What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-06 compared with 2024-08-06 · 175 added, 113 removed, 411 unchanged (41% of the section changed)

3 unchanged sentences

Three Months Ended

Six 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)

24 unchanged sentences

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

0 shares issued and outstanding at June 30, 2024 and December 31, 2023

0 shares issued and outstanding at September 30, 2024 and December 31, 2023

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

54,090 and 53,970 shares issued and 29,549 and 29,953 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Treasury stock, at cost, 24,541 and 24,017 shares of common stock at June 30, 2024 and December 31, 2023, respectively

54,090 and 53,970 shares issued and 29,274 and 29,953 shares outstanding at September 30, 2024 and December 31, 2023, respectively

Treasury stock, at cost, 24,816 and 24,017 shares of common stock at September 30, 2024 and December 31, 2023, respectively

( 1,958,837 )

9 unchanged sentences

Three Months Ended

Six 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 $ 4 and $ 86 for the three months ended June 30, 2024 and 2023, respectively, and $ 22 and $ 49 for the six months ended June 30, 2024 and 2023, respectively

Realized gains on available-for-sale securities, net of taxes of $ 39 for the three months ended September 30, 2024, and $ 17 for the nine months ended September 30, 2024

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

Comprehensive income

3 unchanged sentences

(In thousands)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Treasury Stock

14 unchanged sentences

( 1,918,810 )

Six Months Ended June 30, 2023

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at September 30, 2024

( 1,958,837 )

GRAND CANYON EDUCATION, INC.

Consolidated Statement of Stockholders’ Equity

(In thousands)

Nine Months Ended September 30, 2023

Treasury Stock

14 unchanged sentences

( 1,798,619 )

Comprehensive income

Common stock purchased for treasury

Restricted shares forfeited

Share-based compensation

Balance at September 30, 2023

( 1,832,686 )

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

1 unchanged sentence

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

14 unchanged sentences

Net cash provided by operating activities

Cash flows used in investing activities:

Cash flows provided by (used in) investing activities:

Capital expenditures

2 unchanged sentences

Proceeds from sale or maturity of investments

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows used in financing activities:

19 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 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.

1 unchanged sentence

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

As of June 30, 2024, GCE provides education services to 22 university partners across the United States.

As of September 30, 2024, GCE provides education services to 22 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 June 30, 2024 and December 31, 2023, the Company considered its investments in corporate bonds, agency bonds, treasury bills and commercial paper as available-for-sale securities based on the Company’s intent for the respective securities.

As of September 30, 2024 the Company had no investments.

As of December 31, 2023, the Company considered its investments in corporate bonds, agency bonds, treasury bills 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.

2 unchanged sentences

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 an 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 have funded the entire settlement amount as of June 30, 2024 and the receivable has been removed from the consolidated financial statements.

Arrangements with GCU

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

In conjunction with the Asset Purchase Agreement, 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 %

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

Arrangements with GCU

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

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 June 30, 2024 and December 31, 2023, $ 728 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.

As of September 30, 2024 and December 31, 2023, $ 676 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

2 unchanged sentences

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.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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.

2 unchanged sentences

At lease inception, the Company determines the lease term by assuming no exercises of renewal options, due to the Company’s constantly changing geographical needs for its university partners.

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

Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and are recognized as

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

lease expense on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, and the non-lease components are accounted for separately and not included in our ROU assets and lease liabilities.

10 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 June 30, 2024.

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

10 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.

4 unchanged sentences

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

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Revenue Recognition

15 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 June 30, 2024.

There have been no amounts written off and no reserves established as of September 30, 2024.

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

2 unchanged sentences

Given that the Fall semester ends on December 31 of each year unbilled revenue is low at year end (whereas a semester is ongoing at the end of each other fiscal quarter, and unbilled revenue is thus higher at the end of our first three quarters).

Our unbilled revenue of $ 10,055 and $ 188 as of June 30, 2024 and December 31, 2023, 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

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

reporting period, and such amounts are reflected as a current liability on our consolidated balance sheets.

Our unbilled revenue of $ 8,351 and $ 188 as of September 30, 2024 and December 31, 2023, respectively, are included in accounts receivable in our consolidated balance sheets.

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

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

4 unchanged sentences

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.

The Company determines the adequacy of

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

the allowance by periodically evaluating each university partners balance, considering their financial condition and credit history, and considering current and forecasted economic conditions.

Bad debt expense is recorded as a technology and academic services expense in the consolidated income statements.

10 unchanged sentences

Marketing and Communication

Marketing and communication includes lead acquisition, digital communication strategies, brand identity advertising, media planning and strategy, video, data science and analysis, marketing to potential students and other promotional and communication services.

Marketing and communication include lead acquisition, digital communication strategies, brand identity advertising, media planning and strategy, video, data science and analysis, marketing to potential students and other promotional and communication services.

This expense category includes salaries, benefits and share-based compensation for marketing and communication personnel, brand advertising, marketing leads and other promotional and communication expenses.

7 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

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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 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.

1 unchanged sentence

The Company expenses legal fees as incurred.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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 at least one major rating agency at the time of purchase.

All of the Company’s cash equivalents and investments as of June 30, 2024 and December 31, 2023 consist of investments rated BBB or higher by at least one rating agency.

All of the Company’s cash equivalents and investments as of September 30, 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 June 30, 2024 and December 31, 2023, the Company had $ 240,317 and $ 145,474 , respectively, in excess of the FDIC insured limit.

At September 30, 2024 and December 31, 2023, the Company had $ 262,584 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 88.4 % and 87.2 % of total service revenue for the six-month periods ended June 30, 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.

Our dependence on our most significant university partner, GCU, with 88.3 % and 87.0 % of total service revenue for the nine-month periods ended September 30, 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

6 unchanged sentences

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

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

8 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.

As of September 30, 2024 and December 31, 2023, the Company had investments of $ 0 and $ 98,031 , respectively, classified as available-for-sale securities.

The Company sold all its investments in the third quarter of 2024 and the proceeds were invested in cash and cash equivalents.

Grand Canyon Education, Inc.

1 unchanged sentence

(In thousands, except per share data)

As of June 30, 2024 and December 31, 2023, the Company had investments of $ 100,498 and $ 98,031 , respectively, classified as available-for-sale securities.

As of June 30, 2024, the Company had available-for-sale investments comprised of the following:

As of June 30, 2024

Corporate bonds

Treasury bills

Total investments

For the six months ended June 30, 2024 and 2023, the net unrealized losses were $ 69 and $ 157 , respectively, net of taxes.

For the nine months ended September 30, 2024 and 2023, the net realized gains and unrealized losses were $ 57 and $ 60 , 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 or maturity.

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

Net Income Per Common Share

4 unchanged sentences

Three Months Ended

Six 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 June 30, 2024 and 2023, approximately nil and 107 , respectively, and for the six-month periods ended June 30, 2024 and 2023, approximately 39 and 103 , respectively, of the Company’s restricted stock awards outstanding were excluded from the calculation of diluted

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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

For the three-month periods ended September 30, 2024 and 2023, approximately nil and 2 , respectively, and for the nine-month periods ended September 30, 2024 and 2023, approximately 26 and 70 , 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.

1 unchanged sentence

Property and equipment consist of the following:

September 30,

Land improvements

6 unchanged sentences

Property and equipment, net

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Amortizable Intangible Assets

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:

June 30, 2024

September 30, 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 one month to 10 years and 8 months.

These leases have remaining lease terms that range from four 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

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

a straight-line basis over the lease term.

The Company had operating lease costs of $ 8,037 and $ 6,170 for the six-month periods ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the Company had $ 18,281 of non-cancelable operating lease commitments for three off-campus classroom and laboratory sites that had not yet commenced.

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 $ 12,350 and $ 9,695 for the nine-month periods ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the Company had $ 22,204 of non-cancelable operating lease commitments for four 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 7.72 years, with a weighted-average discount rate of 4.16 % .

The cash paid for operating lease liabilities was $ 7,279 and $ 5,389 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, the Company had no financing leases.

Future payment obligations with respect to the Company’s operating leases, which were existing at June 30, 2024, by year and in the aggregate, are as follows:

The cash paid for operating lease liabilities was $ 11,054 and $ 8,339 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the Company had no financing leases.

Future payment obligations with respect to the Company’s operating leases, which were existing at September 30, 2024, by year and in the aggregate, are as follows:

Year Ending December 31,

2 unchanged sentences

Present value of lease liabilities

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Commitments and Contingencies

9 unchanged sentences

Shareholder Litigation.

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.

As previously disclosed, on May 12, 2020, a securities class action complaint was filed in the U.S.

District Court for the District of Delaware alleging claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, against 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.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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 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.

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.

Bachus, for allegedly making false and materially misleading statements regarding the circumstances surrounding the Company’s 2018 sale of Grand Canyon University (the “University”) to a non-profit entity 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.

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

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

On August 22, 2024 the Court held a final fairness hearing and entered an order granting final approval of the settlement, and no appeals were taken.

The Company’s insurance carriers have funded 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 complaint asserted claims for breach of fiduciary duty and related claims.

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

In response, Plaintiff will be filing an amended complaint on or before August 12, 2024 and Defendants’ motion to dismiss Plaintiff’s amended complaint is due on October 11, 2024.

On August 22, 2024, Plaintiff filed a motion requesting that the Court voluntarily dismiss the claims without prejudice.

On September 5, 2024, the Court granted Plaintiff’s motion and issued an order dismissing the claims without prejudice.

False Claims Act Matter .

14 unchanged sentences

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.

For any future settlement to be affected, all parties to the litigation will need to

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

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.

5 unchanged sentences

Accordingly, the Company has not accrued any liability associated with this action.

Matters Related to GCU Graduate Program Disclosures and Related Matters.

The Company is a party to several matters alleging that, in the performance of its marketing services provided on behalf of GCU, it made false or misleading representations regarding the time to complete and the costs associated with and/or accreditation issues related to certain Grand Canyon University graduate programs, and (in the case of the FTC matter noted below) also made false or misleading representations regarding Grand Canyon University’s non-profit status and made telemarketing calls to phone numbers on do not call lists.

These matters include:

● Smith and Wang v.

Grand Canyon Education, Inc.

This putative class action was filed in June 2024 in the United States District Court for the District of Arizona and asserts claims under the federal RICO statute as well as various claims for violations of state law consumer protection statutes.

On September 20, 2024, the plaintiffs amended their complaint, and on November 4, 2024, the Company moved to dismiss the case.

The motion to dismiss is pending with the court.

There is currently no trial date scheduled in this matter.

● Federal Trade Commission v.

Grand Canyon Education, Inc., et al .

This suit was filed in late December 2023 in United States District Court for the District of Arizona and asserts claims under the FTC Act and Telemarketing Sales Rule.

In February 2024, GCE filed a partial motion to dismiss, which was denied in August 2024.

Discovery in this matter has commenced and is ongoing, with a fact and expert discovery scheduled to conclude in May 2025 and October 2025 respectively.

There is currently no trial date scheduled in this matter.

Grand Canyon Education, Inc., et al .

This putative class action was filed in May 2020 in federal district court in California and later transferred to United States District Court for the District of Arizona and asserts claims for violations of California’s False Advertising Law, Unfair Competition Law, Consumer Legal Remedies Act;

Unjust Enrichment;

and purported violations of the federal RICO statute, including a conspiracy claim.

The defendants include the Company along with our chief executive officer, chief operating officer and chief financial officer.

On May 27, 2022, after significant motions practice, the Company filed an amended motion to dismiss and a motion to strike certain allegations in Plaintiff’s amended complaint.

On August 8, 2023, the court presiding over the dispute entered two orders:

(1) an order granting in part the Company’s motion to dismiss as to Ogdon’s RICO claim from the case and to dismiss the individual Defendants;

and (2) an order granting in part the Company’s motion to strike scandalous and impertinent allegations in Ogdon’s complaint about our business.

Shortly thereafter on August 22, 2023, Plaintiff moved the court to reconsider its dismissal of the RICO claim.

Though discovery had commenced, and the Company substantially completed its discovery obligations on the state-law claims, discovery was stayed on March 18, 2024, pending mediation and the disposition of Ogdon’s motion for reconsideration.

On March 29, 2024, the court issued an order reinstating Plaintiff’s RICO claim.

On September 26, 2024, the court lifted the stay on discovery, and discovery resumed, with class certification briefing to conclude in September 2025.

There is currently no trial date scheduled in this matter.

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

We believe that the Company’s representations made in marketing materials or by our employees regarding Grand Canyon University’s non-profit status and doctoral program requirements were at all times accurate and not false or misleading, and thus did not violate applicable law.

In addition, to the extent the representations we made or actions we took that are at issue in these proceedings were done or taken after July 1, 2018 at the direction of GCU and/or based on written instructions, or advertising or web materials, provided to us for use by GCU, then we believe we have the right to be indemnified by GCU under the terms of the Master Services Agreement for all losses and expenses arising from these matters.

With regard to the FTC’s claims under the Telemarketing Sales Rule, we only make telemarketing calls to individuals who have demonstrated interest in speaking to us about educational opportunities at Grand Canyon University, which are permitted by the rule.

The Company intends to defend itself vigorously in each of these legal proceedings.

The outcome of these legal proceedings is uncertain at this point.

At present, the Company cannot estimate a range of loss for these actions based on the information available to the Company.

Accordingly, the Company has not accrued any liability associated with these actions.

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 June 30, 2024, 962 shares were available for grants under the 2017 Plan.

As of September 30, 2024, 962 shares were available for grants under the 2017 Plan.

Restricted Stock

During the six months ended June 30, 2024, the Company granted 117 shares of common stock with a service vesting condition to certain of its executives, officers and employees.

During the nine months ended September 30, 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 six months ended June 30, 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.

In April 2024, a new non-employee director was appointed to the Board and was granted an initial award of shares pursuant to the Company’s compensation program.

During the nine months ended September 30, 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.

In April 2024, a new non-employee director was appointed to the Company’s Board of Directors and was granted an initial award of shares pursuant to the Company’s compensation program.

The initial award of shares that were granted to such newly appointed director have voting rights and vest on the one-year anniversary of the date of grant.

1 unchanged sentence

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.

On June 30, 2024, a named executive officer resigned for “good reason” which resulted in an acceleration of the next tranche of restricted stock awards that would have vested on March 1, 2025.

As a result, the incremental share-based compensation expense from the modification on five restricted stock awards for the accelerated vesting date was $ 558 and is included in the general and administrative expenses in the Company’s consolidated income statement.

On June 30, 2024, a named executive officer resigned for “good reason” which, under the terms of his employment agreement, resulted in an acceleration of the vesting of the next tranche of five outstanding restricted stock awards that would have otherwise vested on March 1, 2025.

As a result, the incremental share-based compensation expense from the modification on the five restricted stock awards for the accelerated vesting date was $ 558 and is included in the general and administrative expenses in the Company’s consolidated income statement.

In July 2024, 5 shares vested and 2 shares were withheld in lieu of taxes at a cost of $ 324 on the accelerated vesting date.

A summary of the activity related to restricted stock granted under the Company’s Incentive Plan since December 31, 2023 is as follows:

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

A summary of the activity related to restricted stock granted under the 2017 Plan since December 31, 2023 is as follows:

Weighted Average

2 unchanged sentences

Forfeited, canceled or expired

Outstanding as of June 30, 2024

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

Outstanding as of September 30, 2024

Share-based Compensation Expense

The table below outlines share-based compensation expense for the six months ended June 30, 2024 and 2023 related to restricted stock granted:

The table below outlines share-based compensation expense for the nine months ended September 30, 2024 and 2023 related to restricted stock granted:

Technology and academic services

11 unchanged sentences

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

During the six months ended June 30, 2024 the Company repurchased 453 shares of common stock, at an aggregate cost of $ 61,249 .

As of June 30, 2024, there remained $ 203,804 available under its current share repurchase authorization.

During the nine months ended September 30, 2024 the Company repurchased 726 shares of common stock, at an aggregate cost of $ 100,559 .

As of September 30, 2024, there remained $ 164,494 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 $ 815 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.

Subsequent Event

On October 1, 2024, GCU entered into certain loan agreements (the “Loan Agreements”) with MidFirst Bank, a federally chartered savings association (“MidFirst”), and Zions Bancorporation, N.A., dba National Bank of Arizona, (“NBAZ” and, together with MidFirst, the “Banks”), pursuant to which each Bank made loans to GCU in the original amount of $ 250.0 million ( $ 500.0 million in the aggregate) (each, a “Loan” and, collectively, the “Loans”).

The proceeds of the Loans were used by GCU to refinance outstanding bonds originally issued in 2021.

The stated maturity date under the MidFirst Loan Agreement is October 1, 2026 and under the NBAZ Loan Agreement is April 1, 2025.

The Loan Agreements provide for customary events of default and remedies.

As a condition to the making of the Loans, each Bank required GCU to provide cash collateral in an amount equal to the principal balance of the Loan it provided.

At the time of the making of the Loans, GCU provided $ 300.0 million of its cash as collateral and the Company offered to use some of its cash to provide the remaining collateral

Grand Canyon Education, Inc.

Notes to Consolidated Financial Statements

(In thousands, except per share data)

necessary for GCU to secure the Loans.

Accordingly, on October 1, 2024, the Company entered into (i) a Pledge and Security Agreement, by and between the Company and MidFirst, and (ii) a Security Agreement, by and between the Company and Zions (collectively, the “Pledge Agreements”), pursuant to which, among other things, the Company agreed to pledge to each of MidFirst and Zions $ 100.0 million of the Company’s available cash in order to partially secure the obligations of GCU under each Loan Agreement.

The Pledge Agreements generally require that, so long as the time for payment of the indebtedness incurred by GCU under the Loan Agreements has not been stayed, enjoined or prevented for any reason, each Bank will exhaust its rights and remedies against GCU prior to exercising its rights against the Company’s collateral under the Pledge Agreement s.

The Pledge Agreements will terminate upon the earlier of (a) in the case of the MidFirst Loan, repayment by GCU of at least $ 100.0 million of the Loan or GCU’s pledge of $ 100.0 million in cash collateral in substitution of the Company’s cash collateral, and (b) in the case of NBAZ, payment in full of all indebtedness due and owing under Loan Agreement or GCU’s pledge of $ 100.0 million in cash collateral in substitution of the Company’s cash collateral .

All income earned on the Company’s cash collateral under the Pledge Agreements will be for the benefit of the Company.

GCU has agreed to indemnify the Company for any claims, losses, liabilities and expenses arising out of Pledge Agreements (including the value of any collateral against which MidFirst or NBAZ has exercised remedies, out of pocket expenses, costs and disbursements and reasonable and documented attorney’s fees), except to the extent the claims, liabilities or expenses are finally judicially determined by a court of competent jurisdiction to have resulted from the Company’s or any of its affiliates’ gross negligence or willful misconduct.

In the event that the terms of any of the Loan Agreements or Pledge Agreements prevent GCU from making any indemnity payment required by the preceding sentence, GCU shall make such payment immediately upon the removal of such restriction.

The foregoing description of the Pledge Agreements does not purport to be complete and is qualified in its entirety by the full text of the Pledge Agreements, copies of which will be timely filed as an exhibit to the Company’s upcoming Annual Report on Form 10-K in accordance with applicable rules and regulations of the Securities and Exchange Commission.

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