Grand Canyon Education, Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Market risk . As of December 31, 2024, we have no derivative financial instruments or derivative commodity instruments. Although we do not currently have any investments, we have historically, and may in the future invest cash in excess of current operating requirements in short term certificates of deposit and money market instruments, municipal bond portfolios, or municipal mutual funds at multiple financial institutions. Interest rate risk . We manage interest rate risk by investing excess funds in cash equivalents, BBB or higher rated corporate bonds, commercial paper, agency bonds, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations bearing variable interest rates, which are tied to various market indices or individual bond coupon rates. Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities before their maturity date that have declined in market value due to changes in interest rates. At December 31, 2024, we do not currently have any investments, and therefore a 10% increase or decrease in interest rates would not have a material impact on our future earnings, fair values, or cash flows. 56 Table of Contents Item 8. Consolidated Financial Statements and Supplementary Data Page ​ ​ ​ Report of Independent Registered Public Accounting Firm ( KPMG LLP , Phoenix, Arizona , Auditor Firm: 185 ) ​ 58 ​ Consolidated Balance Sheets as of December 31, 2024 and 2023 ​ 60 ​ Consolidated Income Statements for the years ended December 31, 2024, 2023 and 2022 ​ 61 ​ Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 ​ 62 ​ Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022 ​ 63 ​ Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 ​ 64 ​ Notes to Consolidated Financial Statements ​ 65 ​ ​ ​ 57 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Grand Canyon Education, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Grand Canyon Education, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of the sufficiency of audit evidence over service revenue As discussed in Note 2 to the consolidated financial statements, service revenue is recognized from the delivery of support services to institutions in the post-secondary education sector of the United States (University Partners). The transaction price for support services is based on the Company receiving a contracted percentage of the University Partner’s tuition and fee revenue. The tuition and fee information received varies depending 58 Table of Contents on the respective University Partner’s reporting processes and the services provided. The Company recorded $1,033 million of service revenue for the year ended December 31, 2024. We identified the evaluation of the sufficiency of audit evidence over service revenue as a critical audit matter. This required especially subjective auditor judgment because service revenue recorded by the Company is dependent on the tuition and fee information of the University Partners. This included determining the nature and extent of procedures to be performed and evaluating the evidence obtained over the tuition and fee information. The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over tuition and fee information of the University Partners. We evaluated the design and tested the operating effectiveness of certain internal controls related to service revenue. This included controls related to the accurate recording of amounts dependent on University Partners’ tuition and fee revenue information. For a sample of transactions, we compared the amounts recognized as service revenue for consistency with underlying documentation, including contracts with University Partners and student enrollment documentation. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the nature of such evidence. /s/ KPMG LLP ​ We have served as the Company’s auditor since 2012. ​ Phoenix, Arizona February 19, 2025 ​ ​ 59 Table of Contents Grand Canyon Education, Inc. Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ (In thousands, except par value) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ ASSETS: ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ Cash and cash equivalents ​ $ 324,623 ​ $ 146,475 ​ Investments ​ — ​ 98,031 ​ Accounts receivable, net ​ 82,948 ​ 78,811 ​ Income tax receivable ​ 490 ​ 1,316 ​ Other current assets ​ 11,915 ​ 12,889 ​ Total current assets ​ 419,976 ​ 337,522 ​ Property and equipment, net ​ 176,823 ​ 169,699 ​ Right-of-use assets ​ ​ 99,541 ​ ​ 92,454 ​ Amortizable intangible assets, net ​ ​ 159,962 ​ ​ 168,381 ​ Goodwill ​ 160,766 ​ 160,766 ​ Other assets ​ 1,357 ​ 1,641 ​ Total assets ​ $ 1,018,425 ​ $ 930,463 ​ LIABILITIES AND STOCKHOLDERS’ EQUITY: ​ ​ ​ Current liabilities ​ ​ ​ Accounts payable ​ $ 26,721 ​ $ 17,676 ​ Accrued compensation and benefits ​ 33,183 ​ 31,358 ​ Accrued liabilities ​ 29,620 ​ 26,725 ​ Income taxes payable ​ 8,559 ​ 10,250 ​ Deferred revenue ​ — ​ — ​ Current portion of lease liability ​ 12,883 ​ 11,024 ​ Total current liabilities ​ 110,966 ​ 97,033 ​ Deferred income taxes, noncurrent ​ 26,527 ​ 26,749 ​ Other long-term liability ​ ​ 1,444 ​ ​ 410 ​ Lease liability, less current portion ​ 95,635 ​ 88,257 ​ Total liabilities ​ 234,572 ​ 212,449 ​ Commitments and contingencies ​ ​ ​ Stockholders’ equity ​ ​ ​ Preferred stock, $ 0.01 par value, 10,000 shares authorized; 0 shares issued and outstanding at December 31, 2024 and December 31, 2023 ​ — ​ — ​ Common stock, $ 0.01 par value, 100,000 shares authorized; 54,090 and 53,970 shares issued and 28,858 and 29,953 shares outstanding at December 31, 2024 and December 31, 2023, respectively ​ 541 ​ 540 ​ Treasury stock, at cost, 25,232 and 24,017 shares of common stock at December 31, 2024 and December 31, 2023, respectively ​ ( 2,024,370 ) ​ ( 1,849,693 ) ​ Additional paid-in capital ​ 336,736 ​ 322,512 ​ Accumulated other comprehensive loss ​ — ​ ( 57 ) ​ Retained earnings ​ 2,470,946 ​ 2,244,712 ​ Total stockholders’ equity ​ 783,853 ​ 718,014 ​ Total liabilities and stockholders’ equity ​ $ 1,018,425 ​ $ 930,463 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. 60 Table of Contents Grand Canyon Education, Inc. Consolidated Income Statements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (In thousands, except per share data) 2024 2023 2022 Service revenue ​ $ 1,033,002 ​ $ 960,899 ​ $ 911,306 ​ Costs and expenses: ​ ​ ​ ​ Technology and academic services ​ 165,085 ​ 154,870 ​ 150,493 ​ Counseling services and support ​ 323,484 ​ 302,319 ​ 273,313 ​ Marketing and communication ​ 212,420 ​ 202,800 ​ 196,090 ​ General and administrative ​ 46,298 ​ 43,235 ​ 45,491 ​ Impairment and other ​ ​ 1,897 ​ ​ — ​ ​ — ​ Amortization of intangible assets ​ 8,419 ​ 8,419 ​ 8,419 ​ Total costs and expenses ​ 757,603 ​ 711,643 ​ 673,806 ​ Operating income ​ 275,399 ​ 249,256 ​ 237,500 ​ Interest expense ​ ( 4 ) ​ ( 33 ) ​ ( 2 ) ​ Investment interest and other ​ 15,920 ​ 10,452 ​ 2,621 ​ Income before income taxes ​ 291,315 ​ 259,675 ​ 240,119 ​ Income tax expense ​ 65,081 ​ 54,690 ​ 55,444 ​ Net income ​ $ 226,234 ​ $ 204,985 ​ $ 184,675 ​ Earnings per share: ​ ​ ​ ​ Basic income per share ​ $ 7.77 ​ $ 6.83 ​ $ 5.75 ​ Diluted income per share ​ $ 7.73 ​ $ 6.80 ​ $ 5.73 ​ Basic weighted average shares outstanding ​ 29,104 ​ 29,991 ​ 32,131 ​ Diluted weighted average shares outstanding ​ 29,271 ​ 30,147 ​ 32,237 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 61 Table of Contents Grand Canyon Education, Inc. Consolidated Statements of Comprehensive Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2024 2023 2022 ​ Net income ​ $ 226,234 ​ $ 204,985 ​ $ 184,675 ​ Other comprehensive income, net of tax: ​ ​ ​ ​ Realized gains on available-for-sale securities, net of taxes of $ 17 for the year ended December 31, 2024 ​ ​ 57 ​ ​ — ​ ​ — ​ Unrealized gains (losses) on available-for-sale securities, net of taxes of $ 151 and $ 168 for the years ended December 31, 2023 and 2022, respectively ​ — ​ 476 ​ ( 533 ) ​ Comprehensive income ​ $ 226,291 ​ $ 205,461 ​ $ 184,142 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 62 Table of Contents Grand Canyon Education, Inc. Consolidated Statements of Stockholders’ Equity (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Treasury Stock ​ Paid-in ​ Comprehensive ​ Retained ​ ​ ​ ​ Shares Par Value Shares Cost Capital Loss Earnings Total Balance at December 31, 2021 53,637 ​ $ 536 15,915 ​ $ ( 1,107,211 ) ​ $ 296,670 ​ $ — ​ $ 1,855,052 ​ $ 1,045,047 Comprehensive income — ​ — — ​ — ​ — ​ ( 533 ) ​ 184,675 ​ 184,142 Common stock purchased for treasury — ​ — 6,795 ​ ( 599,587 ) ​ — ​ — ​ — ​ ( 599,587 ) Restricted shares forfeited — ​ — 10 ​ — ​ — ​ — ​ — ​ — Share-based compensation 193 ​ 2 52 ​ ( 4,625 ) ​ 12,640 ​ — ​ — ​ 8,017 Exercise of stock options — ​ — — ​ — ​ — ​ — ​ — ​ — Balance at December 31, 2022 53,830 ​ $ 538 22,772 ​ $ ( 1,711,423 ) ​ $ 309,310 ​ $ ( 533 ) ​ $ 2,039,727 ​ $ 637,619 Comprehensive income ​ — ​ — — ​ — ​ — ​ 476 ​ 204,985 ​ 205,461 Common stock purchased for treasury ​ — ​ — 1,170 ​ ( 131,939 ) ​ — ​ — ​ — ​ ( 131,939 ) Restricted shares forfeited ​ — ​ — 19 ​ — ​ — ​ — ​ — ​ — Share-based compensation ​ 140 ​ 2 56 ​ ( 6,331 ) ​ 13,202 ​ — ​ — ​ 6,873 Balance at December 31, 2023 ​ 53,970 ​ $ 540 ​ 24,017 ​ $ ( 1,849,693 ) ​ $ 322,512 ​ $ ( 57 ) ​ $ 2,244,712 ​ $ 718,014 Comprehensive income ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 57 ​ ​ 226,234 ​ ​ 226,291 Common stock purchased for treasury ​ — ​ ​ — ​ 1,142 ​ ​ ( 166,907 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 166,907 ) Restricted shares forfeited ​ — ​ ​ — ​ 16 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Share-based compensation ​ 120 ​ ​ 1 ​ 57 ​ ​ ( 7,770 ) ​ ​ 14,224 ​ ​ — ​ ​ — ​ ​ 6,455 Balance at December 31, 2024 ​ 54,090 ​ $ 541 ​ 25,232 ​ $ ( 2,024,370 ) ​ $ 336,736 ​ $ — ​ $ 2,470,946 ​ $ 783,853 The accompanying notes are an integral part of these consolidated financial statements. ​ 63 Table of Contents Grand Canyon Education, Inc. Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2024 2023 2022 Cash flows provided by operating activities: ​ ​ ​ ​ Net income ​ $ 226,234 ​ $ 204,985 ​ $ 184,675 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Share-based compensation ​ 14,225 ​ 13,204 ​ 12,642 Depreciation and amortization ​ 28,135 ​ 23,554 ​ 22,758 Amortization of intangible assets ​ ​ 8,419 ​ ​ 8,419 ​ ​ 8,419 Deferred income taxes ​ ( 165 ) ​ 402 ​ 401 Other, including impairment and fixed asset disposals ​ 1,227 ​ ( 442 ) ​ 853 Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable from university partners ​ ( 4,137 ) ​ ( 1,398 ) ​ ( 7,350 ) Other assets ​ 1,170 ​ ( 1,639 ) ​ ( 2,604 ) Right-of-use assets and lease liabilities ​ ​ 1,799 ​ ​ 2,105 ​ ​ 1,193 Accounts payable ​ 9,664 ​ ( 3,109 ) ​ ( 3,894 ) Accrued liabilities ​ 4,252 ​ ( 1,974 ) ​ ( 1,023 ) Income taxes receivable/payable ​ ( 865 ) ​ ( 445 ) ​ 4,759 Deferred revenue ​ — ​ — ​ ( 10 ) Net cash provided by operating activities ​ 289,958 ​ 243,662 ​ 220,819 Cash flows provided by (used in) investing activities: ​ ​ ​ Capital expenditures ​ ( 37,248 ) ​ ( 44,537 ) ​ ( 35,232 ) Additions of amortizable content ​ ( 412 ) ​ ( 897 ) ​ ( 397 ) Purchases of investments ​ ( 48,594 ) ​ ( 98,853 ) ​ ( 171,549 ) Proceeds from sale or maturity of investments ​ 147,619 ​ 63,815 ​ 110,039 Net cash provided by (used in) investing activities ​ 61,365 ​ ( 80,472 ) ​ ( 97,139 ) Cash flows used in financing activities: ​ ​ ​ Repurchase of common shares and shares withheld in lieu of income taxes ​ ( 173,175 ) ​ ( 137,124 ) ​ ( 604,212 ) Net cash used in financing activities ​ ( 173,175 ) ​ ( 137,124 ) ​ ( 604,212 ) Net increase in cash and cash equivalents and restricted cash ​ 178,148 ​ 26,066 ​ ( 480,532 ) Cash and cash equivalents and restricted cash, beginning of period ​ 146,475 ​ 120,409 ​ 600,941 Cash and cash equivalents and restricted cash, end of period ​ $ 324,623 ​ $ 146,475 ​ $ 120,409 Supplemental disclosure of cash flow information ​ ​ ​ Cash paid for interest ​ $ 4 ​ $ 33 ​ $ 2 Cash paid for income taxes ​ $ 65,261 ​ $ 59,026 ​ $ 48,573 Supplemental disclosure of non-cash investing and financing activities ​ ​ ​ Purchases of property and equipment included in accounts payable ​ $ 1,065 ​ $ 1,909 ​ $ 1,131 ROU Asset and Liability recognition ​ $ 7,087 ​ $ 19,735 ​ $ 15,067 Excise tax on treasury stock repurchases ​ $ 1,502 ​ $ 1,146 ​ $ — ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 64 Table of Contents 1. Nature of Business Grand Canyon Education, Inc. (together with its subsidiaries, the “Company” or “GCE”) is a publicly traded education services company dedicated to serving colleges and universities. GCE has developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale. GCE’s most significant university partner is Grand Canyon University (“GCU”), an Arizona non-profit corporation that operates 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 eight off-site classroom and laboratory sites. We also provide education services to numerous university partners across the United States. 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 December 31, 2024, GCE provides education services to 22 university partners across the Unites States. GCE was formed in Delaware in November 2003 as a limited liability company, under the name Significant Education, LLC, for the purchase of acquiring the assets of the University from a non-profit foundation on February 2, 2004. On August 24, 2005, the Company converted from a limited liability company to a corporation and changed its name to Significant Education, Inc. On May 9, 2008, the Company changed its name to Grand Canyon Education, Inc. On July 1, 2018, the Company sold the university to GCU (the “Transaction”). The Company’s wholly owned subsidiaries were historically used to facilitate expansion of the university campus prior to the Transaction. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes, including the collection of accounts receivables and reserves associated with uncertain tax positions. Actual results could differ from those estimates. Cash and Cash Equivalents The Company invests a portion of its cash in excess of current operating requirements in short term certificates of deposit and money market instruments. The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Investments As of December 31, 2024 the Company had no investments. As of December 31, 2023 the Company considered 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 quoted market prices and inputs other than quoted prices that are observable for the assets. 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. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method. Normal repairs and maintenance are expensed as incurred. Expenditures that materially extend the useful life of an asset are capitalized. Construction in progress represents items not yet placed in service and are not 65 Table of Contents depreciated. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures, computer equipment, and vehicles generally have estimated useful lives of ten , four , and five years , respectively. Leasehold improvements are depreciated over the shorter of their lease term or their useful life. Land improvements and buildings are depreciated over lives ranging from 10 to 40 years . 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 % of GCU’s tuition and fee revenue. Except for identified liabilities assumed by GCU, GCE retained responsibility for all liabilities of the business arising from pre-closing operations. Internally Developed Technology The Company capitalizes certain costs related to internal-use software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation or operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of design, coding, integration, and testing of the software developed. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which we expect to benefit from the use of that software. Once the software is placed in service, these costs are amortized over the estimated useful life of the software, which is generally three years . These assets are a component of our property and equipment, net in our consolidated balance sheets. Capitalized Content Development The Company capitalizes certain costs to fulfill a contract related to the development and digital creation of content on a course-by-course basis for each university partner, many times in conjunction with faculty and subject matter experts. The Company is responsible for the conversion of instructional materials to an on-line format, including outlines, quizzes, lectures, and articles in accordance with the educational guidelines provided to us by our university partners, prior to the respective course commencing. We also capitalize the creation of learning objects which are digital assets such as online demonstrations, simulations, and case studies used to obtain learning objectives. Costs that are capitalized include payroll and payroll-related costs for employees who are directly associated and spend time producing content and payments to faculty and subject matter experts involved in the process. The Company starts capitalizing content costs when it begins to develop or to convert a particular course, resources have been assigned and a timeline has been set. The content asset is placed in service when all work is complete and the curriculum could be used for instruction. Capitalized content development assets are included in other assets in our consolidated balance sheets. The Company has concluded that the most appropriate method to amortize the deferred content assets is on a straight-line basis over the estimated life of the course, which is generally four years which corresponds with course’s review and major revision cycle. As of December 31, 2024 and 2023, $ 658 and $ 746 , respectively, net of amortization, of deferred content assets are included in other assets 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 undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Leases The Company determines if an arrangement is a lease at inception and evaluates the lease agreement to determine whether the lease is a finance or operating lease. Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses 66 Table of Contents its incremental borrowing rate based on the information available at the commencement to determine the present value of lease payments over the lease term. At lease inception, the Company determines the lease term by assuming no exercises of renewal options, due to the Company’s constantly changing geographical needs for its university partners. Leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets and are recognized as lease expense on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, and the non-lease components are accounted for separately and not included in our ROU assets and lease liabilities. Leases primarily consist of off-campus classroom and laboratory site locations and office space. Goodwill and Amortizable Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the tangible and intangible assets acquired and liabilities assumed. Goodwill is assessed at least annually for impairment during the fourth quarter, or more frequently if circumstances indicate potential impairment. Goodwill is allocated to our reporting unit at the education services segment, which is the same as the entity as a whole (entity level reporting unit). The Company has concluded there is one operating segment and one reporting unit for goodwill impairment consideration. The Financial Accounting Standards Board (“FASB”) has issued guidance that permits an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company reviews goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Following this assessment, the Company determined that it is more likely than not that its fair value exceeds its carrying amount. Finite-lived intangible assets that are acquired in a business combination are recorded at fair value on their acquisition dates and are amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or on a straight-line basis over the estimated useful life of the intangible asset if the pattern of economic benefit cannot be reliability determined. Finite-lived intangible assets consist of university partner relationships and trade names. The Company reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. There were no indicators that the carrying amount of the finite-lived intangible assets were impaired as of December 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, 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 The Company measures and recognizes compensation expense for share-based payment awards made to employees and directors. The fair value of the Company’s restricted stock awards is based on the market price of its common stock on the date of grant. Stock-based compensation expense related to restricted stock grants is expensed over the vesting period using the straight-line method for Company employees and the Company’s board of directors (the “Board of Directors”). The Company recognizes forfeitures as they occur. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued compensation and benefits and accrued liabilities approximate their fair value based on the liquidity or the short-term maturities of these instruments. The fair value of investments was determined using Level 1 and Level 2 of the hierarchy of valuation inputs, with the use of inputs other than quoted prices that are observable for the assets. The unit of account used for valuation is the individual underlying security. The basis of fair value measurements for each level is described below, with Level 1 having the highest priority. -Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. -Level 2 – inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in non-active markets; and model-derived valuations whose inputs are observable or whose significant valuation drivers are observable. -Level 3 – unobservable inputs that are not corroborated by market data. 67 Table of Contents Investments are comprised of corporate bonds, commercial paper, municipal securities, asset backed securities, municipal bonds, and collateralized mortgage obligations. Income Taxes The Company accounts for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be realized. The Company applies a more-likely-than-not threshold for financial statement recognition and measurement of an uncertain tax position taken or expected to be taken in a tax return. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2024 and 2023, the Company has reserved approximately $ 14,626 and $ 13,631 , respectively, for uncertain tax positions, including interest and penalties, which is classified within accrued liabilities on the accompanying consolidated balance sheet. The Company has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. Realization of the deferred tax assets is principally dependent upon achievement of projected future taxable income. Commitments and Contingencies The Company accrues for a contingent obligation when it is probable that a liability has been incurred and the amount is reasonably estimable. When the Company becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the Company records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the Company will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The Company expenses legal fees as incurred. Revenue Recognition The Company generates all of its revenue through services agreements with its university partners (“Services Agreements”), pursuant to which the Company provides integrated technology and academic services, marketing and communication services, and back-office services to its university partners in return for a percentage of tuition and fee revenue. The Company’s Services Agreements have initial terms ranging from 7 - 15 years , subject to renewal options, although certain agreements may give the university partners the right to terminate early if certain conditions are met. The Company’s Services Agreements have a single performance obligation, as the promises to provide the identified services are not distinct within the context of these agreements. The single performance obligation is delivered as our partners receive and consume benefits, which occurs ratably over a series of distinct service periods (daily or semester). Service revenue is recognized over time using the output method of measuring progress towards complete satisfaction of the single performance obligation. The output method provides a faithful depiction of the performance toward complete satisfaction of the performance obligation and can be tied to the time elapsed which is consumed evenly over the service period and is a direct measurement of the value provided to our partners. The service fees received from our partners over the term of the agreement are variable in nature in that they are dependent upon the number of students attending the university partner’s program and revenues generated from those students during the service period. Due to the variable nature of the consideration over the life of the service arrangement, the Company considered forming an expectation of the variable consideration to be received over the service life of this one performance obligation. However, since the performance obligation represents a series of distinct services, the Company recognizes the variable consideration that becomes known and billable because these fees relate to the distinct service period in which the fees are earned. The Company meets the criteria in the standard and exercises the practical expedient to not disclose the aggregate amount of the transaction price allocated to the single performance obligation that is unsatisfied as of the end of the reporting period. The Company does not disclose the value of unsatisfied performance obligations because the directly allocable variable consideration is allocated entirely to a wholly unsatisfied promise to transfer a service that forms part of a single performance obligation. The service fees are calculated and settled per the terms of the Services 68 Table of Contents Agreements and result in a settlement duration of less than one year for all partners. There are no refunds or return rights under the Services Agreements. The Company’s receivables represent unconditional rights to consideration from our Services Agreements with our university partners. Accounts receivable, net is stated at net realizable value and contains billed and unbilled revenue. The Company utilizes the allowance method to provide for doubtful accounts based on its evaluation of the collectability of the amounts due. There have been no amounts written off and no reserves established as of December 31, 2024 given historical collection experience and an evaluation of reasonable and supportable forecasts of economic conditions and other pertinent factors affecting the Company’s customers such as known credit risk or industry trends. The Company will continue to review and revise its allowance methodology based on its collection experience with its partners. For our partners with unbilled revenue, revenue recognition occurs in advance of billings. Billings for some university partners do not occur until after the service period has commenced and final enrollment information is available. Our unbilled revenue of $ 115 and $ 188 as of December 31, 2024 and 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. These payments are recorded as deferred revenue until the services are delivered and revenue is recognized. Allowance for Credit Losses The Company records its accounts receivable at the net amount expected to be collected. Our accounts receivable are derived through education services provided to university partners. The Company maintains an allowance for credit losses resulting from our university partners not making payments. The Company determines the adequacy of the allowance by periodically evaluating each university partner’s 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 statement. The Company will continue to actively monitor other factors on expected credit losses. Technology and Academic Services Technology and academic services consist primarily of costs related to ongoing maintenance of educational infrastructure, including online course delivery and management, student records, assessment, customer relations management and other internal administrative systems. This also includes costs to provide support for content development, faculty training, development and other faculty support, technology support, rent and occupancy costs for university partners’ off-campus locations, and assistance with state compliance. This expense category includes salaries, benefits and share-based compensation, information technology costs, amortization of content development costs and other costs associated with these support services. This category also includes an allocation of depreciation, amortization, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Counseling Services and Support Counseling services and support consist primarily of costs including team-based counseling and other support to prospective and current students as well as financial aid processing. This expense category includes salaries, benefits and share-based compensation, and other costs such as dues, fees and subscriptions and travel costs. This category also includes an allocation of depreciation, amortization, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Marketing and Communication Marketing and communication includes lead acquisition, digital communication strategies, brand identity advertising, media planning and strategy, video, data science and analysis, marketing to potential students and other promotional and communication services. This expense category includes salaries, benefits and share-based compensation for marketing and communication personnel, brand advertising, marketing leads and other promotional and communication expenses. This category also includes an allocation of depreciation, amortization, lease expense, and 69 Table of Contents occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Advertising costs are expensed as incurred. General and Administrative General and administrative expenses include salaries, benefits and share-based compensation of employees engaged in corporate management, finance, human resources, compliance, and other corporate functions. This category also includes an allocation of depreciation, amortization, lease expense, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona and Indianapolis, Indiana locations. Impairment and other Impairment and other primarily includes the write-off of an internal use software project that has been terminated that it had been attempting to develop for its other university partners and costs relating to exiting from certain off-campus classroom and laboratory sites. Insurance/Self-Insurance The Company uses a combination of insurance and self-insurance for a number of risks, including claims related to employee healthcare, workers’ compensation, general liability, and business interruption. Liabilities associated with these risks are estimated based on, among other things, historical claims experience, severity factors, and other actuarial assumptions. The Company’s loss exposure related to self-insurance is limited by stop loss coverage on a per occurrence and aggregate basis. The Company regularly analyzes its reserves for incurred but not reported claims, and for reported but not paid claims related to self-funded insurance programs. While the Company believes reserves are adequate, significant judgment is involved in assessing these reserves such as assessing historical paid claims, average lags between the claims’ incurred date, reported dates and paid dates, and the frequency and severity of claims. There may be differences between actual settlement amounts and recorded reserves and any resulting adjustments are included in expense once a probable amount is known. 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 required investments to have a minimum BBB rating, depending on the type of security, by one major rating agency at the time of purchase. All of the Company’s cash equivalents and investments as of December 31, 2024 and 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. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash balances, which are primarily invested in money market funds or on deposit at high credit quality financial institutions in the U.S. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2024 and December 31, 2023, the Company had $ 323,124 and $ 145,474 , respectively, in excess of the FDIC insured limit . The Company is also subject to credit risk for its accounts receivable balance. The Company has not experienced any losses on accounts receivables since July 1, 2018, the date the Company transitioned to an education service company. To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed. Our dependence on our most significant university partner, with 88.9 % and 87.8 % of total service revenue for the years ended December 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. Segment Information The Company operates as a single education services company using a core infrastructure that serves the curriculum and educational delivery needs of its university partners. The Company’s Chief Executive Officer (the “Chief Operating Decision Maker” or “CODM”) 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. The education services segment generates revenue through Service Agreements with its university partners, pursuant to which the Company provides integrated technology and academic services, marketing and communication services, and back-office services to its university partners in return for a percentage of tuition and fee revenue. 70 Table of Contents The accounting policies of the education services segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. The CODM uses consolidated net income to monitor budget versus actual results, which is used to evaluate headcount and compensation decisions. Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (“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. This ASU adds disclosure requirements for segment expense information and 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.” This 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. In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. ASU No. 2024-03 does not change or remove existing expense disclosure requirements but requires disaggregated disclosures about certain expense categories and captions, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. ASU No. 2024-03 will become effective for us in fiscal 2027 and in the first quarter of fiscal 2028 for interim reporting. Retrospective application is permitted. 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. 3. Investments As of December 31, 2024 and 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. For the year ended December 31, 2024, the net realized gains were $ 57 and for the years ended December 31, 2023 and 2022, unrealized gains and losses were $ 476 and $ 533 , respectively, net of taxes. Available-for-sale securities are carried at fair value on the consolidated balance sheets. The Company estimates the lifetime expected credit losses for all available-for-sale debt securities in an unrealized loss position. If our assessment indicates that an expected credit loss exists, we determine the portion of the unrealized loss attributable to credit deterioration and record a reserve for the expected credit loss in the allowance for credit losses in technology and academic services in our consolidated income statements. ​ 71 Table of Contents 4. Property and Equipment Property and equipment consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2024 2023 ​ Land ​ $ 5,098 ​ $ 5,098 ​ Land improvements ​ 2,242 ​ 2,242 ​ Buildings ​ 51,399 ​ 51,399 ​ Buildings and leasehold improvements ​ 37,424 ​ 34,210 ​ Computer equipment ​ 141,160 ​ 138,950 ​ Furniture, fixtures and equipment ​ 29,715 ​ 26,737 ​ Internally developed software ​ 98,605 ​ 71,204 ​ Construction in progress ​ 6,393 ​ 10,274 ​ ​ ​ 372,036 ​ 340,114 ​ Less accumulated depreciation and amortization ​ ( 195,213 ) ​ ( 170,415 ) ​ Property and equipment, net ​ $ 176,823 ​ $ 169,699 ​ ​ Depreciation expense associated with property and equipment totaled $ 27,760 , $ 23,106 and $ 22,115 for the years ended December 31, 2024, 2023, and 2022, respectively. 5. 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 acquisition of Orbis Education in January 2019. Amortizable intangible assets consist of the following as of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ Estimated ​ Gross ​ ​ ​ ​ Net ​ Average Useful ​ Carrying ​ Accumulated ​ Carrying ​ Life (in years) ​ Amount ​ Amortization ​ Amount University partner relationships 25 $ 210,000 $ ( 50,038 ) $ 159,962 Trade names 1 ​ ​ 280 ​ ​ ( 280 ) ​ — Total amortizable intangible assets, net ​ ​ $ 210,280 ​ $ ( 50,318 ) ​ $ 159,962 ​ Amortization expense for university partner relationships and trade names for the years ending December 31: ​ ​ ​ ​ ​ 2025 ​ $ 8,419 2026 ​ 8,419 2027 ​ ​ 8,419 2028 ​ ​ 8,419 2029 ​ ​ 8,419 Thereafter ​ 117,867 ​ ​ $ 159,962 ​ ​ 6. Leases The Company has operating leases for off-campus classroom and laboratory site locations, office space, office equipment, and optical fiber communication lines. These leases have terms that range from one month to ten years and four 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 has operating lease costs of $ 16,694 , $ 13,496 and $ 10,666 for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, the Company had $ 17,029 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 7.62 years, with a weighted-average discount rate of 4.22 % . The cash paid 72 Table of Contents for operating lease liabilities was $ 14,895 , $ 11,391 and $ 9,537 for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, the Company had no financing leases. Future payment obligations with respect to the Company’s operating leases, which were existing at December 31, 2024, by year and in the aggregate, are as follows: ​ ​ ​ ​ ​ Year Ending December 31, Amount 2025 ​ $ 16,963 2026 ​ ​ 17,309 2027 ​ ​ 16,595 2028 ​ ​ 16,414 2029 ​ ​ 16,556 Thereafter ​ ​ 44,477 Total lease payments ​ $ 128,314 Less interest ​ ​ 19,796 Present value of lease liabilities ​ $ 108,518 ​ ​ 7. Commitments and Contingencies Legal Matters From time to time, the Company is party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business, some of which are covered by insurance. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company records a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. With respect to the majority of pending litigation matters, the Company’s ultimate legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases, any potential losses related to those matters are not considered probable. Upon resolution of any pending legal matters, the Company may incur charges in excess of presently established reserves. Management does not believe that any such charges would, individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Pending Litigation Matters False Claims Act Matter . In May 2020, the Company was 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. Having been unsuccessful in reaching terms with the relevant parties, which would have avoided litigation, the Court has rescheduled the trial for October 2025. For any future settlement to be affected, 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 73 Table of Contents incentive compensation rule, do not violate applicable law. The Company intends to defend itself vigorously in this legal proceeding. The outcome of this legal proceeding is uncertain at this point. At present, the Company cannot reasonably estimate a range of loss for this action based on the information available to the Company. Accordingly, the Company has not accrued any liability associated with this action. 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 fact and expert discovery scheduled to conclude in May 2025 and October 2025 respectively. There is currently no trial date scheduled in this matter. ● Ogdon v. 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. ● Valerio, et al. v. Grand Canyon Education, Inc., et al. This suit was filed on December 24, 2024, in Maricopa County, Arizona Superior Court on behalf of nearly 300 plaintiffs. The plaintiffs assert various claims, including claims for violations of state law consumer protection statutes. The Company’s response to the complaint is due on April 10, 2025. There is currently no trial date scheduled in this matter. ​ 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, GCU has agreed to indemnify us in part under the terms of the Master Services Agreement for our losses and expenses arising from these matters. With 74 Table of Contents 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. Tax Reserves, Non-Income Tax Related From time to time the Company has exposure to various non-income tax related matters that arise in the ordinary course of business. At both December 31, 2024 and 2023, the Company has no non-income tax related matters where exposure is considered probable and the potential loss can be reasonably estimated. 8. Earnings Per Share Basic earnings per common share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all potentially dilutive securities, consisting of stock options and restricted stock awards, for which the estimated fair value exceeds the exercise price, less shares which could have been purchased with the related proceeds, unless anti-dilutive. For employee equity awards, repurchased shares are also included for any unearned compensation adjusted for tax. The table below reflects the calculation of the weighted average number of common shares outstanding, on an as if converted basis, used in computing basic and diluted earnings per common share. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 Denominator: Basic weighted average shares outstanding 29,104 29,991 32,131 Effect of dilutive stock options and restricted stock 167 156 106 Diluted weighted average shares outstanding 29,271 30,147 32,237 ​ Diluted weighted average shares outstanding excludes the incremental effect of unvested restricted stock and shares that would be issued upon the assumed exercise of stock options in accordance with the treasury stock method. For each of the years ended December 31, 2024, 2023 and 2022, approximately 20 , 52 , and 58 , 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. 9. Equity Transactions Preferred Stock As of December 31, 2024 and 2023, the Company had 10,000 shares of authorized but unissued and undesignated preferred stock. The Company’s charter provides that the Board of Directors has authority to issue preferred stock, with voting powers, designations, preferences, and special rights, qualifications, limitation, or restrictions as permitted by law as determined by the Board of Directors, without stockholder approval. The Board of Directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. Treasury Stock On January 29, 2025 the Board of Directors approved a $ 200,000 increase under its existing stock repurchase program reflecting an aggregate authorization for share repurchases since the initiation of the program of $ 2,245,000 . The expiration date on the repurchase authorization is March 1, 2026 . Repurchases occur at the Company’s discretion. Repurchases may be made in the open market or in privately negotiated transactions, pursuant to the applicable Securities and Exchange Commission rules. The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant. During the year ended December 31, 2024, the Company repurchased 1,142 shares of common stock at an aggregate cost of $ 165,405 . As of December 31, 2024, there remained $ 99,648 available under its current share 75 Table of Contents repurchase authorization (which authorization was increased to $ 299,648 in January 2025). 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. 10. Income Taxes The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities is principally dependent upon achievement of projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the Company will realize the benefits of these deductible differences. The Company has no valuation allowance at December 31, 2024 and 2023. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted though income tax expense. The components of income tax expense (benefit) are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Current: ​ ​ ​ Federal ​ $ 60,294 ​ $ 54,097 ​ $ 50,194 State ​ 5,009 ​ 39 ​ 5,017 ​ ​ 65,303 ​ 54,136 ​ 55,211 Deferred: ​ ​ ​ Federal ​ ( 476 ) ​ 229 ​ ( 578 ) State ​ 254 ​ 325 ​ 811 ​ ​ ( 222 ) ​ 554 ​ 233 Tax expense recorded as an increase of paid-in capital ​ — ​ — ​ — ​ ​ $ 65,081 ​ $ 54,690 ​ $ 55,444 ​ A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 2.8 2.8 2.8 ​ State tax credits, net of federal effect ( 1.2 ) ( 1.0 ) ( 1.6 ) ​ Excess tax benefits ( 0.5 ) ( 0.3 ) ( 0.1 ) ​ Nondeductible expenses 0.4 0.3 0.2 ​ Other ( 0.2 ) ( 1.7 ) 0.8 ​ Effective income tax rate 22.3 % 21.1 % 23.1 % ​ 76 Table of Contents Significant components of the Company’s deferred income tax assets and liabilities, included in Deferred income taxes, non-current on the consolidated balance sheets are as follows: ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ 2024 2023 Deferred tax assets: ​ ​ Share-based compensation ​ $ 2,911 ​ $ 2,850 Employee compensation ​ 1,459 ​ 1,262 Intangibles ​ 8,532 ​ 11,696 Leases ​ ​ 2,598 ​ ​ 1,780 State taxes ​ 4,197 ​ 3,641 Other ​ 171 ​ 329 Deferred tax assets ​ 19,868 ​ 21,558 ​ ​ ​ ​ ​ ​ ​ Deferred tax liability: ​ ​ Property and equipment ​ ( 9,337 ) ​ ( 11,256 ) Goodwill ​ ( 37,051 ) ​ ( 37,051 ) Other ​ ( 7 ) ​ — Deferred tax liability ​ ( 46,395 ) ​ ( 48,307 ) Net deferred tax liability ​ $ ( 26,527 ) ​ $ ( 26,749 ) ​ The net deferred tax liability on the accompanying consolidated balance sheet is comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, ​ 2024 2023 Deferred income taxes, current ​ $ 5,827 ​ $ 5,118 Deferred income taxes, non-current ​ ( 32,354 ) ​ ( 31,867 ) Net deferred tax liability ​ $ ( 26,527 ) ​ $ ( 26,749 ) ​ The Company recognizes the impact of a tax position in its financial statements if that position is more-likely-than-not to be sustained on audit, based on the technical merits of the position. The Company discloses all unrecognized tax benefits, which includes the reserves recorded for uncertain tax positions on filed tax returns and the unrecognized portion of affirmative claims. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. Unrecognized tax benefits as of December 31, 2024 and 2023 were $ 14,626 and $ 13,631 , respectively. The reconciliation of the beginning and ending balance of unrecognized tax benefits at December 31, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Unrecognized tax benefits, beginning of year ​ $ 13,631 ​ $ 15,862 Tax positions taken during the current year ​ ​ Increases ​ 3,407 ​ 2,891 Decreases ​ — ​ — Tax positions taken during a prior year ​ ​ Increases ​ 2,465 ​ 392 Decreases ​ ( 1,550 ) ​ ( 1,810 ) Decreases for settlements during the period ​ — ​ ( 384 ) Reductions for lapses of applicable statute of limitations ​ ( 3,327 ) ​ ( 3,320 ) Unrecognized tax benefits, end of year ​ $ 14,626 ​ $ 13,631 ​ As of December 31, 2024 and 2023, the unrecognized tax benefit recorded of $ 14,626 and $ 13,631 , respectively, if reversed, would impact the effective tax rate. At both years ended December 31, 2024 and 2023 the Company had accrued $ 0 , in interest and $ 0 , in penalties. It is reasonably possible that the amount of the unrecognized tax benefit will change during the next 12 months, however management does not expect the potential change to have a material effect on the results of operations or financial position. 77 Table of Contents The Company’s uncertain tax positions were related to tax years that remained subject to examination by tax authorities. As of December 31, 2024, the earliest tax year still subject to examination for federal and state purposes is 2021 and 2020, respectively. 11. Share-Based Compensation Plans Incentive Plans 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 December 31, 2024, 962 shares were available for grants under the 2017 Plan. Restricted Stock During fiscal years 2024, 2023, and 2022, the Company granted 117 , 136 , and 189 shares of common stock, respectively, with a service vesting condition to certain of its executives, officers, and employees. The restricted shares have voting rights and vest evenly at 20 % over each of the next five years . Upon vesting, shares will be held in lieu of taxes equivalent to the statutory tax withholding required to be paid when the restricted stock vests. During the years ended December 31, 2024, 2023 and 2022, the Company withheld 55 , 56 , and 52 shares of common stock in lieu of taxes at a cost of $ 7,446 , $ 6,331 , and $ 4,625 , on the restricted stock vesting dates, respectively. In April 2024, a new non-employee director was appointed to the 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. During 2024, 2023 and 2022, following the annual stockholders meeting, the Company granted 3 , 4 and 4 shares of common stock to the non-employee members of the Board of Directors. The restricted shares granted to these directors have voting rights and vest on the earlier of (a) the one year anniversary of the date of grant or (b) immediately prior to the following year’s annual stockholders’ meeting. 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 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Total ​ Grant Date ​ ​ Shares ​ Fair Value per Share Outstanding as of December 31, 2021 427 ​ $ 86.24 Granted 193 ​ $ 83.10 Vested ( 134 ) ​ $ 85.07 Forfeited, canceled or expired ( 10 ) ​ $ 85.49 Outstanding as of December 31, 2022 476 ​ $ 85.32 Granted 140 ​ $ 112.60 Vested ( 147 ) ​ $ 86.94 Forfeited, canceled or expired ( 19 ) ​ $ 87.87 Outstanding as of December 31, 2023 450 ​ $ 93.16 Granted 120 ​ $ 130.80 Vested ( 151 ) ​ $ 91.84 Forfeited, canceled or expired ( 16 ) ​ $ 100.12 Outstanding as of December 31, 2024 403 ​ $ 104.54 ​ As of December 31, 2024, there was approximately $ 30,345 of total unrecognized share-based compensation cost related to unvested restricted stock awards. These costs are expected to be recognized over a weighted average period of 2.03 years. 78 Table of Contents Share-based Compensation Share-based Compensation Expense Assumptions – Restricted Stock Awards The Company measures and recognizes compensation expense for share-based payment awards made to employees and directors. The fair value of the Company’s restricted stock awards is based on the market price of its common stock on the date of grant. Stock-based compensation expense related to restricted stock grants is expensed over the vesting period using the straight-line method for Company employees and the Board of Directors. The Company recognizes forfeitures as they occur. The restricted shares have voting rights. The table below outlines share-based compensation expense for the fiscal years ended December 31, 2024, 2023 and 2022 related to restricted stock and stock options granted: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 Technology and academic services ​ $ 2,594 ​ $ 2,365 ​ $ 2,424 ​ Counseling services and support ​ 7,200 ​ 6,862 ​ 6,287 ​ Marketing and communication ​ 226 ​ 190 ​ 154 ​ General and administrative ​ 4,205 ​ 3,787 ​ 3,777 ​ Share-based compensation expense included in operating expenses ​ 14,225 ​ 13,204 ​ 12,642 ​ Tax effect of share-based compensation ​ ( 3,556 ) ​ ( 3,301 ) ​ ( 3,161 ) ​ Share-based compensation expense, net of tax ​ $ 10,669 ​ $ 9,903 ​ $ 9,481 ​ ​ 401(k) Plan The Company has established a 401(k) Defined Contribution Benefit Plan (the “Plan”). The Plan provides eligible employees, upon date of hire, with an opportunity to make tax-deferred contributions into a long-term investment and savings program. All employees over the age of 21 are eligible to participate in the Plan. The Plan allows eligible employees to contribute to the Plan subject to restrictions under the Internal Revenue Code of 1986 (the “Code”), and the Plan allows the Company to make discretionary matching contributions. The Company plans to make a matching contribution to the Plan of approximately $ 3,092 for the year ended December 31, 2024. The Company made discretionary matching contributions to the Plan of $ 2,951 and $ 2,744 for the years ended December 31, 2023 and 2022, respectively. 12. 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 is the amount of consideration established and agreed to by the parties. As of and for the years ended December 31, 2024, 2023 and 2022, related party transactions consisted of the following: Affiliates GCE Community Fund (“GCECF”) - GCECF was initially formed in 2014. GCECF makes grants for charitable, educational, literary, religious or scientific purposes within the meaning of Section 501(c ) (3) of the 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. No donations were made during the year ended December 31, 2024. The Company made voluntary charitable contributions of $ 1,650 for the year ended December 31, 2023, of which no amounts were owed as of December 31, 2023. ​ 79 Table of Contents ​ Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.