Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | LOPE | |
Entity Registrant Name | GRAND CANYON EDUCATION, INC. | |
Entity Central Index Key | 1,434,588 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 48,133,425 |
Consolidated Income Statements
Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net revenue | $ 155,454 | $ 236,209 | $ 667,953 | $ 702,716 |
Costs and expenses: | ||||
Technology and academic services | 11,101 | 10,494 | 32,476 | 31,095 |
Counseling services and support | 51,116 | 46,100 | 152,701 | 138,382 |
Marketing and communication | 31,546 | 28,130 | 90,168 | 82,865 |
General and administrative | 10,092 | 8,343 | 23,273 | 21,182 |
University related expenses | 6,569 | 83,450 | 173,735 | 237,784 |
Loss on Transaction | 15,610 | 17,600 | ||
Total costs and expenses | 126,034 | 176,517 | 489,953 | 511,308 |
Operating income | 29,420 | 59,692 | 178,000 | 191,408 |
Interest income on Secured Note | 13,248 | 13,248 | ||
Interest expense | (558) | (567) | (961) | (1,642) |
Investment interest and other | 371 | 1,445 | 2,919 | 2,186 |
Income before income taxes | 42,481 | 60,570 | 193,206 | 191,952 |
Income tax expense | 8,720 | 21,266 | 39,726 | 56,889 |
Net income | $ 33,761 | $ 39,304 | $ 153,480 | $ 135,063 |
Earnings per share: | ||||
Basic income per share | $ 0.71 | $ 0.83 | $ 3.22 | $ 2.87 |
Diluted income per share | $ 0.70 | $ 0.81 | $ 3.17 | $ 2.80 |
Basic weighted average shares outstanding | 47,682 | 47,316 | 47,592 | 47,083 |
Diluted weighted average shares outstanding | 48,422 | 48,292 | 48,429 | 48,197 |
Service [Member] | ||||
Net revenue | $ 155,454 | $ 155,454 | ||
University Related Revenue [Member] | ||||
Net revenue | $ 236,209 | $ 512,499 | $ 702,716 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 33,761 | $ 39,304 | $ 153,480 | $ 135,063 |
Other comprehensive income, net of tax: | ||||
Unrealized gains (losses) on available-for-sale securities, net of taxes of $44 and $25 for the three months ended September 30, 2018 and 2017, respectively, and $6 and $257 for the nine months ended September 30, 2018 and 2017, respectively | (133) | 40 | (20) | 416 |
Unrealized gains (losses) on hedging derivatives, net of taxes of $2 and $20 for the three months ended September 30, 2018 and 2017, respectively, and $81 and $65 for the nine months ended September 30, 2018 and 2017, respectively | (4) | (30) | 248 | (104) |
Comprehensive income | $ 33,624 | $ 39,314 | $ 153,708 | $ 135,375 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Unrealized losses on available-for-sale securities, taxes | $ 44 | $ 25 | $ 6 | $ 257 |
Unrealized losses on hedging derivatives, taxes | $ 2 | $ 20 | $ 81 | $ 65 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 44,879 | $ 153,474 |
Restricted cash and cash equivalents | 61,667 | 94,534 |
Investments | 68,754 | 89,271 |
Accounts receivable, net | 65,120 | 10,908 |
Interest receivable on secured note | 4,381 | |
Income tax receivable | 1,791 | 2,086 |
Other current assets | 8,607 | 24,589 |
Total current assets | 255,199 | 374,862 |
Property and equipment, net | 110,908 | 922,284 |
Note receivable | 882,900 | |
Prepaid royalties | 2,763 | |
Goodwill | 2,941 | 2,941 |
Other assets | 743 | 723 |
Total assets | 1,252,691 | 1,303,573 |
Current liabilities | ||
Accounts payable | 16,996 | 29,139 |
Accrued compensation and benefits | 17,857 | 23,173 |
Accrued liabilities | 13,511 | 20,757 |
Income taxes payable | 16,182 | |
Student deposits | 95,298 | |
Deferred revenue | 46,895 | |
Current portion of notes payable | 6,572 | 6,691 |
Total current liabilities | 54,936 | 238,135 |
Other noncurrent liabilities | 1,200 | |
Deferred income taxes, noncurrent | 4,421 | 18,362 |
Notes payable, less current portion | 54,976 | 59,925 |
Total liabilities | 114,333 | 317,622 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value, 10,000 shares authorized; 0 shares issued and outstanding at September 30, 2018 and December 31, 2017 | ||
Common stock, $0.01 par value, 100,000 shares authorized; 52,570 and 52,277 shares issued and 48,134 and 48,125 shares outstanding at September 30, 2018 and December 31, 2017, respectively | 526 | 523 |
Treasury stock, at cost, 4,436 and 4,152 shares of common stock at September 30, 2018 and December 31, 2017, respectively | (119,982) | (100,694) |
Additional paid-in capital | 251,828 | 232,670 |
Accumulated other comprehensive loss | (652) | (724) |
Retained earnings | 1,006,638 | 854,176 |
Total stockholders' equity | 1,138,358 | 985,951 |
Total liabilities and stockholders' equity | $ 1,252,691 | $ 1,303,573 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 52,570,000 | 52,277,000 |
Common stock, shares outstanding | 48,134,000 | 48,125,000 |
Treasury stock, shares | 4,436,000 | 4,152,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] |
Beginning Balance at Dec. 31, 2017 | $ 985,951 | $ 523 | $ (100,694) | $ 232,670 | $ (724) | $ 854,176 |
Beginning Balance, Shares at Dec. 31, 2017 | 52,277 | 4,152 | ||||
Comprehensive income | 153,708 | 228 | 153,480 | |||
Adoption impact - ASU 2018-02 | Accounting Standards Update 2018-02 [Member] | (156) | 156 | ||||
Common stock purchased for treasury | (4,135) | $ (4,135) | ||||
Common stock purchased for treasury, shares | 39 | |||||
Restricted shares forfeited | 0 | $ 0 | $ 0 | 0 | 0 | 0 |
Restricted shares forfeited, Shares | 94 | |||||
Share-based compensation | 1,913 | $ 2 | $ (15,153) | 17,064 | ||
Share-based compensation, Shares | 163 | 151 | ||||
Exercise of stock options | $ 2,095 | $ 1 | 2,094 | |||
Exercise of stock options, Shares | 130 | 130 | ||||
Ending Balance at Sep. 30, 2018 | $ 1,138,358 | $ 526 | $ (119,982) | $ 251,828 | $ (652) | 1,006,638 |
Ending Balance, Shares at Sep. 30, 2018 | 52,570 | 4,436 | ||||
Cumulative effect from the adoption of accounting pronouncements, net of taxes | $ (1,174) | $ (1,174) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows provided by operating activities: | ||
Net income | $ 153,480 | $ 135,063 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Share-based compensation | 17,066 | 9,562 |
Provision for bad debts | 8,669 | 13,351 |
Depreciation and amortization | 31,783 | 40,467 |
Deferred income taxes | (13,551) | 3,813 |
Loss on transaction, net of costs and asset impairment | 12,605 | |
Other | 1,411 | 1,751 |
Changes in assets and liabilities: | ||
Accounts receivable from GCU | (69,501) | |
Accounts receivable | (7,784) | (14,827) |
Prepaid expenses and other | (555) | (3,784) |
Accounts payable | (11,938) | 4,007 |
Accrued liabilities and employee related liabilities | (8,666) | 6,710 |
Income taxes receivable/payable | (15,887) | 8,156 |
Deferred rent | (189) | (271) |
Deferred revenue | 6,881 | 75,699 |
Student deposits | (7,288) | (9,770) |
Net cash provided by operating activities | 96,536 | 269,927 |
Cash flows used in investing activities: | ||
Capital expenditures | (90,152) | (75,604) |
Purchases of land and building improvements related to off-site development | (330) | (10,152) |
Disposition, net of cash | (131,550) | |
Funding to GCU at closing in excess of required capital | (7,377) | |
Repayment of excess funds by GCU | 7,377 | |
Funding to GCU for capital expenditures | (12,803) | |
Return of equity method investment | 685 | |
Purchases of investments | (31,455) | (76,630) |
Proceeds from sale or maturity of investments | 50,561 | 49,617 |
Net cash used in investing activities | (215,729) | (112,084) |
Cash flows used in financing activities: | ||
Principal payments on notes payable and capital lease obligations | (5,076) | (5,102) |
Net borrowings from revolving line of credit | (25,000) | |
Repurchase of common shares including shares withheld in lieu of income taxes | (19,288) | (9,657) |
Net proceeds from exercise of stock options | 2,095 | 6,755 |
Net cash used in financing activities | (22,269) | (33,004) |
Net (decrease) increase in cash and cash equivalents and restricted cash | (141,462) | 124,839 |
Cash and cash equivalents and restricted cash, beginning of period | 248,008 | 130,907 |
Cash and cash equivalents and restricted cash, end of period | 106,546 | 255,746 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 738 | 1,633 |
Cash paid for income taxes | 69,161 | 45,413 |
Supplemental disclosure of non-cash investing and financing activities | ||
Sale transaction to GCU through Secured Note financing | 870,097 | |
Purchases of property and equipment included in accounts payable | 924 | $ 6,437 |
Reclassification of capitalized costs - adoption of ASC 606 | 9,015 | |
Reclassification of deferred revenue - adoption of ASC 606 | 7,451 | |
Reclassification of tax effect within accumulated other comprehensive income | $ 156 |
Nature of Business
Nature of Business | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | 1. Nature of Business Grand Canyon Education, Inc. (together with its subsidiaries, the “Company” or “GCE”) is a publicly traded education services company. GCE provides a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide service in these areas on a large scale. GCE currently provides services to Grand Canyon University, an Arizona non-profit GCU owns and operates a comprehensive regionally accredited university (the “University”) that offers over 230 graduate and undergraduate degree programs, emphases and certificates across nine colleges both online and on ground at its over 262 acre campus in Phoenix, Arizona, at leased facilities and at facilities owned by third party employers. |
The Transaction
The Transaction | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
The Transaction | 2. The Transaction Asset Purchase Agreement and Related Agreements On July 1, 2018, the Company consummated an Asset Purchase Agreement (the “Asset Purchase Agreement”) with GCU (formerly known as Gazelle University). Prior to the consummation of the transactions contemplated by the Asset Purchase Agreement (the “Transaction”), the Company operated the University. Pursuant to the Asset Purchase Agreement: • The Company transferred to GCU the real property and improvements comprising the University campus as well as tangible and intangible academic and related operations and assets related to the University (the “Transferred Assets”), and GCU assumed liabilities related to the Transferred Assets. Accordingly, GCU now owns and operates the University. The Asset Purchase Agreement contains customary representations, warranties, covenants, agreements and indemnities. • The final purchase price that GCU paid for the Transferred Assets at closing (and after giving effect to a post-closing adjustment as provided in the Asset Purchase Agreement) was $870,097. The final purchase price was equal to the book value of the tangible Transferred Assets as of July 1, 2018, plus $1.00 for the intangible Transferred Assets. • GCU paid the purchase price for the Transferred Assets by issuing to the Company a senior secured note (the “Secured Note”) that is governed by a credit agreement between the Company and GCU (the “Credit Agreement”). The Credit Agreement contains customary commercial credit terms, including affirmative and negative covenants applicable to GCU, and provides that the Secured Note bears interest at an annual rate of 6.0%, has a maturity date of June 30, 2025, and is secured by all of the assets of GCU. The Secured Note provides for GCU to make interest only payments during the term, with all principal and accrued and unpaid interest due at maturity and also provides that the Company will loan additional amounts to GCU to fund approved capital expenditures during the first three years of the term on the terms set forth therein. • In connection with the closing of the Asset Purchase Agreement, the Company and GCU entered into a long-term master services agreement (the “Master Services Agreement”) pursuant to which the Company provides identified technology and academic services, counseling services and support, marketing and communication services, and several back office services to GCU in return for 60% of GCU’s tuition and fee revenue. The Master Services Agreement has an initial term of fifteen (15) years, subject to renewal options, although GCU has the right to terminate the Master Services Agreement early after the later of seven (7) years or the payment in full of the Secured Note. If GCU were to terminate the Master Services Agreement early, then GCU would be required to pay the Company a termination fee equal to one-hundred non-renewal As a result of the Transaction, effective July 1, 2018, various aspects of the Company’s operations changed in important ways. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Change in the Structure of Our Operations.” Disposed Assets, previously Assets and Liabilities Held for Sale The Company received Board approval to consummate the Transaction on June 28, 2018, and completed the Transaction on July 1, 2018. As a result, the Company determined that it had met the accounting requirements to classify the assets and liabilities to be transferred in the Transaction as assets and liabilities held for sale as of June 30, 2018. The assets and liabilities held for sale were sold as part of the Transaction on July 1, 2018. Accordingly, the following balances were transferred to GCU as of July 1, 2018: Restricted cash and cash equivalents $ 97,443 Accounts receivable, net of allowance for doubtful accounts of $6,093 9,780 Other assets 7,677 Property and equipment, net of accumulated depreciation of $166,066 870,097 Total assets held for sale, current $ 984,997 Accrued and other liabilities $ 5,025 Student deposits 88,010 Deferred revenue 46,325 Note payable 79 Total liabilities held for sale, current $ 139,439 The Company received a Secured Note for the Transferred Assets. The Company also transferred cash equal to $34,107 representing a working capital adjustment as part of the closing. Except for identified liabilities assumed by GCU, GCE retained responsibility for all liabilities of the business arising from pre-closing Variable Interest Entity and Related Party Considerations ASC 810-10-15-17 not-for • Since GCU is a non-profit • GCU is a separate non-profit entity • Mr. Brian E. Mueller has served as the Chief Executive Officer of the Company since 2008 and the Chairman of the Board of the Company since 2017 and has also served as the President of the University since 2012. In connection with the Transaction, the Board of Directors of the Company and the board of trustees of GCU each independently determined that Mr. Mueller should retain those roles. Accordingly, Mr. Mueller remains the Chairman of the Board and Chief Executive Officer of the Company and continues to serve as the President of GCU. As noted above, however, Mr. Mueller is prohibited from serving on the board of trustees of GCU. Aside from Mr. Mueller, no other employee of GCU or GCE has a dual role in both organizations. A structure has been put in place that prevents Mr. Mueller from participating in operational matters involving the Company and GCU, including with respect to the Master Services Agreement. • The terms of the Master Services Agreement vest in GCU and its board of trustees full authority over decision making related to the day-to-day day-to-day • If GCU were to default under the Credit Agreement, the Company would be able to pursue assets of GCU, which are pledged as collateral for the Secured Note. However, the Company would not become the owner or operator of GCU. • There is no parent entity and subsidiary relationship between the Company and GCU. • The Company and GCU both engaged their own outside corporate counsel, outside regulatory counsel, and financial advisors to represent each party’s interest during the Transaction. Second Amendment to Credit Agreement The Company is a party to a credit agreement with Bank of America, N.A. as Administrative Agent, and other lenders, dated December 21, 2012 and amended as of January 15, 2016. Effective July 1, 2018, the Company and the lenders amended the credit agreement (the “Amendment”). Under the terms of the Amendment, (a) the lenders released the collateral securing the Company’s obligations under the credit agreement in order to enable the Company to consummate the Asset Purchase Agreement described above and modified certain financial and regulatory covenants to reflect the transactions described above, including the fact that the Company no longer operates a regulated educational institution, and (b) the Company (i) provided to the Administrative Agent cash collateral securing its remaining obligations under the credit agreement until such time as the Transaction has been approved by the U.S. Department of Education (the “Department of Education”), and (ii) agreed to collaterally assign its rights under the Asset Purchase Agreement, the Secured Note and the Master Services Agreement. The amount that is considered cash collateral is included as restricted cash on the consolidated balance sheet. The credit agreement, as amended by the Amendment, contains standard covenants, including covenants that, among other things, restrict the Company’s ability to incur additional debt or make certain investments and that require the Company to maintain a certain financial condition. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 3. 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. Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the United States Securities and Exchange Commission and the instructions to Form 10-Q 10-K 10-K Restricted Cash and Cash Equivalents A significant portion of the Company’s university related revenue was received from students who participated in government financial aid and assistance programs. Prior to July 1, 2018, restricted cash and cash equivalents represented amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV. The Company received these funds subsequent to the completion of the authorization and disbursement process and held them for the benefit of the student. The Department of Education requires Title IV funds collected in advance of student billings to be restricted until the course begins. Prior to the Transaction, the Company recorded all of these amounts as a current asset in restricted cash and cash equivalents. The majority of these funds remained as restricted for an average of 60 to 90 days from the date of receipt. Restricted cash and cash equivalents at September 30, 2018 represents the cash collateral on the credit agreement. Investments The Company considers its investments in municipal bonds, mutual funds, municipal securities, certificates of deposit and commercial paper as available-for-sale Available-for-sale Derivatives and Hedging Derivative financial instruments are recorded on the balance sheet as assets or liabilities and re-measured Derivative financial instruments enable the Company to manage its exposure to interest rate risk. The Company does not engage in any derivative instrument trading activity. Credit risk associated with the Company’s derivative is limited to the risk that a derivative counterparty will not perform in accordance with the terms of the contract. Exposure to counterparty credit risk is considered low because these agreements have been entered into with institutions with Aa or higher credit ratings, and they are expected to perform fully under the terms of the agreements. On February 27, 2013, the Company entered into an interest rate corridor to manage its 30 Day LIBOR interest exposure related to its variable rate debt. The fair value of the interest rate corridor instrument as of September 30, 2018 and December 31, 2017 was $801 and $509, respectively, which is included in other assets. The fair value of the derivative instrument was determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs. This derivative instrument was originally designated as a cash flow hedge of variable rate debt obligations. The adjustment of $330 and $169 for the nine months ended September 30, 2018 and 2017, respectively, for the effective portion of the gains and losses on the derivatives is included as a component of other comprehensive income, net of taxes. The interest rate corridor instrument reduces variable interest rate risk starting March 1, 2013 through December 20, 2019 with a notional amount of $61,667 as of September 30, 2018. The corridor instrument’s terms permit the Company to hedge its interest rate risk at several thresholds; the Company pays variable interest monthly based on the 30 Day LIBOR rates until that index reaches 1.5%. If 30 Day LIBOR is equal to 1.5% through 3.0%, the Company pays 1.5%. If 30 Day LIBOR exceeds 3.0%, the Company pays actual 30 Day LIBOR less 1.5%. As of September 30, 2018, no derivative ineffectiveness was identified. Any ineffectiveness in the Company’s derivative instrument designated as a hedge is reported in interest expense in the income statement. At September 30, 2018, the Company expects to reclassify gains or losses on derivative instruments from accumulated other comprehensive income (loss) into earnings during the next 12 months as the derivative instrument expires in December 2019. Fair Value of Financial Instruments The carrying value of cash and cash equivalents, investments, accounts receivable, accounts payable and accrued compensation and benefits and accrued liabilities expenses approximate their fair value based on the liquidity or the short-term maturities of these instruments. The carrying value of notes receivable, non-current The fair value of investments, primarily municipal securities, was determined using 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 municipal securities are comprised of city and county bonds related to schools, water and sewer, utilities, transportation, healthcare and housing. Revenue Recognition University related revenue – prior to July 1, 2018 On January 1, 2018, the Company adopted “Revenue from Contracts with Customers” using the modified retrospective method applied to all contracts. Prior to the Transaction on July 1, 2018, net revenues consisted primarily of tuition, net of scholarships, and fees derived from courses taught by the University online, on ground, and at facilities it leased or those of employers, as well as from related educational resources that the University provided to its students, such as access to online materials. Tuition revenue was recognized pro-rata The following table presents our revenues disaggregated by the nature of transfer of services for the six months ended June 30, 2018: Tuition revenues $ 522,430 Ancillary revenues (housing, meals, fees, golf, hotel, arena, other) 91,245 Total revenues 613,675 Scholarships (101,176 ) Net Revenues $ 512,499 The Company’s receivables represented unconditional rights to consideration from its contracts with students; accordingly, students were not billed until they started attending a course and the revenue recognition process had commenced. Once a student had been invoiced, payment was due immediately. Included in each invoice to the student were all educational related items including tuition, net of scholarships, housing, educational materials, fees, etc. The Company did not have any contract assets. The Company’s contract liabilities were reported as deferred revenue and student deposits in the consolidated balance sheets. Deferred revenue and student deposits in any period represented the excess of tuition, fees, and other student payments received as compared to amounts recognized as revenue on the consolidated income statement and were reflected as current liabilities in the accompanying consolidated balance sheets. The Company’s education programs had starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs was not yet earned. The majority of the University’s traditional ground students did not attend courses during the summer months (May through August), which affected our results for our second and third fiscal quarters. The Company had identified a performance obligation associated with the provision of its educational instruction and other educational services, housing services, and other academic related services and used the output measure for recognition as the period of time over which the services were provided to our students. The Company had identified performance obligations related to its hotel, golf course, restaurants, sale of branded promotional items and other ancillary activities and recognized revenue at the point in time goods or services were provided to its customers. The Company maintained an institutional tuition refund policy, which provided for all or a portion of tuition to be refunded if a student withdrew during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which overrode the Company’s policy to the extent in conflict. If a student withdrew at a time when only a portion, or none of the tuition was refundable, then in accordance with its revenue recognition policy, the Company continued to recognize the tuition that was not refunded pro-rata Service revenue commenced July 1, 2018 Starting July 1, 2018, the Company generates all of its revenue through the Master Services Agreement, pursuant to which the Company provides identified technology and academic services, counseling services and support, marketing and communication services, and several back office services to GCU in return for 60% of GCU’s tuition and fee revenue. Effective July 1, 2018, the Company adopted “ Revenue from Contracts with Customers The Company’s contract with GCU has an initial 15 year term, subject to renewal options, although GCU has the right to terminate the Master Services Agreement early after the later of seven (7) years or the payment in full of the Secured Note. Refer to Note 2 for further discussion on the fees associated with early termination or non-renewal The Company’s receivables represent unconditional rights to consideration from our contract with GCU. Accounts receivable, net is stated at net realizable value, and the Company utilizes the allowance method to provide for doubtful accounts based on its evaluation of the collectability of the amounts due. There are no unbilled revenue amounts included in our accounts receivable. There have been no amounts written off and no reserves established as of September 30, 2018. The Company receives service revenue payments monthly. The Company will continue to review and revise its allowance methodology based on historical collection experience. The Company does not have any contract assets or contract liabilities as the Company calculates the service fee and bills its client on the last day of each month. The Company has no costs that are capitalized to obtain or to fulfill a contract with a customer. Prepaid Royalty In connection with its February 2004 acquisition of the assets of Grand Canyon University from a non-profit Internally Developed Technology The Company capitalizes certain costs related to internal-use Long-Lived Assets (other than goodwill) The Company evaluates the recoverability of its long-lived assets for impairment 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. Financial Statement Presentation On July 1, 2018 the Company consummated the Transaction, which impacted the nature of its business. See Note 2 to our consolidated financial statements for a full description of the Transaction. GCE now provides services to GCU, its client, that include technology and academic services, counseling services and support, marketing and communication services, and several back office services such as accounting, reporting, tax, human resources, and procurement services. The Company made changes in its presentation of operating expenses and reclassified prior periods to conform to the current presentation. The Company determined that these changes would provide more meaningful information as this new presentation provides transparency for costs that will be incurred as a service provider and costs that will not reoccur in the future as they are related to university expenses that were transferred to GCU in the Transaction. Technical and Academic Services Technical and academic services (previously primarily a component of instructional costs and 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 curriculum and new program development, support for faculty training and development, technical support and assistance with state compliance. This expense category includes salaries, benefits and share-based compensation, information technology costs, curriculum and new program development costs (which are expensed as incurred) and other costs associated with these support services. 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 location. Counseling Services and Support Counseling services and support (previously primarily components of instructional costs and services and admissions advisory related expenses) 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 location. 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 category was primarily from our historical captions of advertising and marketing and promotional. 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, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona location. 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, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona location. University related expenses University related expenses (previously primarily instructional costs and services) represent the costs that were transferred to GCU in the Transaction and that are no longer incurred by the Company. We have reclassified our operating expenses for prior periods to conform to the above disaggregation and revisions to our presentation. There were no changes to total operating expenses or operating income as a result of these reclassifications. The following table presents our operating expenses as previously reported and as reclassified on our Consolidated Income Statement for each of the quarters in 2017 and the first two quarters of 2018. 2017 First Quarter As Reported First Quarter As Reclassified Second Quarter As Reported Second Quarter As Reclassified Costs and expenses: Technology and academic services — 10,381 — 10,220 Counseling services and support — 46,312 — 45,970 Marketing and communication — 27,309 — 27,426 General and administrative 9,941 7,033 10,058 5,806 University related expenses — 80,543 — 73,791 Instructional costs and services 102,574 — 95,030 — Admissions advisory and related 31,972 — 31,085 — Advertising 24,631 — 24,776 — Marketing and promotional 2,460 — 2,264 — Total costs and expenses 171,578 171,578 163,213 163,213 2017 Third Quarter As Reported Third Quarter As Reclassified Fourth Quarter As Reported Fourth Quarter As Reclassified Costs and expenses: Technology and academic services — 10,494 — 10,739 Counseling services and support — 46,100 — 50,213 Marketing and communication — 28,130 — 26,227 General and administrative 12,915 8,343 10,845 5,975 University related expenses — 83,450 — 86,356 Loss on transaction — — — 562 Instructional costs and services 104,303 — 108,933 — Admissions advisory and related 31,426 — 34,061 — Advertising 25,523 — 23,678 — Marketing and promotional 2,350 — 2,555 — Total costs and expenses 176,517 176,517 180,072 180,072 2018 First Quarter As Reported First Quarter As Reclassified Second Quarter As Reported Second Quarter As Reclassified Costs and expenses: Technology and academic services — 10,697 — 10,678 Counseling services and support — 50,747 — 50,838 Marketing and communication — 28,527 — 30,095 General and administrative 11,309 7,419 11,969 5,762 University related expenses — 87,649 — 79,517 Loss on transaction — 550 — 1,440 Instructional costs and services 111,027 — 102,237 — Admissions advisory and related 34,854 — 34,254 — Advertising 25,715 — 27,602 — Marketing and promotional 2,684 — 2,268 — Total costs and expenses 185,589 185,589 178,330 178,330 Commitments and Contingencies The Company accrues for contingent obligations 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. 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 one major rating agency at the time of purchase. All of the Company’s cash equivalents and investments as of September 30, 2018 and December 31, 2017 consist of investments rated BBB or higher by at least one rating agency. Additionally, the Company utilizes more than 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. The Company is also subject to credit risk for its accounts receivable balance. The Company has not experienced any losses on receivables to date. To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed. Our dependence on one customer subjects us to the risk that declines in our customer’s operations would result in a sustained reduction in revenues for the Company. 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. Actual results could differ from those estimates. Segment Information The Company operates as a single educational services company using a core infrastructure that serves the curriculum and educational delivery needs of its client, GCU. The Company’s Chief Executive Officer manages the Company’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. Accounting Pronouncements Adopted in 2018 In May 2014, the FASB issued “ Revenue from Contracts with Customers In January 2016, the FASB issued “ Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In May 2017, the FASB issued “ Compensation – Stock Compensation – Scope of Modification Accounting In February 2018, the FASB issued “ Income Statement – Reporting Comprehensive Income.” Recent Accounting Pronouncements In February 2016, the FASB issued “ Leases right-of-use In August 2017, the FASB issued “ Targeted Improvements to Accounting for Hedging Activities 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. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 4. Investments The following is a summary of investments as of September 30, 2018 and December 31, 2017. The Company considered all investments as available for sale. As of September 30, 2018 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 69,192 $ — $ (438 ) $ 68,754 Total investments $ 69,192 $ — $ (438 ) $ 68,754 As of December 31, 2017 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 84,768 $ — $ (409 ) $ 84,359 Certificates of Deposit $ 4,915 $ — $ (3 ) $ 4,912 Total investments $ 89,683 $ — $ (412 ) $ 89,271 The cash flows of municipal securities are backed by the issuing municipality’s credit worthiness. All municipal securities are due in one year or less as of September 30, 2018. For the nine months ended September 30, 2018, the net unrealized losses on available-for-sale |
Net Income Per Common Share
Net Income Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Common Share | 5. Net Income Per Common 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. Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Denominator: Basic weighted average shares outstanding 47,682 47,316 47,592 47,083 Effect of dilutive stock options and restricted stock 740 976 837 1,114 Diluted weighted average shares outstanding 48,422 48,292 48,429 48,197 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 the nine months ended September 30, 2018 and 2017, approximately 0 and 3, respectively, of the Company’s stock options and restricted stock awards outstanding were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive. These options and restricted stock awards could be dilutive in the future. |
Allowance for Doubtful Accounts
Allowance for Doubtful Accounts | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Allowance for Doubtful Accounts | 6. Allowance for Doubtful Accounts Balance at Beginning Charged to Expense Deductions (1) Transfers (2) Balance at End of Period Nine months ended September 30, 2018 (2) $ 5,907 8,669 (8,483 ) (6,093 ) $ 0 Nine months ended September 30, 2017 $ 5,918 13,351 (12,978 ) — $ 6,291 (1) Deductions represent accounts written off, net of recoveries. (2) Allowance was transferred to GCU with other educational assets and liabilities on July 1, 2018. See Note 2. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 7. Property and Equipment Property and equipment consist of the following: September 30, December 31, 2018 2017 Land $ 5,579 $ 160,126 Land improvements 2,242 25,630 Buildings 51,409 595,384 Buildings and leasehold improvements 9,564 117,460 Equipment under capital leases — 5,937 Computer equipment 82,974 116,477 Furniture, fixtures and equipment 4,874 63,470 Internally developed software 37,933 36,173 Other — 1,176 Construction in progress 2,695 32,390 197,270 1,154,223 Less accumulated depreciation and amortization (86,362 ) (231,939 ) Property and equipment, net $ 110,908 $ 922,284 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Legal Matters From time to time, the Company is a 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 could be 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. Tax Reserves, Non-Income From time to time the Company has exposure to various non-income |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. 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. As a result of the Transaction, discussed in Note 2, significant changes were recorded with respect to deferred tax assets and liabilities. Significant components of the Company’s deferred income tax assets and liabilities, included in Deferred income taxes, non-current As of September 30, 2018 As of December 31, 2017 Deferred tax assets: Share-based compensation $ 2,729 $ 4,201 Employee compensation 758 950 Allowance for doubtful accounts 155 1,685 Deferred tuition revenue 147 1,294 Deferred scholarship — 618 Intangibles — 590 State taxes 713 985 Other 204 526 Deferred tax assets 4,706 10,849 Deferred tax liability: Property and equipment (8,335 ) (28,028 ) Goodwill (762 ) (762 ) Other (30 ) (421 ) Deferred tax liability (9,127 ) (29,211 ) Net deferred tax liability $ (4,421 ) $ (18,362 ) The net deferred tax liability on the accompanying consolidated balance sheet is comprised of the following: As of September 30, 2018 As of December 31, 2017 Deferred income taxes, current $ 1,744 $ 5,214 Deferred income taxes, non-current (6,165 ) (23,576 ) Net deferred tax liability $ (4,421 ) $ (18,362 ) |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | 10. Share-Based Compensation Incentive Plan Prior to June 2017, the Company made grants of restricted stock and stock options under its 2008 Equity Incentive Plan (the “2008 Plan”). In January 2017, the Board of Directors of the Company approved, and at the Company’s 2017 annual meeting of stockholders held on June 14, 2017, the Company’s stockholders adopted a 2017 Equity Incentive Plan (the “2017 Plan”) under which a maximum of 3,000 shares may be granted. As of September 30, 2018, 1,910 shares were available for grants under the 2017 Plan. All grants of equity incentives made after June 2017 will be made from the 2017 Plan. Restricted Stock During the nine months ended September 30, 2018, the Company granted 160 shares of common stock with a service vesting condition to certain of its executives, officers, faculty and employees. The restricted shares have voting rights and vest in five annual installments of 20%, with this first installment vesting in March of the calendar year following the date of grant (the “first vesting date”) and on each of the four anniversaries of the first vesting date. Upon vesting, shares will be held in lieu of taxes equivalent to the minimum statutory tax withholding required to be paid when the restricted stock vests. During the nine months ended September 30, 2018, the Company withheld 151 shares of common stock in lieu of taxes at a cost of $15,153 on the restricted stock vesting dates. In June 2018, following the annual stockholders meeting, the Company granted 3 shares of common stock under the 2017 Plan to the non-employee A summary of the activity related to restricted stock granted under the Company’s Incentive Plan since December 31, 2017 is as follows: Total Shares Weighted Average Fair Value per Share Outstanding as of December 31, 2017 776 $ 49.16 Granted 163 $ 92.34 Vested (384 ) $ 65.57 Forfeited, canceled or expired (94 ) $ 71.68 Outstanding as of September 30, 2018 461 $ 63.27 Stock Options During the nine months ended September 30, 2018, no options were granted. A summary of the activity since December 31, 2017 related to stock options granted under the Company’s Incentive Plan is as follows: Summary of Stock Options Outstanding Total Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($)(1) Outstanding as of December 31, 2017 694 $ 17.31 Granted — $ — Exercised (130 ) $ 16.07 Forfeited, canceled or expired — $ — Outstanding as of September 30, 2018 564 $ 17.60 2.03 $ 53,657 Exercisable as of September 30, 2018 564 $ 17.60 2.03 $ 53,657 (1) Aggregate intrinsic value represents the value of the Company’s closing stock price on September 28, 2018 ($112.80) in excess of the exercise price multiplied by the number of shares underlying options outstanding or exercisable, as applicable. Share-based Compensation Expense The table below outlines share-based compensation expense for the nine months ended September 30, 2018 and 2017 related to restricted stock and stock options granted: 2018 2017 Technical and academic services $ 1,195 $ 1,160 Counseling support and services 3,707 3,566 Marketing and communication 40 19 General and administrative 2,530 2,535 University related expenses 9,594 2,282 Share-based compensation expense included in operating expenses 17,066 9,562 Tax effect of share-based compensation (4,267 ) (3,825 ) Share-based compensation expense, net of tax $ 12,799 $ 5,737 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | 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. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the United States Securities and Exchange Commission and the instructions to Form 10-Q 10-K 10-K |
Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents A significant portion of the Company’s university related revenue was received from students who participated in government financial aid and assistance programs. Prior to July 1, 2018, restricted cash and cash equivalents represented amounts received from the federal and state governments under various student aid grant and loan programs, such as Title IV. The Company received these funds subsequent to the completion of the authorization and disbursement process and held them for the benefit of the student. The Department of Education requires Title IV funds collected in advance of student billings to be restricted until the course begins. Prior to the Transaction, the Company recorded all of these amounts as a current asset in restricted cash and cash equivalents. The majority of these funds remained as restricted for an average of 60 to 90 days from the date of receipt. Restricted cash and cash equivalents at September 30, 2018 represents the cash collateral on the credit agreement. |
Investments | Investments The Company considers its investments in municipal bonds, mutual funds, municipal securities, certificates of deposit and commercial paper as available-for-sale Available-for-sale |
Derivatives and Hedging | Derivatives and Hedging Derivative financial instruments are recorded on the balance sheet as assets or liabilities and re-measured Derivative financial instruments enable the Company to manage its exposure to interest rate risk. The Company does not engage in any derivative instrument trading activity. Credit risk associated with the Company’s derivative is limited to the risk that a derivative counterparty will not perform in accordance with the terms of the contract. Exposure to counterparty credit risk is considered low because these agreements have been entered into with institutions with Aa or higher credit ratings, and they are expected to perform fully under the terms of the agreements. On February 27, 2013, the Company entered into an interest rate corridor to manage its 30 Day LIBOR interest exposure related to its variable rate debt. The fair value of the interest rate corridor instrument as of September 30, 2018 and December 31, 2017 was $801 and $509, respectively, which is included in other assets. The fair value of the derivative instrument was determined using a hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs. This derivative instrument was originally designated as a cash flow hedge of variable rate debt obligations. The adjustment of $330 and $169 for the nine months ended September 30, 2018 and 2017, respectively, for the effective portion of the gains and losses on the derivatives is included as a component of other comprehensive income, net of taxes. The interest rate corridor instrument reduces variable interest rate risk starting March 1, 2013 through December 20, 2019 with a notional amount of $61,667 as of September 30, 2018. The corridor instrument’s terms permit the Company to hedge its interest rate risk at several thresholds; the Company pays variable interest monthly based on the 30 Day LIBOR rates until that index reaches 1.5%. If 30 Day LIBOR is equal to 1.5% through 3.0%, the Company pays 1.5%. If 30 Day LIBOR exceeds 3.0%, the Company pays actual 30 Day LIBOR less 1.5%. As of September 30, 2018, no derivative ineffectiveness was identified. Any ineffectiveness in the Company’s derivative instrument designated as a hedge is reported in interest expense in the income statement. At September 30, 2018, the Company expects to reclassify gains or losses on derivative instruments from accumulated other comprehensive income (loss) into earnings during the next 12 months as the derivative instrument expires in December 2019. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of cash and cash equivalents, investments, accounts receivable, accounts payable and accrued compensation and benefits and accrued liabilities expenses approximate their fair value based on the liquidity or the short-term maturities of these instruments. The carrying value of notes receivable, non-current The fair value of investments, primarily municipal securities, was determined using 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 municipal securities are comprised of city and county bonds related to schools, water and sewer, utilities, transportation, healthcare and housing. |
Revenue Recognition | Revenue Recognition University related revenue – prior to July 1, 2018 On January 1, 2018, the Company adopted “Revenue from Contracts with Customers” using the modified retrospective method applied to all contracts. Prior to the Transaction on July 1, 2018, net revenues consisted primarily of tuition, net of scholarships, and fees derived from courses taught by the University online, on ground, and at facilities it leased or those of employers, as well as from related educational resources that the University provided to its students, such as access to online materials. Tuition revenue was recognized pro-rata The following table presents our revenues disaggregated by the nature of transfer of services for the six months ended June 30, 2018: Tuition revenues $ 522,430 Ancillary revenues (housing, meals, fees, golf, hotel, arena, other) 91,245 Total revenues 613,675 Scholarships (101,176 ) Net Revenues $ 512,499 The Company’s receivables represented unconditional rights to consideration from its contracts with students; accordingly, students were not billed until they started attending a course and the revenue recognition process had commenced. Once a student had been invoiced, payment was due immediately. Included in each invoice to the student were all educational related items including tuition, net of scholarships, housing, educational materials, fees, etc. The Company did not have any contract assets. The Company’s contract liabilities were reported as deferred revenue and student deposits in the consolidated balance sheets. Deferred revenue and student deposits in any period represented the excess of tuition, fees, and other student payments received as compared to amounts recognized as revenue on the consolidated income statement and were reflected as current liabilities in the accompanying consolidated balance sheets. The Company’s education programs had starting and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal quarter, a portion of revenue from these programs was not yet earned. The majority of the University’s traditional ground students did not attend courses during the summer months (May through August), which affected our results for our second and third fiscal quarters. The Company had identified a performance obligation associated with the provision of its educational instruction and other educational services, housing services, and other academic related services and used the output measure for recognition as the period of time over which the services were provided to our students. The Company had identified performance obligations related to its hotel, golf course, restaurants, sale of branded promotional items and other ancillary activities and recognized revenue at the point in time goods or services were provided to its customers. The Company maintained an institutional tuition refund policy, which provided for all or a portion of tuition to be refunded if a student withdrew during stated refund periods. Certain states in which students reside impose separate, mandatory refund policies, which overrode the Company’s policy to the extent in conflict. If a student withdrew at a time when only a portion, or none of the tuition was refundable, then in accordance with its revenue recognition policy, the Company continued to recognize the tuition that was not refunded pro-rata Service revenue commenced July 1, 2018 Starting July 1, 2018, the Company generates all of its revenue through the Master Services Agreement, pursuant to which the Company provides identified technology and academic services, counseling services and support, marketing and communication services, and several back office services to GCU in return for 60% of GCU’s tuition and fee revenue. Effective July 1, 2018, the Company adopted “ Revenue from Contracts with Customers The Company’s contract with GCU has an initial 15 year term, subject to renewal options, although GCU has the right to terminate the Master Services Agreement early after the later of seven (7) years or the payment in full of the Secured Note. Refer to Note 2 for further discussion on the fees associated with early termination or non-renewal The Company’s receivables represent unconditional rights to consideration from our contract with GCU. Accounts receivable, net is stated at net realizable value, and the Company utilizes the allowance method to provide for doubtful accounts based on its evaluation of the collectability of the amounts due. There are no unbilled revenue amounts included in our accounts receivable. There have been no amounts written off and no reserves established as of September 30, 2018. The Company receives service revenue payments monthly. The Company will continue to review and revise its allowance methodology based on historical collection experience. The Company does not have any contract assets or contract liabilities as the Company calculates the service fee and bills its client on the last day of each month. The Company has no costs that are capitalized to obtain or to fulfill a contract with a customer. |
Prepaid Royalty | Prepaid Royalty In connection with its February 2004 acquisition of the assets of Grand Canyon University from a non-profit |
Internally Developed Technology | Internally Developed Technology The Company capitalizes certain costs related to internal-use |
Long-Lived Assets (other than goodwill) | Long-Lived Assets (other than goodwill) The Company evaluates the recoverability of its long-lived assets for impairment 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. |
Financial Statement Presentation | Financial Statement Presentation On July 1, 2018 the Company consummated the Transaction, which impacted the nature of its business. See Note 2 to our consolidated financial statements for a full description of the Transaction. GCE now provides services to GCU, its client, that include technology and academic services, counseling services and support, marketing and communication services, and several back office services such as accounting, reporting, tax, human resources, and procurement services. The Company made changes in its presentation of operating expenses and reclassified prior periods to conform to the current presentation. The Company determined that these changes would provide more meaningful information as this new presentation provides transparency for costs that will be incurred as a service provider and costs that will not reoccur in the future as they are related to university expenses that were transferred to GCU in the Transaction. |
Technical and Academic Services | Technical and Academic Services Technical and academic services (previously primarily a component of instructional costs and 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 curriculum and new program development, support for faculty training and development, technical support and assistance with state compliance. This expense category includes salaries, benefits and share-based compensation, information technology costs, curriculum and new program development costs (which are expensed as incurred) and other costs associated with these support services. 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 location. |
Counseling Services and Support | Counseling Services and Support Counseling services and support (previously primarily components of instructional costs and services and admissions advisory related expenses) 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 location. |
Marketing and Communication | 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 category was primarily from our historical captions of advertising and marketing and promotional. 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, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona location. Advertising costs are expensed as incurred. |
General and Administrative | 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, rent, and occupancy costs attributable to the provision of these services, primarily at the Company’s Phoenix, Arizona location. |
University related expenses | University related expenses University related expenses (previously primarily instructional costs and services) represent the costs that were transferred to GCU in the Transaction and that are no longer incurred by the Company. We have reclassified our operating expenses for prior periods to conform to the above disaggregation and revisions to our presentation. There were no changes to total operating expenses or operating income as a result of these reclassifications. The following table presents our operating expenses as previously reported and as reclassified on our Consolidated Income Statement for each of the quarters in 2017 and the first two quarters of 2018. 2017 First Quarter As Reported First Quarter As Reclassified Second Quarter As Reported Second Quarter As Reclassified Costs and expenses: Technology and academic services — 10,381 — 10,220 Counseling services and support — 46,312 — 45,970 Marketing and communication — 27,309 — 27,426 General and administrative 9,941 7,033 10,058 5,806 University related expenses — 80,543 — 73,791 Instructional costs and services 102,574 — 95,030 — Admissions advisory and related 31,972 — 31,085 — Advertising 24,631 — 24,776 — Marketing and promotional 2,460 — 2,264 — Total costs and expenses 171,578 171,578 163,213 163,213 2017 Third Quarter As Reported Third Quarter As Reclassified Fourth Quarter As Reported Fourth Quarter As Reclassified Costs and expenses: Technology and academic services — 10,494 — 10,739 Counseling services and support — 46,100 — 50,213 Marketing and communication — 28,130 — 26,227 General and administrative 12,915 8,343 10,845 5,975 University related expenses — 83,450 — 86,356 Loss on transaction — — — 562 Instructional costs and services 104,303 — 108,933 — Admissions advisory and related 31,426 — 34,061 — Advertising 25,523 — 23,678 — Marketing and promotional 2,350 — 2,555 — Total costs and expenses 176,517 176,517 180,072 180,072 2018 First Quarter As Reported First Quarter As Reclassified Second Quarter As Reported Second Quarter As Reclassified Costs and expenses: Technology and academic services — 10,697 — 10,678 Counseling services and support — 50,747 — 50,838 Marketing and communication — 28,527 — 30,095 General and administrative 11,309 7,419 11,969 5,762 University related expenses — 87,649 — 79,517 Loss on transaction — 550 — 1,440 Instructional costs and services 111,027 — 102,237 — Admissions advisory and related 34,854 — 34,254 — Advertising 25,715 — 27,602 — Marketing and promotional 2,684 — 2,268 — Total costs and expenses 185,589 185,589 178,330 178,330 |
Commitments and Contingencies | Commitments and Contingencies The Company accrues for contingent obligations 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. |
Concentration of Credit Risk | 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 one major rating agency at the time of purchase. All of the Company’s cash equivalents and investments as of September 30, 2018 and December 31, 2017 consist of investments rated BBB or higher by at least one rating agency. Additionally, the Company utilizes more than 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. The Company is also subject to credit risk for its accounts receivable balance. The Company has not experienced any losses on receivables to date. To manage accounts receivable risk, the Company maintains an allowance for doubtful accounts, if needed. Our dependence on one customer subjects us to the risk that declines in our customer’s operations would result in a sustained reduction in revenues for the Company. |
Use of Estimates | 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. Actual results could differ from those estimates. |
Segment Information | Segment Information The Company operates as a single educational services company using a core infrastructure that serves the curriculum and educational delivery needs of its client, GCU. The Company’s Chief Executive Officer manages the Company’s operations as a whole and no expense or operating income information is generated or evaluated on any component level. |
Accounting Pronouncements Adopted in 2018 | Accounting Pronouncements Adopted in 2018 In May 2014, the FASB issued “ Revenue from Contracts with Customers In January 2016, the FASB issued “ Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In May 2017, the FASB issued “ Compensation – Stock Compensation – Scope of Modification Accounting In February 2018, the FASB issued “ Income Statement – Reporting Comprehensive Income.” |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued “ Leases right-of-use In August 2017, the FASB issued “ Targeted Improvements to Accounting for Hedging Activities 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. |
The Transaction (Tables)
The Transaction (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Summary of Disposed Assets, previously Assets and Liabilities Held for Sale Transferred to GCU | the following balances were transferred to GCU as of July 1, 2018: Restricted cash and cash equivalents $ 97,443 Accounts receivable, net of allowance for doubtful accounts of $6,093 9,780 Other assets 7,677 Property and equipment, net of accumulated depreciation of $166,066 870,097 Total assets held for sale, current $ 984,997 Accrued and other liabilities $ 5,025 Student deposits 88,010 Deferred revenue 46,325 Note payable 79 Total liabilities held for sale, current $ 139,439 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Revenues Disaggregated by Nature of Transfer of Services | The following table presents our revenues disaggregated by the nature of transfer of services for the six months ended June 30, 2018: Tuition revenues $ 522,430 Ancillary revenues (housing, meals, fees, golf, hotel, arena, other) 91,245 Total revenues 613,675 Scholarships (101,176 ) Net Revenues $ 512,499 |
Schedule of Restatements on Consolidated Income Statement | The following table presents our operating expenses as previously reported and as reclassified on our Consolidated Income Statement for each of the quarters in 2017 and the first two quarters of 2018. 2017 First Quarter As Reported First Quarter As Reclassified Second Quarter As Reported Second Quarter As Reclassified Costs and expenses: Technology and academic services — 10,381 — 10,220 Counseling services and support — 46,312 — 45,970 Marketing and communication — 27,309 — 27,426 General and administrative 9,941 7,033 10,058 5,806 University related expenses — 80,543 — 73,791 Instructional costs and services 102,574 — 95,030 — Admissions advisory and related 31,972 — 31,085 — Advertising 24,631 — 24,776 — Marketing and promotional 2,460 — 2,264 — Total costs and expenses 171,578 171,578 163,213 163,213 2017 Third Quarter As Reported Third Quarter As Reclassified Fourth Quarter As Reported Fourth Quarter As Reclassified Costs and expenses: Technology and academic services — 10,494 — 10,739 Counseling services and support — 46,100 — 50,213 Marketing and communication — 28,130 — 26,227 General and administrative 12,915 8,343 10,845 5,975 University related expenses — 83,450 — 86,356 Loss on transaction — — — 562 Instructional costs and services 104,303 — 108,933 — Admissions advisory and related 31,426 — 34,061 — Advertising 25,523 — 23,678 — Marketing and promotional 2,350 — 2,555 — Total costs and expenses 176,517 176,517 180,072 180,072 2018 First Quarter As Reported First Quarter As Reclassified Second Quarter As Reported Second Quarter As Reclassified Costs and expenses: Technology and academic services — 10,697 — 10,678 Counseling services and support — 50,747 — 50,838 Marketing and communication — 28,527 — 30,095 General and administrative 11,309 7,419 11,969 5,762 University related expenses — 87,649 — 79,517 Loss on transaction — 550 — 1,440 Instructional costs and services 111,027 — 102,237 — Admissions advisory and related 34,854 — 34,254 — Advertising 25,715 — 27,602 — Marketing and promotional 2,684 — 2,268 — Total costs and expenses 185,589 185,589 178,330 178,330 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investments | The following is a summary of investments as of September 30, 2018 and December 31, 2017. The Company considered all investments as available for sale. As of September 30, 2018 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 69,192 $ — $ (438 ) $ 68,754 Total investments $ 69,192 $ — $ (438 ) $ 68,754 As of December 31, 2017 Adjusted Cost Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Municipal securities $ 84,768 $ — $ (409 ) $ 84,359 Certificates of Deposit $ 4,915 $ — $ (3 ) $ 4,912 Total investments $ 89,683 $ — $ (412 ) $ 89,271 |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Summary of Weighted Average Number of Common Shares Outstanding | 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. Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Denominator: Basic weighted average shares outstanding 47,682 47,316 47,592 47,083 Effect of dilutive stock options and restricted stock 740 976 837 1,114 Diluted weighted average shares outstanding 48,422 48,292 48,429 48,197 |
Allowance for Doubtful Accoun_2
Allowance for Doubtful Accounts (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Schedule of Allowance for Doubtful Accounts | Balance at Beginning Charged to Expense Deductions (1) Transfers (2) Balance at End of Period Nine months ended September 30, 2018 (2) $ 5,907 8,669 (8,483 ) (6,093 ) $ 0 Nine months ended September 30, 2017 $ 5,918 13,351 (12,978 ) — $ 6,291 (1) Deductions represent accounts written off, net of recoveries. (2) Allowance was transferred to GCU with other educational assets and liabilities on July 1, 2018. See Note 2. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | Property and equipment consist of the following: September 30, December 31, 2018 2017 Land $ 5,579 $ 160,126 Land improvements 2,242 25,630 Buildings 51,409 595,384 Buildings and leasehold improvements 9,564 117,460 Equipment under capital leases — 5,937 Computer equipment 82,974 116,477 Furniture, fixtures and equipment 4,874 63,470 Internally developed software 37,933 36,173 Other — 1,176 Construction in progress 2,695 32,390 197,270 1,154,223 Less accumulated depreciation and amortization (86,362 ) (231,939 ) Property and equipment, net $ 110,908 $ 922,284 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Significant Components of Deferred Income Tax Assets and Liabilities | Significant components of the Company’s deferred income tax assets and liabilities, included in Deferred income taxes, non-current As of September 30, 2018 As of December 31, 2017 Deferred tax assets: Share-based compensation $ 2,729 $ 4,201 Employee compensation 758 950 Allowance for doubtful accounts 155 1,685 Deferred tuition revenue 147 1,294 Deferred scholarship — 618 Intangibles — 590 State taxes 713 985 Other 204 526 Deferred tax assets 4,706 10,849 Deferred tax liability: Property and equipment (8,335 ) (28,028 ) Goodwill (762 ) (762 ) Other (30 ) (421 ) Deferred tax liability (9,127 ) (29,211 ) Net deferred tax liability $ (4,421 ) $ (18,362 ) The net deferred tax liability on the accompanying consolidated balance sheet is comprised of the following: As of September 30, 2018 As of December 31, 2017 Deferred income taxes, current $ 1,744 $ 5,214 Deferred income taxes, non-current (6,165 ) (23,576 ) Net deferred tax liability $ (4,421 ) $ (18,362 ) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Activity Related to Restricted Stock Granted under Company's Incentive Plan | A summary of the activity related to restricted stock granted under the Company’s Incentive Plan since December 31, 2017 is as follows: Total Shares Weighted Average Fair Value per Share Outstanding as of December 31, 2017 776 $ 49.16 Granted 163 $ 92.34 Vested (384 ) $ 65.57 Forfeited, canceled or expired (94 ) $ 71.68 Outstanding as of September 30, 2018 461 $ 63.27 |
Summary of Activity Related to Stock Options Granted under Company's Incentive Plan | During the nine months ended September 30, 2018, no options were granted. A summary of the activity since December 31, 2017 related to stock options granted under the Company’s Incentive Plan is as follows: Summary of Stock Options Outstanding Total Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($)(1) Outstanding as of December 31, 2017 694 $ 17.31 Granted — $ — Exercised (130 ) $ 16.07 Forfeited, canceled or expired — $ — Outstanding as of September 30, 2018 564 $ 17.60 2.03 $ 53,657 Exercisable as of September 30, 2018 564 $ 17.60 2.03 $ 53,657 (1) Aggregate intrinsic value represents the value of the Company’s closing stock price on September 28, 2018 ($112.80) in excess of the exercise price multiplied by the number of shares underlying options outstanding or exercisable, as applicable. |
Share-Based Compensation Expense | Share-based Compensation Expense The table below outlines share-based compensation expense for the nine months ended September 30, 2018 and 2017 related to restricted stock and stock options granted: 2018 2017 Technical and academic services $ 1,195 $ 1,160 Counseling support and services 3,707 3,566 Marketing and communication 40 19 General and administrative 2,530 2,535 University related expenses 9,594 2,282 Share-based compensation expense included in operating expenses 17,066 9,562 Tax effect of share-based compensation (4,267 ) (3,825 ) Share-based compensation expense, net of tax $ 12,799 $ 5,737 |
Nature of Business - Additional
Nature of Business - Additional Information (Detail) - Grand Canyon University [Member] | 9 Months Ended |
Sep. 30, 2018CollegesDegrees | |
Nature Of Operations [Line Items] | |
Description of area of campus in Phoenix, Arizona | 262 acre campus |
Number of colleges in Phoenix, Arizona | Colleges | 9 |
Number of degree programs and certificates | Degrees | 262 |
The Transaction - Additional In
The Transaction - Additional Information (Detail) - USD ($) | Jul. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2018 |
Long Lived Assets Held-for-sale [Line Items] | |||
Loss on transaction | $ (15,610,000) | $ (17,600,000) | |
Asset impairment | $ 3,037,000 | ||
Grand Canyon University [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Cash transferred | 34,107,000 | ||
Loss on transaction due to transaction costs | 4,995,000 | ||
Loss on transaction | (17,600,000) | ||
Asset impairment | 3,037,000 | ||
Recognized deferred compensation plan expense for former GCE employees | $ 9,568,000 | 9,568,000 | |
Share-based compensation expense | 7,880,000 | ||
Employer tax expense related to share-based compensation | 191,000 | ||
Share-based compensation modification, net of reversals of employee related liabilities | $ 1,502,000 | ||
Grand Canyon University [Member] | Asset Purchase Agreement [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Purchase price of assets | 870,097,000 | ||
Final purchase price adjustment amount | $ 1 | ||
Senior secured note bears interest | 6.00% | ||
Senior secured notes maturity date | Jun. 30, 2025 | ||
Grand Canyon University [Member] | Master Services Agreement [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Percentage of tuition and fee revenue used for closing of purchase agreement | 60.00% | ||
Initial maturity period of agreement | 15 years | ||
Early termination period of agreement | 7 years | ||
Percentage of termination fee | 100.00% | ||
Termination fees payment period | 12 months | ||
Percentage of non-renewal fees payment | 50.00% | ||
Non-renewal fees payment period | 12 months |
The Transaction - Summary of Di
The Transaction - Summary of Disposed Assets, previously Assets and Liabilities Held for Sale Transferred to GCU (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 01, 2018 | Dec. 31, 2017 |
Long Lived Assets Held-for-sale [Line Items] | |||
Restricted cash and cash equivalents | $ 61,667 | $ 94,534 | |
Accounts receivable, net | 65,120 | 10,908 | |
Other assets | 8,607 | 24,589 | |
Property and equipment, net | 110,908 | 922,284 | |
Accrued and other liabilities | 13,511 | 20,757 | |
Student deposits | 95,298 | ||
Deferred revenue | 46,895 | ||
Note payable | $ 54,976 | $ 59,925 | |
Asset Held For Sale [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Restricted cash and cash equivalents | $ 97,443 | ||
Accounts receivable, net | 9,780 | ||
Other assets | 7,677 | ||
Property and equipment, net | 870,097 | ||
Total assets held for sale, current | 984,997 | ||
Liabilities Held For Sale [Member] | |||
Long Lived Assets Held-for-sale [Line Items] | |||
Accrued and other liabilities | 5,025 | ||
Student deposits | 88,010 | ||
Deferred revenue | 46,325 | ||
Note payable | 79 | ||
Total liabilities held for sale, current | $ 139,439 |
The Transaction - Summary of _2
The Transaction - Summary of Disposed Assets, previously Assets and Liabilities Held for Sale Transferred to GCU (Parenthetical) (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Long Lived Assets Held-for-sale [Line Items] | |||||
Allowance for doubtful accounts | $ 0 | $ 5,907 | $ 6,291 | $ 5,918 | |
Accumulated depreciation on property and equipment | $ 86,362 | $ 231,939 | |||
Asset Held For Sale [Member] | |||||
Long Lived Assets Held-for-sale [Line Items] | |||||
Allowance for doubtful accounts | $ 6,093 | ||||
Accumulated depreciation on property and equipment | $ 166,066 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) shares in Thousands | Jul. 01, 2018USD ($) | Jun. 30, 2018USD ($)Employeeshares | May 31, 2017USD ($)Employeeshares | Jun. 30, 2018USD ($) | Sep. 30, 2018USD ($)ProjectAgency | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Summary Of Significant Accounting Policies [Line Items] | |||||||
Average days from the date of receipt in which funds remain as restricted cash and cash equivalents | 60 to 90 days | ||||||
Period of LIBOR interest rate | 30 days | ||||||
Reduction in revenue due to scholarships offered to students | $ 101,176,000 | $ 135,630,000 | |||||
Royalty amortization period | 20 years | ||||||
Remaining prepaid royalty assets impaired | $ 3,037,000 | ||||||
Number of stages of software development projects | Project | 3 | ||||||
Cumulative effect from the adoption of accounting pronouncements, net of taxes | $ 1,174,000 | ||||||
Deferred revenue | $ 46,895,000 | ||||||
Computer Software, Intangible Asset [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Estimated useful life | 3 years | ||||||
Grand Canyon University [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Remaining prepaid royalty assets impaired | $ 3,037,000 | ||||||
Number of former employees hired | Employee | 100 | 100 | |||||
Share-based compensation expense for restricted stock awards | $ 7,880,000 | ||||||
Grand Canyon University [Member] | Restricted Stock Grants [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Shares issued under plan | shares | 82 | 82 | |||||
Share-based compensation expense for restricted stock awards | $ 7,880,000 | $ 7,880,000 | |||||
Grand Canyon University [Member] | Master Services Agreement [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Percentage of tuition and fee revenue used for closing of purchase agreement | 60.00% | ||||||
Initial maturity period of agreement | 15 years | ||||||
Early termination period of agreement | 7 years | ||||||
Refund or return rights under agreement | $ 0 | ||||||
Interest Rate Corridor [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Notional amount of derivative instrument | $ 61,667,000 | ||||||
Description of interest rate risk hedge at several thresholds | The Company pays variable interest monthly based on the 30 Day LIBOR rates until that index reaches 1.5%. If 30 Day LIBOR is equal to 1.5% through 3.0%, the Company pays 1.5%. If 30 Day LIBOR exceeds 3.0%, the Company pays actual 30 Day LIBOR less 1.5%. | ||||||
Interest Rate Corridor [Member] | LIBOR [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Maximum percentage of variable interest rates based on LIBOR | 1.50% | ||||||
Percentage of amount paid by Company | 1.50% | ||||||
Percentage deducted from LIBOR for actual payment | 1.50% | ||||||
Cash Flow Hedging [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Effective portion of gain (loss) on derivatives included as a component of other comprehensive income | $ 330,000 | $ 169,000 | |||||
Other Assets [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Fair values of interest rate corridor instrument | $ 801,000 | $ 509,000 | |||||
Minimum [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Number of days from the date of receipt in which funds remain as restricted cash and cash equivalents | 60 days | ||||||
Number of major rating agencies reporting credit ratings | Agency | 1 | ||||||
Minimum [Member] | Interest Rate Corridor [Member] | LIBOR [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Percentage of LIBOR | 1.50% | ||||||
Maximum [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Number of days from the date of receipt in which funds remain as restricted cash and cash equivalents | 90 days | ||||||
Maximum [Member] | Interest Rate Corridor [Member] | LIBOR [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Percentage of LIBOR | 3.00% | ||||||
Revenue from Contracts with Customers [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Direct and incremental capitalized costs | $ 9,015,000 | ||||||
Deferred revenue | $ 7,451,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Revenues Disaggregated by Nature of Transfer of Services (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | |||||
Total revenues | $ 613,675 | ||||
Scholarships | (101,176) | $ (135,630) | |||
Net Revenues | $ 155,454 | $ 236,209 | 512,499 | $ 667,953 | $ 702,716 |
Tuition Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 522,430 | ||||
Ancillary Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | $ 91,245 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Restatements on Consolidated Income Statement (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Costs and expenses: | |||||||||
Technology and academic services | $ 11,101 | $ 10,494 | $ 32,476 | $ 31,095 | |||||
Counseling services and support | 51,116 | 46,100 | 152,701 | 138,382 | |||||
Marketing and communication | 31,546 | 28,130 | 90,168 | 82,865 | |||||
General and administrative | 10,092 | 8,343 | 23,273 | 21,182 | |||||
University related expenses | 6,569 | 83,450 | 173,735 | 237,784 | |||||
Total costs and expenses | $ 126,034 | 176,517 | $ 489,953 | $ 511,308 | |||||
As Reported [Member] | |||||||||
Costs and expenses: | |||||||||
General and administrative | $ 11,969 | $ 11,309 | $ 10,845 | 12,915 | $ 10,058 | $ 9,941 | |||
Instructional costs and services | 102,237 | 111,027 | 108,933 | 104,303 | 95,030 | 102,574 | |||
Admissions advisory and related | 34,254 | 34,854 | 34,061 | 31,426 | 31,085 | 31,972 | |||
Advertising | 27,602 | 25,715 | 23,678 | 25,523 | 24,776 | 24,631 | |||
Marketing and promotional | 2,268 | 2,684 | 2,555 | 2,350 | 2,264 | 2,460 | |||
Total costs and expenses | 178,330 | 185,589 | 180,072 | 176,517 | 163,213 | 171,578 | |||
As Reclassified [Member] | |||||||||
Costs and expenses: | |||||||||
Technology and academic services | 10,678 | 10,697 | 10,739 | 10,494 | 10,220 | 10,381 | |||
Counseling services and support | 50,838 | 50,747 | 50,213 | 46,100 | 45,970 | 46,312 | |||
Marketing and communication | 30,095 | 28,527 | 26,227 | 28,130 | 27,426 | 27,309 | |||
General and administrative | 5,762 | 7,419 | 5,975 | 8,343 | 5,806 | 7,033 | |||
University related expenses | 79,517 | 87,649 | 86,356 | 83,450 | 73,791 | 80,543 | |||
Loss on transaction | 1,440 | 550 | 562 | ||||||
Total costs and expenses | $ 178,330 | $ 185,589 | $ 180,072 | $ 176,517 | $ 163,213 | $ 171,578 |
Investments - Summary of Invest
Investments - Summary of Investments (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | $ 69,192 | $ 89,683 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | (438) | (412) |
Estimated Fair Value | 68,754 | 89,271 |
Certificates of Deposit [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | 4,915 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized (Losses) | (3) | |
Estimated Fair Value | 4,912 | |
Municipal Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Adjusted Cost | 69,192 | 84,768 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized (Losses) | (438) | (409) |
Estimated Fair Value | $ 68,754 | $ 84,359 |
Investments - Additional Inform
Investments - Additional Information (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Debt Securities, Available-for-sale [Line Items] | |
Unrealized net (losses) gains on available-for-sale securities | $ (329) |
Certificates of Deposit [Member] | |
Debt Securities, Available-for-sale [Line Items] | |
Maturity period of investments | One year or less |
Net Income Per Common Share - S
Net Income Per Common Share - Summary of Weighted Average Number of Common Shares Outstanding (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Denominator: | ||||
Basic weighted average shares outstanding | 47,682 | 47,316 | 47,592 | 47,083 |
Effect of dilutive stock options and restricted stock | 740 | 976 | 837 | 1,114 |
Diluted weighted average shares outstanding | 48,422 | 48,292 | 48,429 | 48,197 |
Net Income Per Common Share - A
Net Income Per Common Share - Additional Information (Detail) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Stock Option And Restricted Stock Awards [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Company's stock options and restricted stock awards outstanding were excluded from the calculation of diluted earnings | 0 | 3 |
Allowance for Doubtful Accoun_3
Allowance for Doubtful Accounts - Schedule of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Receivables [Abstract] | ||
Balance at Beginning of Period | $ 5,907 | $ 5,918 |
Charged to Expense | 8,669 | 13,351 |
Deductions | (8,483) | (12,978) |
Transfers | (6,093) | |
Balance at End of Period | $ 0 | $ 6,291 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 197,270 | $ 1,154,223 |
Less accumulated depreciation and amortization | (86,362) | (231,939) |
Property and equipment, net | 110,908 | 922,284 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 5,579 | 160,126 |
Land Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 2,242 | 25,630 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 51,409 | 595,384 |
Buildings and Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 9,564 | 117,460 |
Equipment under Capital Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 5,937 | |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 82,974 | 116,477 |
Furniture, Fixtures and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 4,874 | 63,470 |
Internally Developed Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 37,933 | 36,173 |
Other [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,176 | |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 2,695 | $ 32,390 |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Income Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Share-based compensation | $ 2,729 | $ 4,201 |
Employee compensation | 758 | 950 |
Allowance for doubtful accounts | 155 | 1,685 |
Deferred tuition revenue | 147 | 1,294 |
Deferred scholarship | 618 | |
Intangibles | 590 | |
State taxes | 713 | 985 |
Other | 204 | 526 |
Deferred tax assets | 4,706 | 10,849 |
Deferred tax liability: | ||
Property and equipment | (8,335) | (28,028) |
Goodwill | (762) | (762) |
Other | (30) | (421) |
Deferred tax liability | (9,127) | (29,211) |
Net deferred tax liability | $ (4,421) | $ (18,362) |
Income Taxes - Significant Co_2
Income Taxes - Significant Components of Deferred Income Tax Assets and Liabilities Classified (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Deferred income taxes, current | $ 1,744 | $ 5,214 |
Deferred income taxes, non-current | (6,165) | (23,576) |
Net deferred tax liability | $ (4,421) | $ (18,362) |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Jun. 30, 2018USD ($)Employeeshares | May 31, 2017USD ($)Employeeshares | Sep. 30, 2018USD ($)Anniversariesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 0 | ||
Grand Canyon University [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of former employees hired | Employee | 100 | 100 | |
Share-based compensation expense for restricted stock awards | $ | $ 7,880 | ||
Recognized deferred compensation plan expense for former GCE employees | $ | $ 9,568 | ||
2017 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for grant | 1,910,000 | ||
Maximum [Member] | 2017 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for grant | 3,000,000 | ||
Restricted Stock Grants [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted | 163,000 | ||
Shares withheld for taxes | 151,000 | ||
Common stock in lieu of taxes | $ | $ 15,153 | ||
Forfeiture of shares by transferred employees at closing of transaction | 94,000 | ||
Restricted Stock Grants [Member] | Grand Canyon University [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued under plan | 82,000 | 82,000 | |
Share-based compensation expense for restricted stock awards | $ | $ 7,880 | $ 7,880 | |
Recognized deferred compensation plan expense for former GCE employees | $ | $ 9,568 | ||
Forfeiture of shares by transferred employees at closing of transaction | 86,000 | ||
Restricted Stock Grants [Member] | 2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted | 160,000 | ||
Vesting period | 5 years | ||
Number of anniversaries of the vesting date following the date of grant | Anniversaries | 4 | ||
Restricted Stock Grants [Member] | 2017 Plan [Member] | Non-employee [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares granted | 3,000 | ||
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche One [Member] | 2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting right percentage | 20.00% | ||
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche Two [Member] | 2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting right percentage | 20.00% | ||
Restricted Stock Grants [Member] | Share-based Compensation Award, Tranche Three [Member] | 2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting right percentage | 20.00% | ||
Restricted Stock Grants [Member] | Share-based Compensation Award Tranche Four [Member] | 2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting right percentage | 20.00% | ||
Restricted Stock Grants [Member] | Share-based Compensation Award Tranche Five [Member] | 2008 Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting right percentage | 20.00% | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted | 0 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Activity Related to Restricted Stock Granted under Company's Incentive Plan (Detail) - Restricted Stock Grants [Member] shares in Thousands | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Shares, Outstanding, Beginning Balance | shares | 776 |
Total Shares, Granted | shares | 163 |
Total Shares, Vested | shares | (384) |
Total Shares, Forfeited, canceled or expired | shares | (94) |
Total Shares, Outstanding, Ending Balance | shares | 461 |
Weighted Average Grant Date Fair Value, Beginning Balance | $ / shares | $ 49.16 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 92.34 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 65.57 |
Weighted Average Grant Date Fair Value, Forfeited, canceled or expired | $ / shares | 71.68 |
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 63.27 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Activity Related to Stock Options Granted under Company's Incentive Plan (Detail) $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Shares outstanding, Beginning balance | 694,000 |
Total Shares, Granted | 0 |
Total Shares, Exercised | (130,000) |
Total Shares, Forfeited, canceled or expired | 0 |
Total Shares outstanding, Ending balance | 564,000 |
Total Shares, Exercisable | 564,000 |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Shares, Granted | 0 |
Weighted Average Exercise Price per Share Outstanding, Beginning balance | $ / shares | $ 17.31 |
Weighted Average Exercise Price per Share, Granted | $ / shares | 0 |
Weighted Average Exercise Price per Share, Exercised | $ / shares | 16.07 |
Weighted Average Exercise Price per Share, Forfeited, canceled or expired | $ / shares | 0 |
Weighted Average Exercise Price per Share Outstanding, Ending balance | $ / shares | 17.60 |
Weighted Average Exercise Price per Share, Exercisable | $ / shares | $ 17.60 |
Weighted Average Remaining Contractual Term (Years), Outstanding | 2 years 10 days |
Weighted Average Remaining Contractual Term (Years), Exercisable | 2 years 10 days |
Aggregate Intrinsic Value, Outstanding | $ | $ 53,657 |
Aggregate Intrinsic Value, Exercisable | $ | $ 53,657 |
Share-Based Compensation - Su_3
Share-Based Compensation - Summary of Activity Related to Stock Options Granted under Company's Incentive Plan (Parenthetical) (Detail) | Sep. 28, 2018$ / shares |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Value of closing stock price | $ 112.80 |
Share-Based Compensation - Shar
Share-Based Compensation - Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 17,066 | $ 9,562 |
Tax effect of share-based compensation | (4,267) | (3,825) |
Share-based compensation expense, net of tax | 12,799 | 5,737 |
Technical and Academic Services [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 1,195 | 1,160 |
Counseling Support and Services [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 3,707 | 3,566 |
Marketing and Communication [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 40 | 19 |
General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | 2,530 | 2,535 |
University Related Expenses [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-based compensation expense | $ 9,594 | $ 2,282 |