Deferred revenue represents the excess of amounts received as compared to amounts recognized in revenue on our consolidated statements of income as of the end of the reporting period, and such amounts are reflected as a current liability on our consolidated balance sheets.

49 unchanged sentences

The Company believes the credit risk related to cash equivalents and investments is limited due to its adherence to an investment policy that requires investments to have a minimum BBB rating, depending on the type of security, by one major rating agency at the time of purchase.

All of the Company’s cash equivalents and investments as of March 31, 2022 and December 31, 2021 consist of investments rated BBB or higher by at least one rating agency.

All of the Company’s cash equivalents and investments as of June 30, 2022 and December 31, 2021 consist of investments rated BBB or higher by at least one rating agency.

Additionally, the Company utilizes at least one financial institution to conduct initial and ongoing credit analysis on its investment portfolio to monitor and lower the potential impact of market risk associated with its cash equivalents and investment portfolio.

1 unchanged sentence

Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.

At March 31 2022 and December 31, 2021, the Company had $ 200,926 and $ 600,130 in excess of the FDIC insured limit.

At June 30, 2022 and December 31, 2021, the Company had $ 138,519 and $ 600,130 , respectively, in excess of the FDIC insured limit.

The Company is also subject to credit risk for its accounts receivable balance.

Our dependence on our most significant university partner, with 87.6 % and 87.4 % of total service revenue for the three month periods ended March 31, 2022 and 2021, 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 85.1 % and 85.7 % of total service revenue for the six-month periods ended June 30, 2022 and 2021, 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.

Use of Estimates

10 unchanged sentences

(In thousands, except per share data)

As of March 31, 2022, the Company had investments of $ 62,396 , classified as available-for-sale securities.

As of June 30, 2022, the Company had investments of $ 63,867 , classified as available-for-sale securities.

As of December 31, 2021, the Company had no investments.

As of March 31, 2022, the Company had available-for-sale investments comprised of the following:

As of March 31, 2022

As of June 30, 2022, the Company had available-for-sale investments comprised of the following:

As of June 30, 2022

Corporate bonds

1 unchanged sentence

Total investments

For the three months ended March 31, 2022, the net unrealized losses were $ 323 , net of taxes.

For the six months ended June 30, 2022, the net unrealized losses were $ 398 , net of taxes.

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

9 unchanged sentences

Three Months Ended

Six Months Ended

Basic weighted average shares outstanding

2 unchanged sentences

Diluted weighted average shares outstanding excludes the incremental effect of unvested restricted stock in accordance with the treasury stock method.

For the three-month periods ended March 31, 2022 and 2021, approximately 206 and 1 , respectively, of the Company’s restricted stock awards outstanding were excluded from the calculation of

For the three-month periods ended June 30, 2022 and 2021, approximately nil and 1 , respectively, and for the six-month periods ended June 30, 2022 and 2021, approximately 103 and 2 ,

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

diluted earnings per share as their inclusion would have been anti-dilutive.

respectively, of the Company’s restricted stock awards outstanding were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive.

These restricted stock awards could be dilutive in the future.

2 unchanged sentences

Allowance for credit losses

Three months ended March 31, 2022

Three months ended March 31, 2021

Six months ended June 30, 2022

Six months ended June 30, 2021

(1) Amount represents the cumulative effect of the adoption of ASU No.

13 unchanged sentences

Amortizable intangible assets consist of the following as of:

March 31, 2022

June 30, 2022

Average Useful

8 unchanged sentences

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

These leases have terms that range from one month to 10.3 years.

These leases have remaining lease terms that range from two months to 10 years and three 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.

Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and we recognize lease expense for these leases on a straight-line basis over the lease term.

The Company had operating lease costs of $ 2,396 and $ 2,435 for the three-month periods ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the Company had $ 14,871 of non-cancelable operating lease commitments for three off-campus classroom and laboratory sites and an office equipment lease that had not yet commenced.

The Company had operating lease costs of $ 4,807 and $ 4,862 for the six-month periods ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, the Company had $ 28,619 of non-cancelable operating lease commitments for five off-campus classroom and laboratory sites and an office equipment lease that had not yet commenced.

The Company’s weighted-average remaining lease term relating to its operating leases is 7.52 years, with a weighted-average discount rate of 3.04 % .

As of March 31, 2022, the Company had no financing leases.

Future payment obligations with respect to the Company’s operating leases, which were existing at March 31, 2022, by year and in the aggregate, are as follows:

As of June 30, 2022, the Company had no financing leases.

Future payment obligations with respect to the Company’s operating leases, which were existing at June 30, 2022, by year and in the aggregate, are as follows:

Year Ending December 31,

17 unchanged sentences

Management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

COVID-19 Considerations

In March 2020, the World Health Organization declared COVID-19 a global pandemic.

The contagious outbreak and the related adverse public health developments, including orders to shelter-in-place, travel restrictions and mandated non-essential business closures, have adversely affected our business in a number of ways.

The pandemic continues to result in reductions in education service revenue, operating income and margins in the Spring of 2022.

At this time there remains considerable uncertainty around the duration of the COVID-19 pandemic.

However, the related financial impact and duration of the COVID-19 pandemic cannot be reasonably estimated at this time.

Share-Based Compensation

1 unchanged sentence

The Company makes equity incentive grants pursuant to our 2017 Equity Incentive Plan (the “2017 Plan”) under which a maximum of 3,000 shares may be granted.

As of March 31, 2022, 1,225 shares were available for grants under the 2017 Plan.

As of June 30, 2022, 1,221 shares were available for grants under the 2017 Plan.

Restricted Stock

During the three months ended March 31, 2022, the Company granted 189 shares of common stock with a service vesting condition to certain of its executives, officers and employees.

During the six months ended June 30, 2022, the Company granted 189 shares of common stock with a service vesting condition to certain of its executives, officers and employees.

The restricted shares have voting rights and vest in five annual installments of 20 %, with the first installment vesting in March of the calendar year following the date of grant (the “first vesting date”) and subsequent installments vesting on each of the four anniversaries of the first vesting date.

Upon vesting, shares will be withheld in lieu of taxes equivalent to the minimum statutory tax withholding required to be paid when the restricted stock vests.

During the three months ended March 31, 2022, the Company withheld 52 shares of common stock in lieu of taxes at a cost of $ 4,625 on the restricted stock vesting dates.

During the six months ended June 30, 2022, the Company withheld 52 shares of common stock in lieu of taxes at a cost of $ 4,625 on the restricted stock vesting dates.

In June 2022, following the annual stockholders meeting, the Company granted 4 shares of common stock to the non-employee members of the Company’s Board of Directors.

The restricted shares granted to these directors have voting rights and vest on the earlier of (a) the one year anniversary of the date of grant or (b) immediately prior to the following year’s annual stockholders meeting.

A summary of the activity related to restricted stock granted under the Company’s Incentive Plan since December 31, 2021 is as follows:

2 unchanged sentences

Outstanding as of December 31, 2021

Forfeited, canceled or expired

Outstanding as of June 30, 2022

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

Forfeited, canceled or expired

Outstanding as of March 31, 2022

Stock Options

During the three months ended March 31, 2022, no options were granted.

During the six months ended June 30, 2022, no options were granted.

As of December 31, 2021, all options have been exercised or expired.

Share-based Compensation Expense

The table below outlines share-based compensation expense for the three months ended March 31, 2022 and 2021 related to restricted stock granted:

The table below outlines share-based compensation expense for the six months ended June 30, 2022 and 2021 related to restricted stock granted:

Technology and academic services

19 unchanged sentences

The ASR agreement resulted in total of 322 shares repurchased at an average cost of $ 108.76 .

On May 14, 2021, the Company entered into an ASR agreement with Morgan Stanley to repurchase up to $ 50,000 of its outstanding shares of common stock as part of the Company’s share repurchase program.

Under the ASR agreement, the Company received initial delivery on May 17, 2021 of approximately 418 shares of common stock, representing approximately 80 % of the number of shares of common stock initially underlying the ASR agreement based on the closing price of the common stock of $ 95.63 , on May 14, 2021.

At inception of the ASR agreement, the Company recognized the initial delivery of shares as treasury stock of $ 40,000 , and recognized the remaining amount

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

During the three months ended March 31, 2022 the Company repurchased 4,575 shares of common stock, at an aggregate cost of $ 394,930 .

As of March 31, 2022, there remained $ 200,503 available under its current share repurchase authorization.

underlying the ASR agreement as a reduction to additional paid in capital of $ 10,000 .

The total number of shares that the Company repurchased under the ASR program was based on the volume-weighted average price of the common stock during the term of the ASR agreement, less a discount, and subject to potential adjustments pursuant to the terms and conditions of the ASR agreement.

The final settlement of the shares repurchases under the ASR agreement was completed on August 13, 2021 with additional delivery of 139 shares of common stock.

At settlement of the ASR agreement, the Company recognized an increase to additional paid in capital and a decrease in treasury stock of $ 10,000 related to the remaining delivery of shares.

The ASR agreement resulted in a total of 558 shares repurchased at an average cost of $ 89.68 .

During the six months ended June 30, 2022 the Company repurchased 5,894 shares of common stock, at an aggregate cost of $ 523,387 .

As of June 30, 2022, there remained $ 72,046 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.

Related Party Transactions

Related party transactions include transaction between the Company and certain of its affiliates.

The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

As of and for the six months ended June 30, 2022 and 2021, related party transactions consisted of the following:

GCE Community Fund (“GCECF”) – GCECF was initially formed in 2014.

GCECF makes grants for charitable, educational, literary, religious or scientific purposes within the meaning of Section 501(c )(3) of the Internal Revenue Code, including for such purposes as the making of distributions to organizations that qualify as exempt organization under Section 501(c )(3) of the Code.

The Company’s CEO and Chairman serves as the president of GCECF.

All of the board seats are taken by Company executives.

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

The Company contributed $ 200 for the six months ended June 30, 2022, of which no amounts were owed as of June 30, 2022.

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-Q

Item 1. Financial Statements