Grand Canyon Education(US:LOPE)2025-11-05 21:11Financial Performance - Service revenue for Q3 2025 reached $261,142,000, a 9.6% increase from $238,291,000 in Q3 2024[8] - Operating income decreased to $18,019,000 in Q3 2025 from $48,175,000 in Q3 2024, representing a decline of 62.6%[8] - Net income for Q3 2025 was $16,274,000, down 60.8% from $41,467,000 in Q3 2024[8] - Basic earnings per share (EPS) for Q3 2025 was $0.59, compared to $1.43 in Q3 2024, a decrease of 58.8%[8] - Comprehensive income for Q3 2025 was $16,660,000, compared to $41,593,000 in Q3 2024, indicating a decline of 60.0%[13] - Net income for the nine months ended September 30, 2025, was $129,438,000, compared to $144,355,000 for the same period in 2024, reflecting a decrease of approximately 10.3%[20] - Operating income for the nine months ended September 30, 2025, was $157,831,000, compared to $175,372,000 for the same period in 2024, indicating a decline of 10.0%[8] Costs and Expenses - Total costs and expenses for Q3 2025 were $243,123,000, compared to $190,116,000 in Q3 2024, reflecting a 27.9% increase[8] - Cash flows provided by operating activities totaled $143,006,000 for the nine months ended September 30, 2025, down from $154,141,000 in 2024, indicating a decline of about 7.2%[20] - Share-based compensation expenses were $10,411,000 for the nine months ended September 30, 2025, compared to $10,855,000 in 2024, reflecting a decrease of about 4.1%[20] - Operating lease costs for the nine months ended September 30, 2025, were $13,306 thousand, compared to $12,350 thousand for the same period in 2024[82] Assets and Equity - Total assets as of September 30, 2025, were $1,032,792,000, up from $1,018,425,000 at the end of 2024[11] - Total stockholders' equity as of September 30, 2025, was $758,041,000, down from $783,853,000 at the end of 2024[11] - The company reported basic weighted average shares outstanding of 27,740 thousand for the three months ended September 30, 2025, down from 29,003 thousand in the same period of 2024[77] - The company’s total liabilities increased to $274,751,000 as of September 30, 2025, compared to $234,572,000 as of December 31, 2024[11] Cash and Cash Equivalents - Cash and cash equivalents decreased significantly to $97,284,000 from $324,623,000 at the end of 2024[11] - Total cash and cash equivalents and restricted cash at the end of the period was $97,284,000, down from $263,584,000 at the end of September 2024, representing a decrease of approximately 63.1%[20] Litigation and Settlements - The company recorded a reserve for litigation settlement of $35,000,000 in Q3 2025[8] - The company incurred a reserve for litigation settlement amounting to $35,000,000 during the nine months ended September 30, 2025[20] - The company has recorded a settlement amount of $35 million related to a False Claims Act matter in its financial statements for the period ended September 30, 2025[90] Revenue Generation - The company provides education services to 20 university partners across the United States as of September 30, 2025[24] - The company generated all revenue through services agreements with university partners, receiving a percentage of tuition and fee revenue[45] - The company relies heavily on its most significant university partner, GCU, which accounted for 89.1% and 88.3% of total service revenue for the nine-month periods ended September 30, 2025, and 2024, respectively[59] Investments - The company had investments of $179,691,000 classified as available-for-sale securities as of September 30, 2025, with no investments reported at December 31, 2024[71] - As of September 30, 2025, total investments amounted to $178,968 million, with net unrealized gains of $551 million for the nine months ended September 30, 2025[72] - The fair value of investments is determined using Level 1 and Level 2 inputs, with corporate bonds and commercial paper included in the investment portfolio[42][43] Share Repurchase and Compensation - The company repurchased 874 shares of common stock at an aggregate cost of $156,749,000 during the nine months ended September 30, 2025, with $144,381,000 remaining under its current share repurchase authorization[102] - The company has authorized share repurchases of up to $2,245,000,000 since the initiation of its stock repurchase program, with the current authorization expiring on March 1, 2026[101] - Share-based compensation expense for the nine months ended September 30, 2025, was $10,411,000, slightly down from $10,855,000 in the same period of 2024[100] Future Commitments and Obligations - The total lease payments due for the company's operating leases amount to $131,267 thousand, with a present value of lease liabilities of $110,528 thousand[84] - The company has $6,472 thousand of non-cancelable operating lease commitments for one off-campus classroom and laboratory site that had not yet commenced[83] - The weighted-average remaining lease term for operating leases is 7.43 years, with a weighted-average discount rate of 4.43%[83] Accounting and Compliance - The company does not expect recent accounting pronouncements to have a material impact on its financial condition or results of operations[64][68] - The company has not accrued any liability associated with ongoing legal proceedings, as it cannot estimate a range of loss based on available information[93] - The company intends to defend itself vigorously in various legal proceedings, including class actions and FTC claims[93][97]