Grand Canyon Education, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes that appear elsewhere in this report. Forward-Looking Statements This Quarterly Report on Form 10-Q, including Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations , contains certain “forward-looking statements” within the meaning of Section 27A of Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include, without limitation, statements regarding: proposed new programs; statements as to whether regulatory developments or other matters may or may not have a material adverse effect on our financial position, results of operations, or liquidity; statements concerning projections, predictions, expectations, estimates, or forecasts as to our business, financial and operational results, and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, the negative of these expressions, as well as statements in future tense, identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause our actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, include, but are not limited to: ● the harm to our business, results of operations, and financial condition, and harm to our university partners resulting from epidemics, pandemics, or public health crises; ● the occurrence of any event, change or other circumstance that could give rise to the termination of any of the key university partner agreements; ● our ability to properly manage risks and challenges associated with strategic initiatives, including potential acquisitions or divestitures of, or investments in, new businesses, acquisitions of new properties and new university partners, and expansion of services provided to our existing university partners; ● our failure to comply with the extensive regulatory framework applicable to us either directly as a third-party service provider or indirectly through our university partners, including Title IV of the Higher Education Act and the regulations thereunder, state laws and regulatory requirements, and accrediting commission requirements; ● the ability of our university partners’ students to obtain federal Title IV funds, state financial aid, and private financing; ● potential damage to our reputation or other adverse effects as a result of negative publicity in the media, in the industry or in connection with governmental reports or investigations or otherwise, affecting us or other companies in the education services sector; ● risks associated with changes in applicable federal and state laws and regulations and accrediting commission standards, including pending rulemaking by the Department of Education applicable to us directly or indirectly through our university partners; 20 Table of Contents ● competition from other education service companies in our geographic region and market sector, including competition for students, qualified executives and other personnel; ● our expected tax payments and tax rate; ● our ability to hire and train new, and develop and train existing, employees; ● the pace of growth of our university partners’ enrollment and its effect on the pace of our own growth; ● fluctuations in our revenues due to seasonality; ● our ability to, on behalf of our university partners, convert prospective students to enrolled students and to retain active students to graduation; ● our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis for our university partners; ● risks associated with the competitive environment for marketing the programs of our university partners; ● failure on our part to keep up with advances in technology that could enhance the experience for our university partners’ students; ● our ability to manage future growth effectively; ● the impact of any natural disasters or public health emergencies; and ● general adverse economic conditions or other developments that affect the job prospects of our university partners’ students. Additional factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K (the “2022 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) for the fiscal year ended December 31, 2022, as updated in our subsequent reports filed with the SEC, including any updates found in Part II, Item 1A of this Quarterly Report on Form 10-Q or our other reports on Form 10-Q. You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date the statements are made and we assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Explanatory Note 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”), a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across nine colleges both online and 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. GCE, together with Orbis Education, has continued to add additional university partners. In the healthcare field, we wo rk in partnership with a growing number of top 21 Table of Contents 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 June 30, 2023, GCE provides education services to 25 university partners across the United States. We plan to continue to add additional university partners and to introduce additional programs with both our existing partners and with new partners. We may engage with both new and existing university partners to offer healthcare programs, online only or hybrid programs, or, as is the case for our most significant partner, GCU, both healthcare and other programs. In addition, we have centralized a number of services that historically were provided separately to university partners of Orbis Education. Therefore, we refer to all university partners as “GCE partners” or “our partners”. We do disclose significant information for GCU, such as enrollments, due to its size in comparison to our other university partners. Critical Accounting Policies and Use of Estimates Our critical accounting policies are disclosed in the 2022 Form 10-K for the fiscal year ended December 31, 2022. During the six months ended June 30, 2023, there were no significant changes in our critical accounting policies. Results of Operations The following table sets forth certain income statement data as a percentage of revenue for each of the periods indicated. Amortization of intangible assets has been excluded from the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Six Months Ended ​ ​ ​ ​ June 30, ​ ​ June 30, ​ ​ ​ 2023 2022 2023 2022 Costs and expenses Technology and academic services 18.5 % 19.1 % 16.6 % 16.8 % Counseling services and support 34.4 33.1 31.6 30.1 Marketing and communication 24.1 24.9 22.5 22.7 General and administrative 5.2 4.9 4.5 4.4 ​ Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022 Service revenue . Our service revenue for the three months ended June 30, 2023 was $210.6 million, an increase of $10.8 million, or 5.4%, as compared to service revenue of $199.8 million for the three months ended June 30, 2022. The increase year over year in service revenue was primarily due to an increase in GCU enrollments to 95,972 at June 30, 2023, an increase of 4.1% over enrollments at June 30, 2022 and an increase in revenue per student year over year. The increase in revenue per student between years is primarily due to the service revenue impact of the increased room, board and other ancillary revenues at GCU in the second quarter of 2023 as compared to the prior year period . In addition, s ervice revenue per student for Accelerated Bachelor of Science in Nursing (“ABSN”) students at off-campus classroom and laboratory sites generates a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of their students take more credits on average per semester. The increase in revenue per student in the three months ended June 30, 2023 was also positively impacted by the timing of the Spring semester for the ground traditional campus. The Spring semester started two days later in 2023 and extended four more days into April, which had the effect of shifting $4.5 million in service revenue from the first quarter of 2023 to the second quarter of 2023. Partner enrollments totaled 99,526 at June 30, 2023 as compared to 96,029 at June 30, 2022. University partner enrollments at our off-campus classroom and laboratory sites were 3,904, a decrease of 5.2% over enrollments at June 30, 2022, which includes 350 and 324 GCU students at June 30, 2023 and 2022, respectively. None of our ABSN partners stopped admitting new students due to the clinical faculty challenges that began during the pandemic, however some locations that were scheduled to open were delayed and some existing partners have experienced reduced incoming cohort sizes which has slowed the growth. We believe the growth in the number of 22 Table of Contents ABSN students is also being negatively impacted by the strong job market as these students have historically been individuals with already completed bachelor’s degrees choosing to re-career into one of these health professions. To address this challenge, we have been working with a number of our university partners to adjust their programs to allow students with the required education experience but without a complete bachelor’s degree to enter their programs. We did open six new off-campus classroom and laboratory sites in the year ended December 31, 2022 and one site in the six months ended June 30, 2023 increasing the total number of these sites to 36 at June 30, 2023 and we anticipate opening three to four more in 2023 which we hope, along with the program change discussed earlier, will re-accelerate the ABSN student enrollment growth. Enrollments for GCU ground students were 7,327 at June 30, 2023 up from 7,101 at June 30, 2022 primarily due to a 3.7% increase in traditional ground students between years. GCU online enrollments were 88,645 at June 30, 2023, up from 85,132 at June 30, 2022. GCU enrollment declines between March 31 and June 30 of each year as ground traditional enrollment at GCU at June 30 of each year only includes traditional-aged students taking summer school classes, which is a small percentage of GCU’s traditional-aged student body. The Spring semester for GCU’s traditional-aged student body ends near the end of April each year. Technology and academic services . Our technology and academic services expenses for the three months ended June 30, 2023 were $39.0 million, an increase of $0.8 million, or 2.0%, as compared to technology and academic services expenses of $38.2 million for the three months ended June 30, 2022. This increase was primarily due to increases in occupancy and depreciation and in other technology and academic costs of $1.2 million and $0.8 million, respectively, partially offset by a decrease in employee compensation and related expenses, including share-based compensation of $1.2 million. The increased occupancy and depreciation and other technology and academic costs were primarily due to the costs associated with the increased number of off-campus classroom and laboratory sites to support our 25 university partners, and their increased enrollment growth. The decrease in employee compensation and related expenses is primarily due to decreased faculty reimbursements due to the decline in our other partners’ enrollments partially offset by increased headcount to support our 25 university partners, and their increased enrollment growth, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites year over year. Our technology and academic services expenses as a percentage of revenue decreased 0.6% to 18.5% for the three months ended June 30, 2023, from 19.1% for the three months ended June 30, 2022. This decrease was primarily due to the decreased faculty reimbursements between years. We anticipate that technology and academic services expenses as a percentage of revenue will increase in the future as we open more off-campus classroom and laboratory sites and our other partners’ enrollments grow. Counseling services and support . Our counseling services and support expenses for the three months ended June 30, 2023 were $72.4 million, an increase of $6.4 million, or 9.6%, as compared to counseling services and support expenses of $66.0 million for the three months ended June 30, 2022. This increase was primarily attributable to increases in employee compensation and related expenses including share-based compensation and in other counseling services and support expenses of $6.6 million and $0.3 million, respectively, partially offset by a decrease in occupancy and depreciation of $0.5 million. The increases in employee compensation and related expenses were primarily due to increased headcount to support our university partners, and their planned increases in enrollment, tenure-based salary adjustments, increased benefit costs and the increased number of off-campus classroom and laboratory sites open year over year. The increase in other counseling services and support expenses is primarily the result of increased travel costs for our 25 university partners. Our counseling services and support expenses as a percentage of revenue increased 1.3% to 34.4% for the three months ended June 30, 2023, from 33.1% for the three months ended June 30, 2022 primarily due to the significant increase year over year in headcount and travel costs. We anticipate that counseling services and support expense as a percentage of revenue will continue to be higher in 2023 than in 2022 as travel expenses will continue to be higher than in the prior year and we continue to grow our employee base and their compensation to meet our university partners’ growth expectations and retain our employees. Marketing and communication . Our marketing and communication expenses for the three months ended June 30, 2023 were $50.8 million, an increase of $1.1 million, or 2.2%, as compared to marketing and communication expenses of $49.7 million for the three months ended June 30, 2022. This increase was primarily attributable to the increased cost to market our university partners’ programs and to the marketing of new university partners and new locations which resulted in increased advertising of $1.1 million and increased employee compensation, including share-based compensation of $0.2 million, partially offset by a decrease in other marketing and communication expenses of $0.2 million. Our marketing and communication expenses as a percentage of revenue decreased by 0.8% to 24.1% for 23 Table of Contents the three months ended June 30, 2023, from 24.9% for the three months ended June 30, 2022, primarily due to our ability to leverage our marketing and communication expenses across an increasing revenue base, partially offset by the number of university partners and their growth expectations and increased off-campus classroom and laboratory sites opened and sites planned to open in the next 12 months. General and administrative . Our general and administrative expenses for the three months ended June 30, 2023 were $10.9 million, an increase of $1.0 million, or 10.3%, as compared to general and administrative expenses of $9.9 million for the three months ended June 30, 2022. This increase was primarily attributable to increased charitable contributions and increased professional fees of $0.7 million and $0.5 million, respectively, partially offset by a decrease in employee compensation, including share-based expenses of $0.2 million. Our general and administrative expenses as a percentage of revenue increased by 0.3% to 5.2% for the three months ended June 30, 2023, from 4.9% for the three months ended June 30, 2022. Amortization of intangible assets . Amortization of intangible assets for the three months ended June 30, 2023 and 2022 were $2.1 million for both periods. As a result of the acquisition of our wholly owned subsidiary, Orbis Education, certain identifiable intangible assets were created (primarily customer relationships) that will be amortized over their expected lives. Investment interest and other . Investment interest and other for the three months ended June 30, 2023 was $2.6 million, as compared to investment interest and other for the three months ended June 30, 2022 of $0.3 million due to higher investment balances and higher returns on those balances. Income tax expense . Income tax expense for the three months ended June 30, 2023 was $9.1 million, an increase of $0.5 million, or 5.0%, as compared to income tax expense of $8.6 million for the three months ended June 30, 2022. This increase was the result of an increase in our taxable income, partially offset by a decrease in our effective tax rate between periods. Our effective tax rate was 23.8% during the second quarter of 2023 compared to 25.2% during the second quarter of 2022. In the second quarter of 2023 the effective tax rate was favorably impacted by state tax audits, while in the second quarter of 2022 the effective tax rate was unfavorably impacted by an increase in the state income tax rate. ​ Net income . Our net income for the three months ended June 30, 2023 was $29.0 million, an increase of $3.4 million, or 13.3%, as compared to $25.6 million for the three months ended June 30, 2022, due to the factors discussed above. Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022 Service revenue . Our service revenue for the six months ended June 30, 2023 was $460.7 million, an increase of $16.8 million, or 3.8%, as compared to service revenue of $443.9 million for the six months ended June 30, 2022. The increase year over year in service revenue was primarily due to an increase in GCU enrollments to 95,972 at June 30, 2023, an increase of 4.1% over enrollments at June 30, 2022 and an increase in revenue per student year over year. The increase in revenue per student between years is primarily due to the service revenue impact of the increased room, board and other ancillary revenues at GCU’s ground traditional campus between years primarily due to increased enrollment . In addition, s ervice revenue per student for ABSN students at off-campus classroom and laboratory sites generates a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of their students take more credits on average per semester. Partner enrollments totaled 99,526 at June 30, 2023 as compared to 96,029 at June 30, 2022. University partner enrollments at our off-campus classroom and laboratory sites were 3,904, a decrease of 5.2% over enrollments at June 30, 2022, which includes 350 and 324 GCU students at June 30, 2023 and 2022, respectively. None of our ABSN partners stopped admitting new students due to the clinical faculty challenges that began during the pandemic, however some locations that were scheduled to open were delayed and some existing partners have experienced reduced incoming cohort sizes which has slowed the growth. We believe the growth in the number of ABSN students is also being negatively impacted by the strong job market as these students have historically been individuals with already completed bachelor’s degrees choosing to re-career into one of these health professions. To address this challenge, we have been working with a number of our university partners to adjust 24 Table of Contents their programs to allow students with the required education experience but without a complete bachelor’s degree to enter their programs. We did open six new off-campus classroom and laboratory sites in the year ended December 31, 2022 and one site in the six months ended June 30, 2023 increasing the total number of these sites to 36 at June 30, 2023 and we anticipate opening three to four more in 2023 which we hope, along with the program change discussed earlier, will re-accelerate the ABSN student enrollment growth. Enrollments for GCU ground students were 7,327 at June 30, 2023 up from 7,101 at June 30, 2022 primarily due to a 3.7% increase in traditional ground students between years. GCU online enrollments were 88,645 at June 30, 2023, up from 85,132 at June 30, 2022. GCU enrollment declines between March 31 and June 30 of each year as ground traditional enrollment at GCU at June 30 of each year only includes traditional-aged students taking summer school classes, which is a small percentage of GCU’s traditional-aged student body. The Spring semester for GCU’s traditional-aged student body ends near the end of April each year. Technology and academic services . Our technology and academic services expenses for the six months ended June 30, 2023 were $76.5 million, an increase of $2.0 million, or 2.6%, as compared to technology and academic services expenses of $74.5 million for the six months ended June 30, 2022. This increase was primarily due to increases in occupancy and depreciation and other technology and academic costs of $2.0 million and $0.6 million, respectively, partially offset by a decrease in employee compensation and related expenses, including share-based compensation of $0.6 million. These increases in occupancy and depreciation and other technology and academic costs were primarily due to the costs associated with the increased number of off-campus classroom and laboratory sites. The decrease in employee compensation and related expenses is primarily due to decreased faculty reimbursements due to the decline in our other partners’ enrollments partially offset by increased headcount to support our 25 university partners, and their increased enrollment growth, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites year over year. Our technology and academic services expenses as a percentage of revenue decreased 0.2% to 16.6% for the six months ended June 30, 2023, from 16.8% for the six months ended June 30, 2022 due primarily to the decreased faculty reimbursements. We anticipate that technology and academic services expenses as a percentage of revenue will increase in the future as we open more off-campus classroom and laboratory sites and as our other partners’ enrollment returns to growth. Counseling services and support . Our counseling services and support expenses for the six months ended June 30, 2023 were $145.7 million, an increase of $12.2 million, or 9.1%, as compared to counseling services and support expenses of $133.5 million for the six months ended June 30, 2022. This increase was primarily attributable to increases in employee compensation and related expenses including share-based compensation and in other counseling services and support expenses of $11.4 million and $1.6 million, respectively, partially offset by a decrease in occupancy and depreciation of $0.8 million. The increases in employee compensation and related expenses were primarily due to increased headcount to support our university partners, and their planned increases in enrollment, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites open year over year. The increase in other counseling services and support expenses is primarily the result of increased travel costs for our 25 university partners. Our counseling services and support expenses as a percentage of revenue increased 1.5% to 31.6% for the six months ended June 30, 2023, from 30.1% for the six months ended June 30, 2022 primarily due to the significant increase year over year in headcount and travel costs. We anticipate that counseling services and support expense as a percentage of revenue will continue to be higher in 2023 than in 2022 as travel expenses will continue to be higher than in the prior year and we continue to grow our employee base and their compensation to meet our university partners’ growth expectations and retain our employees. Marketing and communication . Our marketing and communication expenses for the six months ended June 30, 2023 were $103.7 million, an increase of $3.1 million, or 3.1%, as compared to marketing and communication expenses of $100.6 million for the six months ended June 30, 2022. This increase was primarily attributable to the increased cost to market our university partners’ programs and to the marketing of new university partners and new locations which resulted in increased advertising of $3.2 million and increased employee compensation, including share-based compensation of $0.4 million, partially offset by a decrease in other marketing and communication expenses of $0.5 million. Our marketing and communication expenses as a percentage of revenue decreased by 0.2% to 22.5% for the six months ended June 30, 2023, from 22.7% for the six months ended June 30, 2022, primarily due to our ability to leverage our marketing and communication expenses across an increasing revenue base, partially offset by the number of university partners and their growth expectations and increased off-campus classroom and laboratory sites opened and sites planned to open in the next 12 months. 25 Table of Contents General and administrative . Our general and administrative expenses for the six months ended June 30, 2023 were $20.7 million, an increase of $1.0 million, or 4.6%, as compared to general and administrative expenses of $19.7 million for the six months ended June 30, 2022. This increase was primarily attributable to increased charitable contributions and increased professional fees of $0.8 million and $0.5 million, respectively, partially offset by a decrease in employee compensation, including share-based expenses of $0.3 million. Our general and administrative expenses as a percentage of revenue increased by 0.1% to 4.5% for the six months ended June 30, 2023, from 4.4% for the six months ended June 30, 2022. Amortization of intangible assets . Amortization of intangible assets for the six months ended June 30, 2023 and 2022 were $4.2 million for both periods. As a result of the acquisition of our wholly owned subsidiary, Orbis Education, certain identifiable intangible assets were created (primarily customer relationships) that will be amortized over their expected lives. Investment interest and other . Investment interest and other for the six months ended June 30, 2023 was $4.7 million, as compared to investment interest and other for the six months ended June 30, 2022 of $0.5 million due to higher investment balances and higher returns on those balances. Income tax expense . Income tax expense for the six months ended June 30, 2023 was $26.1 million, a decrease of $2.1 million, or 7.5%, as compared to income tax expense of $28.2 million for the six months ended June 30, 2022. This decrease was the result of a decrease in our effective tax rate between periods, partially offset by an increase in our taxable income. Our effective tax rate was 22.8% during the six months ended June 30, 2023 compared to 25.2% during the six months ended June 30, 2022. In the six months ended June 30, 2023, the effective tax rate was impacted by excess tax benefits of $0.9 million as compared to only $0.1 million in the six months ended June 30, 2022. In the six months ended June 30, 2023 the effective tax rate was also favorably impacted by state income tax refunds and audits, while in the six months ended June 30, 2022 the effective tax rate was unfavorably impacted by an increase in the state income tax rate. ​ Net income . Our net income for the six months ended June 30, 2023 was $88.5 million, an increase of $4.9 million, or 5.9%, as compared to $83.6 million for the six months ended June 30, 2022, due to the factors discussed above. Seasonality Our net revenue and operating results normally fluctuate as a result of seasonal variations in our business, principally due to changes in our university partners’ enrollment. Our partners’ enrollment varies as a result of new enrollments, graduations, and student attrition. Revenues in the summer months (May through August) are lower primarily due to the majority of GCU’s traditional ground university students not attending courses during the summer months, which affects our results for our second and third fiscal quarters. Since a significant amount of our costs are fixed, the lower revenue resulting from the decreased summer enrollment has historically contributed to lower operating margins during those periods. Partially offsetting this summer effect has been the sequential quarterly increase in enrollments that has occurred as a result of the traditional fall school start. This increase in enrollments also has occurred in the first quarter, corresponding to calendar year matriculation. Thus, we experience higher net revenue in the fourth quarter due to its overlap with the semester encompassing the traditional fall school start and in the first quarter due to its overlap with the first semester of the calendar year. A portion of our expenses do not vary proportionately with these fluctuations in service revenue, resulting in higher operating income in the first and fourth quarters relative to other quarters. We expect quarterly fluctuation in operating results to continue as a result of these seasonal patterns. ​ 26 Table of Contents Liquidity and Capital Resources ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ As of December 31, (In thousands) ​ 2023 ​ 2022 Cash, cash equivalents and investments ​ $ 233,369 ​ $ 181,704 Overview Our liquidity position, as measured by cash and cash equivalents and investments increased by $51.7 million between December 31, 2022 and June 30, 2023, which was largely attributable to cash flows from operations exceeding share repurchases and capital expenditures during the six months ended June 30, 2023. Based on our current level of operations and anticipated growth, we believe that our cash flow from operations and other sources of liquidity, including cash and cash equivalents, will provide adequate funds for ongoing operations, planned capital expenditures, and working capital requirements for at least the next 24 months. Cash Flows from Operating Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, (In thousands) ​ 2023 ​ 2022 Net cash provided by operating activities ​ $ 157,128 ​ $ 146,089 The increase in cash generated from operating activities between the six months ended June 30, 2022 and the six months ended June 30, 2023 was primarily due to increased income and changes in working capital balances, primarily accounts receivable, accounts payable, accrued liabilities and income taxes payable. Accounts receivable decreased between December 31, 2022 and June 30, 2023 by $8.4 million more than it did between December 31, 2021 and June 30, 2022 due to the change between periods in the amount due from university partners. Accounts payable increased between December 31, 2022 and June 30, 2023 by $8.6 million more than it did between December 31, 2021 and June 30, 2022 due to the timing of check runs during those periods. These increases in working capital balances were partially offset by decrease in accrued liabilities and income taxes payable that were greater between December 31, 2022 and June 30, 2023 than between December 31, 2021 and June 30, 2022 of $6.0 million and $4.8 million, respectively, due to timing of payments. We define working capital as the assets and liabilities, other than cash, generated through the Company’s primary operating activities. Changes in these balances are included in the changes in assets and liabilities presented in the consolidated statement of cash flows. Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, (In thousands) ​ 2023 ​ 2022 Net cash used in investing activities ​ $ (48,057) ​ $ (79,617) Investing activities consumed $48.1 million of cash in the six months ended June 30, 2023 compared to $79.6 million in the six months ended June 30, 2022. In the first six months of 2023 and 2022 cash used in investing activities consisted of the purchase of available-for-sale securities, net of proceeds from the sale of investments of $30.0 million and $64.4 million, respectively. In the first six months of 2023 and 2022 cash used in investing activities also included capital expenditures totaling $17.6 million and $15.1 million, respectively. Capital expenditures for both periods primarily consisted of leasehold improvements and equipment for new off-campus classroom and laboratory sites, as well as purchases of computer equipment, internal use software projects and furniture and equipment to support our increasing employee headcount. The Company incurs upfront expenses and capital expenditures prior to an off-campus classroom and laboratory site being opened. The Company intends to continue to spend approximately $30.0 million to $35.0 million per year for capital expenditures. 27 Table of Contents Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, (In thousands) ​ 2023 ​ 2022 Net cash used in financing activities ​ $ (86,555) ​ $ (528,012) Financing activities consumed $86.6 million of cash in the six months ended June 30, 2023 compared to $528.0 million in the six months ended June 30, 2022. During the six months ended June 30, 2023 and 2022, $80.3 million and $523.4 million, respectively was used to purchase treasury stock in accordance with GCE’s share repurchase program. In 2023 and 2022, $6.3 million and $4.6 million, respectively, of cash was utilized to purchase common shares withheld in lieu of income taxes resulting from the vesting of restricted share awards. A significant amount of the share repurchases in 2022 were from the proceeds received on the repayment of the Secured Note. The Company intends to continue using a significant portion of its cash flows from operations to repurchase its shares but share repurchases in future years will be less than in 2022. Share Repurchase Program Our Board of Directors has authorized, under its existing stock repurchase program, an aggregate authorization for share repurchases since the initiation of the program of $1,845.0 million. The current expiration date on the repurchase authorization by our Board of Directors is December 31, 2023. Repurchases occur at the Company’s discretion and the Company may modify, suspend or discontinue the repurchase authorization at any time. Under our share repurchase authorization, we may purchase shares in the open market or in privately negotiated transactions, pursuant to the applicable SEC rules. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant. We repurchased 728,410 shares of common stock in the six months ended June 30, 2023. At June 30, 2023, there remains $115.6 million available under our share repurchase authorization . Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.