Grand Canyon Education, Inc. 10-Q

Item 1. Financial Statements GRAND CANYON EDUCATION, INC. Consolidated Income Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, (In thousands, except per share data) 2022 2021 2022 2021 Service revenue ​ $ 208,720 ​ $ 206,767 ​ $ 652,606 ​ $ 645,188 Costs and expenses: ​ ​ ​ ​ Technology and academic services ​ 37,641 ​ 35,536 ​ 112,136 ​ 101,263 Counseling services and support ​ 67,235 ​ 62,209 ​ 200,773 ​ 184,380 Marketing and communication ​ 50,651 ​ 47,150 ​ 151,237 ​ 140,326 General and administrative ​ 15,576 ​ 14,451 ​ 35,323 ​ 33,114 Amortization of intangible assets ​ 2,105 ​ 2,105 ​ 6,315 ​ 6,315 Total costs and expenses ​ 173,208 ​ 161,451 ​ 505,784 ​ 465,398 Operating income ​ 35,512 ​ 45,316 ​ 146,822 ​ 179,790 Interest income on Secured Note ​ — ​ 15,031 ​ — ​ 44,353 Interest expense ​ — ​ ( 741 ) ​ ( 5 ) ​ ( 2,303 ) Investment interest and other ​ 745 ​ 218 ​ 1,294 ​ 577 Income before income taxes ​ 36,257 ​ 59,824 ​ 148,111 ​ 222,417 Income tax expense ​ 6,249 ​ 12,166 ​ 34,463 ​ 47,186 Net income ​ $ 30,008 ​ $ 47,658 ​ $ 113,648 ​ $ 175,231 Earnings per share: ​ ​ ​ ​ Basic income per share ​ $ 0.96 ​ $ 1.08 ​ $ 3.48 ​ $ 3.87 Diluted income per share ​ $ 0.96 ​ $ 1.08 ​ $ 3.47 ​ $ 3.86 Basic weighted average shares outstanding ​ 31,302 ​ 44,212 ​ 32,623 ​ 45,272 Diluted weighted average shares outstanding ​ 31,387 ​ 44,298 ​ 32,709 ​ 45,404 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 3 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, (In thousands, except par value) 2022 ​ 2021 ​ ​ (Unaudited) ​ ​ ​ ASSETS: ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ Cash and cash equivalents ​ $ 39,887 ​ $ 600,941 Investments ​ 68,403 ​ — Accounts receivable, net ​ 101,170 ​ 70,063 Income tax receivable ​ 3,589 ​ 1,275 Other current assets ​ 10,184 ​ 8,766 Total current assets ​ 223,233 ​ 681,045 Property and equipment, net ​ 144,872 ​ 136,120 Right-of-use assets ​ ​ 75,086 ​ ​ 57,652 Amortizable intangible assets, net ​ ​ 178,904 ​ ​ 185,219 Goodwill ​ 160,766 ​ 160,766 Other assets ​ 1,683 ​ 1,943 Total assets ​ $ 784,544 ​ $ 1,222,745 LIABILITIES AND STOCKHOLDERS’ EQUITY: ​ ​ Current liabilities ​ ​ Accounts payable ​ $ 18,829 ​ $ 24,306 Accrued compensation and benefits ​ 33,100 ​ 32,714 Accrued liabilities ​ 28,964 ​ 27,593 Income taxes payable ​ 37 ​ 5,895 Deferred revenue ​ 6,102 ​ 10 Current portion of lease liability ​ 8,555 ​ 7,426 Total current liabilities ​ 95,587 ​ 97,944 Deferred income taxes, noncurrent ​ 26,199 ​ 25,962 Other long-term liability ​ ​ 442 ​ ​ 37 Lease liability, less current portion ​ 70,760 ​ 53,755 Total liabilities ​ 192,988 ​ 177,698 Commitments and contingencies ​ ​ Stockholders’ equity ​ ​ Preferred stock, $ 0.01 par value, 10,000 shares authorized; 0 shares issued and outstanding at September 30, 2022 and December 31, 2021 ​ — ​ — Common stock, $ 0.01 par value, 100,000 shares authorized; 53,830 and 53,637 shares issued and 31,377 and 37,722 shares outstanding at September 30, 2022 and December 31, 2021, respectively ​ 538 ​ 536 Treasury stock, at cost, 22,453 and 15,915 shares of common stock at September 30, 2022 and December 31, 2021, respectively ​ ( 1,683,417 ) ​ ( 1,107,211 ) Additional paid-in capital ​ 306,152 ​ 296,670 Accumulated other comprehensive loss ​ ( 417 ) ​ — Retained earnings ​ 1,968,700 ​ 1,855,052 Total stockholders’ equity ​ 591,556 ​ 1,045,047 Total liabilities and stockholders’ equity ​ $ 784,544 ​ $ 1,222,745 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ ​ 4 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Statements of Comprehensive Income (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ September 30, ​ September 30, (In thousands) ​ 2022 2021 2022 2021 Net income ​ $ 30,008 ​ $ 47,658 ​ $ 113,648 ​ $ 175,231 Other comprehensive income, net of tax: ​ ​ ​ ​ Unrealized losses on available-for-sale securities, net of taxes of $ 8 and $ 56 for the three months ended September 30, 2022 and 2021, respectively, and $ 131 for the nine months ended September 30, 2022 ​ ( 19 ) ​ 185 ​ ( 417 ) ​ — Comprehensive income ​ $ 29,989 ​ $ 47,843 ​ $ 113,231 ​ $ 175,231 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 5 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Statement of Stockholders’ Equity (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury Stock ​ Paid-in ​ Comprehensive ​ Retained ​ ​ ​ ​ Shares Par Value Shares Cost Capital Loss Earnings Total Balance at December 31, 2021 ​ 53,637 ​ $ 536 ​ 15,915 ​ $ ( 1,107,211 ) ​ $ 296,670 ​ $ — ​ $ 1,855,052 ​ $ 1,045,047 Comprehensive income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 323 ) ​ ​ 58,078 ​ ​ 57,755 Common stock purchased for treasury ​ — ​ ​ — ​ 4,575 ​ ​ ( 394,930 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 394,930 ) Restricted shares forfeited ​ — ​ ​ — ​ 6 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Share-based compensation ​ 189 ​ ​ 2 ​ 52 ​ ​ ( 4,625 ) ​ ​ 3,188 ​ ​ — ​ ​ — ​ ​ ( 1,435 ) Balance at March 31, 2022 ​ 53,826 ​ $ 538 ​ 20,548 ​ $ ( 1,506,766 ) ​ $ 299,858 ​ $ ( 323 ) ​ $ 1,913,130 ​ $ 706,437 Comprehensive income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 75 ) ​ ​ 25,562 ​ ​ 25,487 Common stock purchased for treasury ​ — ​ ​ — ​ 1,319 ​ ​ ( 128,457 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 128,457 ) Restricted shares forfeited ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Share-based compensation ​ 4 ​ ​ — ​ — ​ ​ — ​ ​ 3,171 ​ ​ — ​ ​ — ​ ​ 3,171 Balance at June 30, 2022 ​ 53,830 ​ $ 538 ​ 21,867 ​ $ ( 1,635,223 ) ​ $ 303,029 ​ $ ( 398 ) ​ $ 1,938,692 ​ $ 606,638 Comprehensive income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 19 ) ​ ​ 30,008 ​ ​ 29,989 Common stock purchased for treasury ​ — ​ ​ — ​ 582 ​ ​ ( 48,194 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 48,194 ) Restricted shares forfeited ​ — ​ ​ — ​ 4 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Share-based compensation ​ — ​ ​ — ​ — ​ ​ — ​ ​ 3,123 ​ ​ — ​ ​ — ​ ​ 3,123 Balance at September 30, 2022 ​ 53,830 ​ $ 538 22,453 ​ $ ( 1,683,417 ) ​ $ 306,152 ​ $ ( 417 ) ​ $ 1,968,700 ​ $ 591,556 ​ ​ 6 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Statement of Stockholders’ Equity (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury Stock ​ Paid-in ​ Comprehensive ​ Retained ​ ​ ​ ​ Shares Par Value Shares Cost Capital Loss Earnings Total Balance at December 31, 2020 ​ 53,277 ​ $ 533 6,628 ​ $ ( 303,379 ) ​ $ 282,467 ​ $ — ​ $ 1,594,708 ​ $ 1,574,329 Comprehensive income ​ — ​ — — ​ — ​ — ​ ( 120 ) ​ 78,112 ​ 77,992 Common stock purchased for treasury ​ — ​ — 567 ​ ( 56,348 ) ​ ( 7,000 ) ​ — ​ — ​ ( 63,348 ) Restricted shares forfeited ​ — ​ — — ​ — ​ — ​ — ​ — ​ — Share-based compensation ​ 180 ​ 1 56 ​ ( 5,994 ) ​ 3,018 ​ — ​ — ​ ( 2,975 ) Exercise of stock options ​ 176 ​ ​ 2 ​ — ​ ​ — ​ ​ 2,678 ​ ​ — ​ ​ — ​ ​ 2,680 Balance at March 31, 2021 ​ 53,633 ​ $ 536 ​ 7,251 ​ $ ( 365,721 ) ​ $ 281,163 ​ $ ( 120 ) ​ $ 1,672,820 ​ $ 1,588,678 Comprehensive income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 65 ) ​ ​ 49,461 ​ ​ 49,396 Common stock purchased for treasury ​ — ​ ​ — ​ 982 ​ ​ ( 95,331 ) ​ ​ ( 3,000 ) ​ ​ — ​ ​ — ​ ​ ( 98,331 ) Restricted shares forfeited ​ — ​ ​ — ​ 8 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Share-based compensation ​ 4 ​ ​ — ​ — ​ ​ — ​ ​ 2,940 ​ ​ — ​ ​ — ​ ​ 2,940 Balance at June 30, 2021 ​ 53,637 ​ $ 536 ​ 8,241 ​ $ ( 461,052 ) ​ $ 281,103 ​ $ ( 185 ) ​ $ 1,722,281 ​ $ 1,542,683 Comprehensive income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 185 ​ ​ 47,658 ​ ​ 47,843 Common stock purchased for treasury ​ — ​ ​ — ​ 2,324 ​ ​ ( 202,506 ) ​ ​ 10,000 ​ ​ — ​ ​ — ​ ​ ( 192,506 ) Restricted shares forfeited ​ — ​ ​ — ​ 18 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Share-based compensation ​ — ​ — — ​ — ​ 2,756 ​ — ​ — ​ 2,756 Balance at September 30, 2021 ​ 53,637 ​ $ 536 10,583 ​ $ ( 663,558 ) ​ $ 293,859 ​ $ — ​ $ 1,769,939 ​ $ 1,400,776 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 7 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Statements of Cash Flows (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ September 30, (In thousands) ​ 2022 2021 Cash flows provided by operating activities: ​ ​ ​ Net income ​ $ 113,648 ​ $ 175,231 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ Share-based compensation ​ 9,484 ​ 8,715 Depreciation and amortization ​ 17,023 ​ 16,401 Amortization of intangible assets ​ ​ 6,315 ​ ​ 6,315 Deferred income taxes ​ 368 ​ 2,333 Other, including fixed asset impairments ​ 1,013 ​ 478 Changes in assets and liabilities: ​ ​ Accounts receivable and interest receivable from university partners ​ ( 31,107 ) ​ ( 32,815 ) Other assets ​ ( 1,288 ) ​ ( 2,451 ) Right-of-use assets and lease liabilities ​ ​ 700 ​ ​ 445 Accounts payable ​ ( 5,768 ) ​ 23,487 Accrued liabilities ​ 2,162 ​ 13,358 Income taxes receivable/payable ​ ( 8,172 ) ​ ( 5,806 ) Deferred revenue ​ 6,092 ​ 3,204 Net cash provided by operating activities ​ 110,470 ​ 208,895 Cash flows used in investing activities: ​ ​ Capital expenditures ​ ( 26,301 ) ​ ( 21,352 ) Additions of amortizable content ​ ( 294 ) ​ ( 409 ) Funding to GCU ​ — ​ ( 190,000 ) Repayment by GCU ​ ​ — ​ ​ 190,000 Purchases of investments ​ ( 132,096 ) ​ ( 56,335 ) Proceeds from sale or maturity of investments ​ 63,373 ​ 66,792 Net cash used in investing activities ​ ( 95,318 ) ​ ( 11,304 ) Cash flows used in financing activities: ​ ​ Principal payments on notes payable ​ — ​ ( 24,859 ) Repurchase of common shares and shares withheld in lieu of income taxes ​ ( 576,206 ) ​ ( 360,179 ) Net proceeds from exercise of stock options ​ — ​ 2,680 Net cash used in financing activities ​ ( 576,206 ) ​ ( 382,358 ) Net decrease in cash and cash equivalents and restricted cash ​ ( 561,054 ) ​ ( 184,767 ) Cash and cash equivalents and restricted cash, beginning of period ​ 600,941 ​ 245,769 Cash and cash equivalents and restricted cash, end of period ​ $ 39,887 ​ $ 61,002 Supplemental disclosure of cash flow information ​ ​ Cash paid for interest ​ $ 5 ​ $ 2,399 Cash paid for income taxes ​ $ 41,118 ​ $ 48,408 Supplemental disclosure of non-cash investing and financing activities ​ ​ Purchases of property and equipment included in accounts payable ​ $ 1,827 ​ $ 1,802 ROU Asset and Liability recognition ​ $ 17,434 ​ $ 3,775 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 8 Table of Contents Grand Canyon Education, Inc. 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 nine colleges both online, on ground at its campus in Phoenix, Arizona and at four 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”). Since the Acquisition, GCE, together with Orbis Education, 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 September 30, 2022, GCE provides education services to 27 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 and regulations of the United States Securities and Exchange Commission and the instructions to Form 10-Q and Article 10, consistent in all material respects with those applied in its financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. They do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. Such interim financial information is unaudited but reflects all adjustments that in the opinion of management are necessary for the fair presentation of the interim periods presented. Interim results are not necessarily indicative of results for a full year. 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. Investments As of September 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 9 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (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. As of December 31, 2021, the Company had no investments. 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, we received a secured note from GCU as consideration for the transferred assets in the initial principal amount of $ 870,097 (the “Secured Note”) which was repaid by GCU in the fourth quarter of 2021. 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. 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 a course-by-course basis for each university partner, many times in conjunction with faculty and subject matter experts. The Company is responsible for the conversion of instructional materials to an on-line format, including outlines, quizzes, lectures, and articles in accordance with the educational guidelines provided to us by our university partners, prior to the respective course commencing. We also capitalize the creation of learning objects which are digital assets such as online demonstrations, simulations, and case studies used to obtain learning objectives. Costs that are capitalized include payroll and payroll-related costs for employees who are directly associated and spend time producing content and payments to faculty and subject matter experts involved in the process. The Company starts capitalizing content costs when it begins to develop or to convert a particular course, resources have been assigned and a timeline has been set. The content asset is placed in service when all work is complete, and the curriculum could be used for instruction. Capitalized content development assets are included in other assets in our consolidated balance sheets. 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 September 30, 2022 and December 31, 2021, $ 1,038 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. 10 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) Long-Lived Assets The Company evaluates the recoverability of its long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. 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. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. 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. Business Combinations The purchase price of an acquisition is allocated to the assets acquired, including tangible and intangible assets, and liabilities assumed, based on their respective fair values at the acquisition date. The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Transaction costs associated with business combinations are expensed as incurred and are recorded in the loss on transaction in the consolidated financial statements. The determination of the fair value and useful lives of the intangible assets acquired involves certain judgments and estimates. These judgements can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. The net assets and result of operations of an acquired entity are included in the Company’s consolidated financial statements from the acquisition date. 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 to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company reviews goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Finite-lived intangible assets that are acquired in a business combination are recorded at fair value on their acquisition dates and are amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or on a straight-line basis over the estimated useful life of the intangible asset if the pattern of economic benefit cannot be reliability determined. Finite-lived intangible assets consist of university partner 11 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) relationships and trade names. 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 September 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. If such intangible assets are not recoverable, a potential impairment loss is recognized to the extent the carrying amounts of the assets exceeds the fair value of the assets. ​ Acquisition On January 22, 2019, GCE acquired Orbis Education for $ 361,184 (inclusive of closing date adjustments and net of cash acquired). The Acquisition was accounted for in accordance with the acquisition method of accounting. Under this method the cost of the target is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The estimated fair values of current assets and liabilities were based upon their historical costs on the date of acquisition due to their short-term nature. The majority of property and equipment were also estimated based upon historical costs as they approximated fair value. Identified intangible assets of $ 210,280 consisted primarily of university partner relationships that were valued at $ 210,000 . The fair value of university partner relationships was determined using the multiple-period excess earnings method. The fair value of the assets acquired, less the liabilities assumed, exceeded the purchase price by $ 157,825 which was recorded as goodwill. Share-Based Compensation The Company measures and recognizes compensation expense for share-based payment awards made to employees and directors. The fair value of the Company’s restricted stock awards is based on the market price of its common stock on the date of grant. Stock-based compensation expense related to restricted stock grants is expensed over the vesting period using the straight-line method for Company employees and the Company’s board of directors. The Company recognizes forfeitures as they occur. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and benefits and accrued liabilities expenses 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 unit of account used for valuation is the individual underlying security. The basis for fair value measurements for each level is described below, with Level 1 having the highest priority. -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, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations. 12 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) 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 partners. The service fees received from our partners over the term of the agreement are variable in nature in that they are dependent upon the number of students attending the university partner’s program and revenues generated from those students during the service period. Due to the variable nature of the consideration over the life of the service arrangement, the Company considered forming an expectation of the variable consideration to be received over the service life of this one performance obligation. However, since the performance obligation represents a series of distinct services, the Company recognizes the variable consideration that becomes known and billable because these fees relate to the distinct service period in which the fees are earned. The Company meets the criteria in the standard and exercises the practical expedient to not disclose the aggregate amount of the transaction price allocated to the single performance obligation that is unsatisfied as of the end of the reporting period. The Company does not disclose the value of unsatisfied performance obligations because the directly allocable variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a service that forms part of a single performance obligation. The service fees are calculated and settled per the terms of the Services Agreements and result in a settlement duration of less than one year for all partners. There are no refunds or return rights under the Services Agreements. The Company’s receivables represent unconditional rights to consideration from our Services Agreements with our university partners. Accounts receivable, net is stated at net realizable value and contains billed and unbilled revenue. 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 September 30, 2022. The Company will continue to review and revise its allowance methodology based on its collection experience with its partners. For our partners with unbilled revenue, revenue recognition occurs in advance of billings. 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 $ 11,973 and $ 3,841 as of September 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. We generally receive payments for our services billed within 30 days of invoice. These payments are recorded as deferred revenue until the services are delivered and revenue is recognized. Allowance for Credit Losses The Company records its accounts receivable and previously had recorded its Secured Note (as defined above) receivable at the net amount expected to be collected. Our accounts receivable are derived through education services 13 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) provided to university partners. Our Secured Note receivable was derived through the sale of university-related assets to our most significant university partner, GCU. The Company maintains an allowance for credit losses resulting from our university partners not making payments. The Company determines the adequacy of the allowance by periodically evaluating each university partners balance, considering their financial condition and credit history, and considering current and forecasted economic conditions. In the first quarter of 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments using a modified retrospective approach. This model requires consideration of a broader range of reasonable and supportable information and requires the Company to estimate expected credit losses including a measure of the expected risk of credit loss even if that risk is remote over the lifetime of the asset. Upon adoption, the Company recorded a reserve of $ 5,000 on its long-term Secured Note receivable. The cumulative effect for the Company upon adoption of this new standard was $ 3,832 , net of taxes of $ 1,168 . Bad debt expense is recorded as a technology and academic services expense in the consolidated income statements. In the fourth quarter of 2021, the Secured Note receivable was paid off and the credit loss reserve of $ 5,000 was reversed. The Company will also continue to actively monitor the impact of the COVID-19 pandemic as well as other factors on expected credit losses. Technology and Academic Services Technology and academic services consist primarily of costs related to ongoing maintenance of educational infrastructure, including online course delivery and management, student records, assessment, customer relations management and other internal administrative systems. This also includes costs to provide support for content development, faculty training, development and other faculty support, technology support, rent and occupancy costs for university partners’ off-campus classroom and laboratory sites, and assistance with state compliance. This expense category includes salaries, benefits and share-based compensation, information technology costs, amortization of content development costs and other costs associated with these support services. This category also includes an allocation of depreciation, amortization, and occupancy costs attributable to the provision of certain services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Counseling Services and Support Counseling services and support consist primarily of costs including team-based counseling and other support to prospective and current students as well as financial aid processing. This expense category includes salaries, benefits and share-based compensation, and other costs such as dues, fees and subscriptions and travel costs. This category also includes an allocation of depreciation, amortization, lease expense, and occupancy costs attributable to the provision of certain services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Marketing and Communication Marketing and communication includes lead acquisition, digital communication strategies, brand identity advertising, media planning and strategy, video, data science and analysis, marketing to potential students and other promotional and communication services. This expense category includes salaries, benefits and share-based compensation for marketing and communication personnel, brand advertising, marketing leads and other promotional and communication expenses. This category also includes an allocation of depreciation, amortization, lease expense, and occupancy costs attributable to the provision of certain services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Advertising costs are expensed as incurred. General and Administrative General and administrative expenses include salaries, benefits and share-based compensation of employees engaged in corporate management, finance, human resources, compliance, and other corporate functions. This category 14 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) 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. Commitments and Contingencies The Company accrues for contingent obligations when it is probable that a liability has been incurred and the amount is reasonably estimable. When the Company becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the Company records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the Company will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The Company expenses legal fees as incurred. Concentration of Credit Risk 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 September 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. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash balances, which are primarily invested in money market funds or on deposit at high credit quality financial institutions in the U.S. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At September 30, 2022 and December 31, 2021, the Company had $ 38,851 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 84.8 % and 85.0 % of total service revenue for the nine-month periods ended September 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 The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Segment Information The Company operates as a single education services company using a core infrastructure that serves the curriculum and educational delivery needs of its university partners. The Company’s Chief Executive Officer manages the Company’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. Recent Accounting Pronouncements 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. 15 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) 3. Investments As of September 30, 2022, the Company had investments of $ 68,403 , classified as available-for-sale securities. As of December 31, 2021, the Company had no investments. As of September 30, 2022, the Company had available-for-sale investments comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, 2022 ​ ​ ​ Gross Gross Estimated ​ ​ Adjusted ​ Unrealized ​ Unrealized ​ Fair ​ ​ Cost ​ Gains ​ (Losses) ​ Value Corporate bonds ​ $ 34,120 ​ $ 11 ​ $ ( 473 ) ​ $ 33,658 Commercial paper ​ ​ 34,831 ​ ​ — ​ ​ ( 86 ) ​ ​ 34,745 Total investments ​ $ 68,951 ​ $ 11 ​ $ ( 559 ) ​ $ 68,403 ​ For the nine months ended September 30, 2022, the net unrealized losses were $ 417 , net of taxes. Available-for-sale debt securities are carried at fair value on the consolidated balance sheets. The Company estimates the lifetime expected credit losses for all available-for sale debt securities in an unrealized loss position. 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. ​ ​ ​ ​ ​ Available-for-sale securities maturing as of December 31: ​ ​ ​ 2022 (Remainder of year) ​ $ 46,199 2023 ​ ​ 7,376 2024 ​ ​ 6,715 2025 ​ ​ 8,113 Total ​ $ 68,403 ​ ​ 4. Net Income Per Common Share Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all potentially dilutive securities, consisting of restricted stock awards, for which the estimated fair value exceeds the exercise price, less shares which could have been purchased with the related proceeds, unless anti-dilutive. For employee equity awards, repurchased shares are also included for any unearned compensation adjusted for tax. The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ 2022 2021 2022 2021 Denominator: Basic weighted average shares outstanding 31,302 44,212 32,623 45,272 Effect of dilutive stock options and restricted stock 85 86 86 132 Diluted weighted average shares outstanding 31,387 44,298 32,709 45,404 ​ 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 September 30, 2022 and 2021, approximately 25 and 73 , respectively, and for the nine-month periods ended September 30, 2022 and 2021, 16 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) approximately 77 and 25 , 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. 5. Allowance for Credit Losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ Balance at ​ ​ Beginning of ​ Charged to ​ Deductions/ ​ End of ​ ​ Period (1) ​ Expense ​ Transfers (2) ​ Period Allowance for credit losses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, 2022 ​ $ — — — ​ $ — Nine months ended September 30, 2021 ​ $ 5,000 — — ​ $ 5,000 ​ ​ ​ (1) Amount represents the cumulative effect of the adoption of ASU No. 2016-13 on the Secured Note. (2) Deductions represent accounts written off, net of recoveries. ​ ​ 6. Property and Equipment Property and equipment consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2022 ​ 2021 Land ​ $ 5,098 ​ $ 5,579 Land improvements ​ 2,242 ​ 2,242 Buildings ​ 51,399 ​ 51,399 Buildings and leasehold improvements ​ 21,719 ​ 17,161 Computer equipment ​ 117,793 ​ 113,680 Furniture, fixtures and equipment ​ 20,359 ​ 17,921 Internally developed software ​ 56,471 ​ 55,083 Construction in progress ​ 13,415 ​ 3,381 ​ ​ 288,496 ​ 266,446 Less accumulated depreciation and amortization ​ ( 143,624 ) ​ ( 130,326 ) Property and equipment, net ​ $ 144,872 ​ $ 136,120 ​ ​ 7. Amortizable Intangible Assets Amortizable intangible assets consist of the following as of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2022 ​ Estimated ​ Gross ​ ​ ​ ​ Net ​ Average Useful ​ Carrying ​ Accumulated ​ Carrying ​ Life (in years) ​ Amount ​ Amortization ​ Amount University partner relationships 25 $ 210,000 $ ( 31,096 ) $ 178,904 Trade names 1 ​ ​ 280 ​ ​ ( 280 ) ​ — Total amortizable intangible assets, net ​ ​ $ 210,280 ​ $ ( 31,376 ) ​ $ 178,904 ​ 17 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) Amortization expense for university partner relationships and trade names for the years ending December 31: ​ ​ ​ Remainder of 2022 $ 2,104 2023 8,419 2024 ​ 8,419 2025 ​ 8,419 2026 ​ 8,419 Thereafter 143,124 ​ $ 178,904 ​ ​ 8. Leases The Company has operating leases for off-campus classroom and laboratory sites, office space, office equipment, and optical fiber communication lines. These leases have remaining lease terms that range from one month to 10 years and 9 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 $ 7,596 and $ 7,371 for the nine-month periods ended September 30, 2022 and 2021, respectively. As of September 30, 2022, the Company had $ 9,569 of non-cancelable operating lease commitments for one 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 8.22 years, with a weighted-average discount rate of 3.35 % . As of September 30, 2022, the Company had no financing leases. Future payment obligations with respect to the Company’s operating leases, which were existing at September 30, 2022, by year and in the aggregate, are as follows: ​ ​ ​ ​ ​ Year Ending December 31, Amount Remainder of 2022 ​ $ 2,523 2023 ​ ​ 10,907 2024 ​ ​ 11,144 2025 ​ ​ 10,869 2026 ​ ​ 10,807 Thereafter ​ ​ 45,229 Total lease payments ​ $ 91,479 Less interest ​ ​ 12,164 Present value of lease liabilities ​ $ 79,315 ​ ​ 9. Notes Payable and Other Noncurrent Liabilities The Company upon its receipt of the paydown of $ 500,000 on the Secured Note in October 2021 repaid all amounts due under the outstanding term loan and revolving credit facilities, terminated the credit agreement and expensed all remaining capitalized loan cost of $ 1,028 to interest expense. ​ ​ 18 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) 10. Commitments and Contingencies Legal Matters From time to time, the Company is a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which are covered by insurance. 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 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 could be material. With respect to the majority of pending litigation matters, the Company’s ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to those matters are not considered probable. Upon resolution of any pending legal matters, the Company may incur charges in excess of presently established reserves. 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. ​ ​ 11. Share-Based Compensation Incentive Plan 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 September 30, 2022, 1,221 shares were available for grants under the 2017 Plan. Restricted Stock During the nine months ended September 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 nine months ended September 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Total ​ Grant Date ​ ​ Shares ​ Fair Value per Share Outstanding as of December 31, 2021 427 ​ $ 86.24 Granted 193 ​ $ 83.10 Vested ( 134 ) ​ $ 85.07 Forfeited, canceled or expired ( 10 ) ​ $ 85.54 Outstanding as of September 30, 2022 476 ​ $ 85.32 19 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) ​ Stock Options During the nine months ended September 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 nine months ended September 30, 2022 and 2021 related to restricted stock granted: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Technology and academic services ​ $ 1,812 ​ $ 1,627 Counseling services and support ​ 4,720 ​ 4,350 Marketing and communication ​ 114 ​ 75 General and administrative ​ 2,838 ​ 2,663 Share-based compensation expense included in operating expenses ​ 9,484 ​ 8,715 Tax effect of share-based compensation ​ ( 2,371 ) ​ ( 2,179 ) Share-based compensation expense, net of tax ​ $ 7,113 ​ $ 6,536 ​ ​ ​ 12. Treasury Stock On October 26, 2022, the Board of Directors increased the authorization under its existing stock repurchase program by $ 200,000 reflecting an aggregate authorization for share repurchases since the initiation of our program of $ 1,845,000 . The expiration date on the repurchase authorization is December 31, 2023. Repurchases occur at the Company’s discretion. Repurchases may be made in the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant. ​ On March 10, 2021, the Company entered into an accelerated share repurchase (“ASR”) agreement with Morgan Stanley & Co. LLC (“Morgan Stanley”) to repurchase up to $ 35,000 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 of approximately 276 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 $ 101.49 , on March 9, 2021. At inception of the ASR agreement, the Company recognized the initial delivery of shares as treasury stock of $ 28,000 and recognized the remaining amount underlying the ASR agreement as a reduction of additional paid in capital of $ 7,000 . 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 share repurchases under the ASR agreement was completed on May 4, 2021 with additional delivery of 46 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 $ 7,000 related to the remaining delivery of shares. 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 20 Table of Contents Grand Canyon Education, Inc. Notes to Consolidated Financial Statements (In thousands, except per share data) Company recognized the initial delivery of shares as treasury stock of $ 40,000 , and recognized the remaining amount 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 nine months ended September 30, 2022 the Company repurchased 6,476 shares of common stock, at an aggregate cost of $ 571,581 . As of September 30, 2022, there remained $ 23,852 available under its current share repurchase authorization (which authorization was increased to $ 223,852 in October 2022). 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. ​ 13. 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 nine months ended September 30, 2022 and 2021, related party transactions consisted of the following: ​ Affiliates ​ 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 nine months ended September 30, 2022, of which no amounts were owed as of September 30, 2022. ​ ​ ​ ​ ​ 21 Table of Contents