What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2022-10-27 · 113 added, 188 removed, 360 unchanged (46% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

8 unchanged sentences

Operating income

Interest income on Secured Note

Interest expense

10 unchanged sentences

Consolidated Balance Sheets

September 30,

(In thousands, except par value)

24 unchanged sentences

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

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

0 shares issued and outstanding at March 31, 2023 and December 31, 2022

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

Treasury stock, at cost, 22,453 and 15,915 shares of common stock at September 30, 2022 and December 31, 2021, respectively

53,966 and 53,830 shares issued and 30,823 and 31,058 shares outstanding at March 31, 2023 and December 31, 2022, respectively

Treasury stock, at cost, 23,143 and 22,772 shares of common stock at March 31, 2023 and December 31, 2022, respectively

( 1,752,844 )

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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

Unrealized gains (losses) on available-for-sale securities, net of taxes of $ 37 and $ 99 for the three months ended March 31, 2023 and 2022, respectively

Comprehensive income

3 unchanged sentences

(In thousands)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Treasury Stock

8 unchanged sentences

( 1,752,844 )

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at June 30, 2022

( 1,635,223 )

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at September 30, 2022

( 1,683,417 )

GRAND CANYON EDUCATION, INC.

Consolidated Statement of Stockholders’ Equity

(In thousands)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Treasury Stock

1 unchanged sentence

Balance at December 31, 2021

( 1,107,211 )

Comprehensive income

2 unchanged sentences

Share-based compensation

Exercise of stock options

Balance at March 31, 2022

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at June 30, 2021

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at September 30, 2021

( 1,506,766 )

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

1 unchanged sentence

Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

7 unchanged sentences

Changes in assets and liabilities:

Accounts receivable and interest receivable from university partners

Accounts receivable from university partners

Right-of-use assets and lease liabilities

7 unchanged sentences

Additions of amortizable content

Funding to GCU

Repayment by GCU

Purchases of investments

2 unchanged sentences

Cash flows used in financing activities:

Principal payments on notes payable

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

Net proceeds from exercise of stock options

Net cash used in financing activities

8 unchanged sentences

ROU Asset and Liability recognition

Excise tax on treasury stock repurchases

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

11 unchanged sentences

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.

As of March 31, 2023, 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, 2022 from which the December 31, 2022 balance sheet information was derived.

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

As of March 31, 2023 and December 31, 2022, the Company considered its investments in corporate bonds, agency bonds 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 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 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.

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.

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

Arrangements with GCU

20 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 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.

As of March 31, 2023 and December 31, 2022, $ 1,021 and $ 910 , 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.

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

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

Long-Lived Assets

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.

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.

9 unchanged sentences

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.

Transaction costs associated with business combinations are expensed as incurred.

The determination of the fair value and useful lives of the intangible assets acquired involves certain judgments and estimates.

9 unchanged sentences

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

Finite-lived intangible assets consist of university partner 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 March 31, 2023.

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,

Grand Canyon Education, Inc.

1 unchanged sentence

(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.

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.

a potential impairment loss is recognized to the extent the carrying amounts of the assets exceeds the fair value of the assets.

Share-Based Compensation

13 unchanged sentences

-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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Investments are comprised of corporate bonds, commercial paper and agency bonds.

Revenue Recognition

6 unchanged sentences

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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.

6 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 September 30, 2022.

There have been no amounts written off and no reserves established as of March 31, 2023.

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 $ 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.

Our unbilled revenue of $ 4,076 and $ 5,560 as of March 31, 2023 and December 31, 2022, 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.

2 unchanged sentences

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

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 records its accounts receivable at the net amount expected to be collected.

Our accounts receivable are derived through education services provided to university partners.

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.

The Company monitors the impact of other factors on expected credit losses.

Technology and Academic Services

3 unchanged sentences

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Counseling Services and Support

9 unchanged sentences

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

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.

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.

Commitments and Contingencies

6 unchanged sentences

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.

All of the Company’s cash equivalents and investments as of March 31, 2023 and December 31, 2022 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 September 30, 2022 and December 31, 2021, the Company had $ 38,851 and $ 600,130 , respectively, in excess of the FDIC insured limit.

At March 31, 2023 and December 31, 2022, the Company had $ 104,496 and $ 119,639 , 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.

Our dependence on our most significant university partner, with 88.5 % and 87.6 % of total service revenue for

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

the three-month periods ended March 31, 2023 and 2022, 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

7 unchanged sentences

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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

As of March 31, 2023 and December 31, 2022, the Company had investments of $ 89,483 and $ 61,295 , respectively, classified as available-for-sale securities.

As of March 31, 2023, the Company had available-for-sale investments comprised of the following:

As of March 31, 2023

Corporate bonds

Commercial paper

Total investments

For the nine months ended September 30, 2022, the net unrealized losses were $ 417 , net of taxes.

For the three months ended March 31, 2023 and 2022, the net unrealized gains (losses) were $ 119 and $ 323 , respectively, net of taxes.

Available-for-sale debt 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.

The Company has the ability and intent to hold these investments until recovery.

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

2022 (Remainder of year)

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Net Income Per Common Share

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

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 September 30, 2022 and 2021, approximately 25 and 73 , respectively, and for the nine-month periods ended September 30, 2022 and 2021,

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.

For the three-month periods ended March 31, 2023 and 2022, approximately 100 and 206 , 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.

Allowance for Credit Losses

Transfers (2)

Allowance for credit losses

Nine months ended September 30, 2022

Nine months ended September 30, 2021

(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.

Property and Equipment

Property and equipment consist of the following:

September 30,

Land improvements

7 unchanged sentences

Amortizable Intangible Assets

In January 2019, GCE completed the Acquisition.

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.

Identified intangible assets of

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

$ 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.

Amortizable intangible assets consist of the following as of:

September 30, 2022

March 31, 2023

Average Useful

2 unchanged sentences

Total amortizable intangible assets, net

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

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.

These leases have remaining lease terms that range from six months to 10 years and five 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 had operating lease costs of $ 3,018 and $ 2,396 for the three-month periods ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, the Company had $ 34,106 of non-cancelable operating lease commitments for six off-campus classroom and laboratory sites and $ 192 for optical fiber communication lines that had not yet commenced.

The Company’s weighted-average remaining lease term relating to its operating leases is 7.85 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:

As of March 31, 2023, the Company had no financing leases.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Future payment obligations with respect to the Company’s operating leases, which were existing at March 31, 2023, by year and in the aggregate, are as follows:

Year Ending December 31,

Remainder of 2022

Total lease payments

1 unchanged sentence

Present value of lease liabilities

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Commitments and Contingencies

7 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.

On May 12, 2020, a securities class action complaint was filed in the U.S.

District Court for the District of Delaware by the City of Hialeah Employees’ Retirement System naming the Company, Brian E.

Mueller and Daniel E.

Bachus as defendants for allegedly making false and materially misleading statements regarding the circumstances surrounding the Company’s sale of Grand Canyon University (the “University”) to a non-profit entity on July 1, 2018 and the subsequent decision of the U.S.

Department of Education to continue to treat the University as a for-profit institution for education regulatory purposes (collectively, the “Conversion”).

The complaint asserted a putative class period stemming from January 5, 2018, the date when the Company announced that it had applied to the University’s accreditor for approval of the Conversion, to January 27, 2020, the date prior to the publication of a short-seller report focused on the Conversion.

A substantially similar complaint was filed in the same court by Grant Walsh on June 12, 2020 making similar allegations against the Company, Mr.

Mueller and Mr.

Both complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder and sought unspecified monetary relief, interest, and attorneys’ fees.

On August 13, 2020, the two cases were consolidated and the Fire and Police Association of Colorado, the Oakland County Employees’ Retirement System and the Oakland County Voluntary Employees’ Beneficiary Association Trust were appointed as lead plaintiffs.

Thereafter, the plaintiffs filed a consolidated amended complaint on October 20, 2020 and the Company filed a motion to dismiss on December 21, 2020.

On August 23, 2021, the Court

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

granted the Company’s motion to dismiss in its entirety but permitted plaintiffs to file a further amended complaint to correct deficiencies in the initial complaint.

The plaintiffs filed further amended complaints on September 28, 2021 and January 21, 2022, and the Company filed a further motion to dismiss on March 15, 2022.

On March 28, 2023, the Company’s motion to dismiss was denied.

The Company believes that plaintiffs’ claims are without merit and it intends to defend itself in this legal proceeding vigorously.

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.

Other Matters

In May 2022, we received a civil investigative demand (“CID”) from the Federal Trade Commission (“FTC”) related to the marketing services that we provide on behalf of GCU, and related activities.

The CID requests the production of documents and answers to written questions.

In January 2023, we received a further CID from the FTC requesting testimony on the same topic.

We are cooperating with the FTC in connection with each of these CIDs.

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 September 30, 2022, 1,221 shares were available for grants under the 2017 Plan.

As of March 31, 2023, 1,085 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.

During the three months ended March 31, 2023, the Company granted 136 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.

During the three months ended March 31, 2023, the Company withheld 56 shares of common stock in lieu of taxes at a cost of $ 6,331 on the restricted stock vesting dates.

A summary of the activity related to restricted stock granted under the Company’s Incentive Plan since December 31, 2022 is as follows:

3 unchanged sentences

Forfeited, canceled or expired

Outstanding as of September 30, 2022

Outstanding as of March 31, 2023

Grand Canyon Education, Inc.

1 unchanged sentence

(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:

The table below outlines share-based compensation expense for the three months ended March 31, 2023 and 2022 related to restricted stock granted:

Technology and academic services

6 unchanged sentences

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 .

Our Board of Directors has authorized under its existing stock repurchase program, 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.

2 unchanged sentences

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

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 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).

During the three months ended March 31, 2023 the Company repurchased 310 shares of common stock, at an aggregate cost of $ 34,903 .

As of March 31, 2023, there remained $ 160,944 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 nine months ended September 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 nine months ended September 30, 2022, of which no amounts were owed as of September 30, 2022.

Excise taxes of $ 187 are not included in the repurchase plan totals but are included in the total cost of net share repurchases in the consolidated statement of stockholders’ equity.

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