What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-11-02 · 126 added, 152 removed, 374 unchanged (43% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

20 unchanged sentences

Consolidated Balance Sheets

September 30,

(In thousands, except par value)

2 unchanged sentences

Accounts receivable, net

Insurance receivable

Income tax receivable

20 unchanged sentences

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

0 shares issued and outstanding at September 30, 2023 and December 31, 2022

0 shares issued and outstanding at March 31, 2024 and December 31, 2023

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

53,970 and 53,830 shares issued and 30,092 and 31,058 shares outstanding at September 30, 2023 and December 31, 2022, respectively

Treasury stock, at cost, 23,878 and 22,772 shares of common stock at September 30, 2023 and December 31, 2022, respectively

54,087 and 53,970 shares issued and 29,839 and 29,953 shares outstanding at March 31, 2024 and December 31, 2023, respectively

Treasury stock, at cost, 24,248 and 24,017 shares of common stock at March 31, 2024 and December 31, 2023, respectively

( 1,879,697 )

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Other comprehensive income, net of tax:

Unrealized gains (losses) on available-for-sale securities, net of taxes of $ 30 and $ 8 for the three months ended September 30, 2023 and 2022, respectively, and $ 19 and $ 131 for the nine months ended September 30, 2023 and 2022, respectively

Unrealized (losses) gains on available-for-sale securities, net of taxes of $ 18 and $ 37 for the three months ended March 31, 2024 and 2023, respectively

Comprehensive income

3 unchanged sentences

(In thousands)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Treasury Stock

8 unchanged sentences

( 1,879,697 )

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at June 30, 2023

( 1,798,619 )

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at September 30, 2023

( 1,832,686 )

GRAND CANYON EDUCATION, INC.

Consolidated Statement of Stockholders’ Equity

(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

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 )

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)

5 unchanged sentences

Deferred income taxes

Other, including fixed asset impairments

Other, including fixed asset disposals

Changes in assets and liabilities:

15 unchanged sentences

Net cash used in financing activities

Net decrease in cash and cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of period

5 unchanged sentences

Purchases of property and equipment included in accounts payable

ROU Asset and Liability recognition

Insurance receivable for litigation settlement to be paid by insurance

Excise tax on treasury stock repurchases

7 unchanged sentences

GCE has developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale.

GCE’s most significant university partner is Grand Canyon University (“GCU”), an Arizona non-profit corporation, a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across nine colleges both online, on ground at its campus in Phoenix, Arizona and at six 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.

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 ten colleges both online, on ground at its campus in Phoenix, Arizona and at six off-campus classroom and laboratory sites.

We also provide education services to numerous university partners across the United States.

GCE 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, 2023, GCE provides education services to 25 university partners across the United States.

As of March 31, 2024, GCE provides education services to 23 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, 2023 from which the December 31, 2023 balance sheet information was derived.

As of September 30, 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.

As of March 31, 2024 and December 31, 2023, 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.

Unrealized investment gains and losses, net of tax, are 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.

Insurance Receivable

The Company recorded a insurance receivable on March 31, 2024 for $ 25,500 for the Shareholder Litigation matter discussed in detail in Note 8 of the consolidated financial statements.

The Company’s insurance carriers will fund the entire settlement amount.

Grand Canyon Education, Inc.

3 unchanged sentences

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.

In conjunction with the Asset Purchase Agreement, the Company and GCU entered into a long-term 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.

16 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, 2023 and December 31, 2022, $ 906 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.

As of March 31, 2024 and December 31, 2023, $ 726 and $ 746 , 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

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.

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

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.

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.

5 unchanged sentences

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.

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

8 unchanged sentences

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

There were no indicators that the carrying amount of the finite-lived intangible assets were impaired as of September 30, 2023.

There were no indicators that the carrying amount of the finite-lived intangible assets were impaired as of March 31, 2024.

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.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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

Share-Based Compensation

8 unchanged sentences

The basis for fair value measurements for each level is described below, with Level 1 having the highest priority.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

-Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

12 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.

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.

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.

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, 2023.

There have been no amounts written off and no reserves established as of March 31, 2024.

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 $ 7,778 and $ 5,560 as of September 30, 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.

Given that the Fall semester has ended as of December 31 of each year unbilled revenue is low at year end whereas at the end of each fiscal quarter a semester is ongoing and thus unbilled revenue is higher.

Our unbilled revenue of $ 2,956 and $ 188 as of March 31, 2024 and December 31, 2023, respectively, are included in accounts receivable in our consolidated balance sheets.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

are reflected as a current liability on our consolidated balance sheets.

We generally receive payments for our services billed within 30 days of invoice.

12 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

13 unchanged sentences

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 it is probable that a loss will result and the amount of the loss is estimable, the Company

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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.

3 unchanged sentences

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

All of the Company’s cash equivalents and investments as of September 30, 2023 and December 31, 2022 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, 2024 and December 31, 2023 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, 2023 and December 31, 2022, the Company had $ 56,119 and $ 119,639 , respectively, in excess of the FDIC insured limit.

At March 31, 2024 and December 31, 2023, the Company had $ 195,207 and $ 145,474 , respectively, in excess of the FDIC insured limit.

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

Our dependence on our most significant university partner, with 87.0 % and 84.9 % of total service revenue for

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

the nine-month periods ended September 30, 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.

Our dependence on our most significant university partner, with 89.7 % and 88.5 % of total service revenue for the three-month periods ended March 31, 2024 and 2023, 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

4 unchanged sentences

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.

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 other than consolidated net income.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure,” effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The ASU adds disclosure requirements for segment expense information.

The ASU clarifies that single reportable segment entities are subject to Topic 280 in its entirety.

The Company adopted this standard effective January 1, 2024 and the adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company does not expect the adoption of this guidance to have a material impact on the Company’s financial condition, results of operations or statements of cash flows.

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.

As of September 30, 2023 and December 31, 2022, the Company had investments of $ 97,553 and $ 61,295 , respectively, classified as available-for-sale securities.

As of September 30, 2023, the Company had available-for-sale investments comprised of the following:

As of September 30, 2023

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

As of March 31, 2024 and December 31, 2023, the Company had investments of $ 94,485 and $ 98,031 , respectively, classified as available-for-sale securities.

As of March 31, 2024, the Company had available-for-sale investments comprised of the following:

As of March 31, 2024

Corporate bonds

Commercial Paper

Total investments

For the nine months ended September 30, 2023 and 2022, the net unrealized losses were $ 60 and $ 417 , respectively, net of taxes.

For the three months ended March 31, 2024 and 2023, the net unrealized losses and gains were $ 56 and $ 119 , respectively, net of taxes.

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

2 unchanged sentences

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

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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

5 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, 2023 and 2022, approximately 2 and 25 , respectively, and for the nine-month periods ended September 30, 2023 and 2022, approximately 70 and 77 , 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, 2024 and 2023, approximately 78 and 100 , 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.

4 unchanged sentences

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 $ 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.

Identified intangible assets of $ 210,280 consisted primarily of university partner relationships that were valued at $ 210,000 , which arose in connection with the 2019 acquisition of Orbis Education.

Amortizable intangible assets consist of the following as of:

September 30, 2023

March 31, 2024

Average Useful

4 unchanged sentences

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

These leases have remaining lease terms that range from eight

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

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 $ 3,877 and $ 3,018 for the three-month periods ended March 31, 2024 and 2023, respectively.

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

months to 10 years and eight 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 $ 3,525 and $ 2,789 for the three-month periods ended September 30, 2023 and 2022, respectively, and $ 9,695 and $ 7,596 for the nine-month periods ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, the Company had $ 24,077 of non-cancelable operating lease commitments for four off-campus classroom and laboratory sites and $ 192 for optical fiber communication lines that had not yet commenced.

As of March 31, 2024, the Company had $ 29,578 of non-cancelable operating lease commitments for five 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 7.79 years, with a weighted-average discount rate of 3.9 % .

As of September 30, 2023, the Company had no financing leases.

Future payment obligations with respect to the Company’s operating leases, which were existing at September 30, 2023, by year and in the aggregate, are as follows:

The cash paid for operating lease liabilities was $ 3,541 and $ 2,600 for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the Company had no financing leases.

Future payment obligations with respect to the Company’s operating leases, which were existing at March 31, 2024, by year and in the aggregate, are as follows:

Year Ending December 31,

11 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.

Pending Litigation Matters

Shareholder Litigation.

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

2 unchanged sentences

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

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

institution for education regulatory purposes (collectively, the “Conversion”).

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.

2 unchanged sentences

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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.

2 unchanged sentences

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.

On January 5, 2024, plaintiffs moved for class action status and the briefing on plaintiffs motion commenced.

On March 25, 2024, the parties executed a Stipulation and Agreement of Settlement to resolve this action.

Subsequently, on March 29, 2024, the plaintiffs filed a motion seeking entry of an order preliminarily approving the settlement and establishing notice procedures, and on May 1, 2024, the Court granted an order preliminarily approving the settlement and authorizing dissemination of notice.

The settlement remains subject to final approval by the Court.

The Company’s insurance carriers will fund the entire settlement amount.

On December 22, 2023, the Company was named as a nominal defendant and certain of the Company’s current and former directors and officers were named as defendants in a shareholder derivative lawsuit filed in the Delaware Court of Chancery related to, among other things, the allegations in the aforementioned securities class action.

The complaint asserts claims for breach of fiduciary duty, unjust enrichment, aiding and abetting breach of fiduciary duty, and corporate waste against all defendants.

The defendants filed a motion to dismiss the complaint on April 15, 2024.

The plaintiffs are required to either file a response opposing the motion to dismiss or submit an amended complaint by no later than June 12, 2024.

False Claims Act Matter .

In May 2020, we were served with a qui tam lawsuit that had been filed against us in 2019 in the U.S.

District Court for the District of Massachusetts by a former employee on behalf of the federal government.

All proceedings in the lawsuit had been under seal until February 2020, when the U.S.

government decided to not intervene in the lawsuit, and the complaint was then unsealed by the court.

The suit, United States ex rel Mackillop v.

Grand Canyon Education, Inc.

, alleges that we violated the False Claims Act by improperly compensating certain of our enrollment counselors in violation of the Title IV law governing compensation of such employees (the “incentive compensation rule”), and as a result, improperly received Title IV program funds.

In response to a second amended complaint filed in September 2020, we filed a motion to dismiss and a motion to transfer the matter to the U.S.

District Court for the District of Arizona.

In December 2020, the court granted our motion to dismiss as to one of three counts and granted the motion to transfer but only upon conclusion of pretrial proceedings.

In September 2021, we filed a motion for summary judgment which the Massachusetts court denied in September 2022.

Subsequently, the matter was transferred to the Arizona court and trial was scheduled for late April 2024.

In the interim, we filed a motion for reconsideration of the summary judgment ruling in September 2023;

that motion remains pending.

Prior to trial commencing, we and the relator reached an agreement to stay trial while the parties attempt to finalize the terms upon which the litigation could be concluded.

For any future settlement to be effected, all parties to the litigation will need to agree on acceptable terms, both monetary and non-monetary.

In this regard, because this matter involves claims under the False Claims Act, any such terms would also need to be approved by the applicable U.S.

government agencies.

We believe that the compensation practices at issue in the complaint, which were developed with the guidance of outside regulatory counsel specifically to comply with Title IV and its regulations and relevant case law interpreting the incentive compensation rule, do not violate applicable law.

If a future settlement is not finalized on terms acceptable to all parties in interest, the Company intends to defend itself vigorously in this legal proceeding.

The outcome of this legal proceeding is uncertain at this point.

1 unchanged sentence

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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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, 2023, 1,081 shares were available for grants under the 2017 Plan.

As of March 31, 2024, 965 shares were available for grants under the 2017 Plan.

Restricted Stock

During the nine months ended September 30, 2023, the Company granted 136 shares of common stock with a service vesting condition to certain of its executives, officers and employees.

During the three months ended March 31, 2024, the Company granted 117 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, 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.

In June 2023, 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 next annual stockholders meeting.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

During the three months ended March 31, 2024, the Company withheld 55 shares of common stock in lieu of taxes at a cost of $ 7,446 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, 2023 is as follows:

3 unchanged sentences

Forfeited, canceled or expired

Outstanding as of September 30, 2023

Outstanding as of March 31, 2024

Share-based Compensation Expense

The table below outlines share-based compensation expense for the nine months ended September 30, 2023 and 2022 related to restricted stock granted:

The table below outlines share-based compensation expense for the three months ended March 31, 2024 and 2023 related to restricted stock granted:

Technology and academic services

6 unchanged sentences

Treasury Stock

On October 25, 2023, 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 $ 2,045,000 .

The Board of Directors has authorized under its existing stock repurchase program, an aggregate authorization for share repurchases since the initiation of our program of $ 2,045,000 .

The expiration date on the repurchase authorization is March 1, 2025.

2 unchanged sentences

The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.

During the nine months ended September 30, 2023 the Company repurchased 1,035 shares of common stock, at an aggregate cost of $ 113,954 .

As of September 30, 2023, there remained $ 81,892 available under its current share repurchase authorization (which authorization was increased to $ 281,892 in October 2023).

During the three months ended March 31, 2024 the Company repurchased 172 shares of common stock, at an aggregate cost of $ 22,524 .

As of March 31, 2024, there remained $ 242,530 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.

Excise taxes of $ 34 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.

Related Party Transactions

Related party transactions include transactions 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 was the amount of consideration established and agreed to by the parties.

As of and for the nine months ended September 30, 2023 and 2022, related party transactions consisted of the following:

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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 (the “Code”), including for such purposes as the making of distributions to organizations that qualify as exempt organizations under Section 501 (c ) (3) of the Code.

The Company’s Chief Executive Officer serves as the president of GCECF and GCECF’s board of directors is comprised entirely of Company executives.

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

The Company made voluntary charitable contributions of $ 700 and $ 200 for each of the nine months ended September 30, 2023 and 2022, respectively, of which no amounts were owed as of September 30, 2023 and 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements