Grand Canyon Education

None of the serious warning signs we check for were found. 1 thing worth knowing.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 18 Feb 2026, plus the 10-Q filed 30 Jul 2026 and 6 later 8-Ks.

• One big customer

  Worth knowing

  One customer brings in a big share of sales: 89.5% last year. Losing that customer would hurt.

  “Our dependence on our most significant university partner, with 89.5% and 88.9% of total service revenue for the years ended December 31, 2025 and 2024, respectively, subjects us to the risk that declines in our customers’ operations would result in a sustained reduction in service revenue for the Company.”

  From the 10-K filed 18 February 2026, Item 8. Financial Statements and Notes. Read it in the filing

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Risks Related to the Extensive Regulation of the Higher Education Industry

  Could happen

  On July 4, 2025, President Trump signed the OBBBA, which makes a variety of changes to federal student aid programs, including loan limits, accountability measures for programs based on low earning outcomes, loan repayment, Pell Grant eligibility, and regulatory changes. As one example, OBBBA creates the “Do No Harm” accountability framework, effective July 2026, that institutions must satisfy at the program level in order for students to continue to receive Federal Direct Loans for such programs. Under this framework, OBBBA requires that an undergraduate program become ineligible for Federal Direct Loans if, in two out of three consecutive years, the median earnings of a cohort of program completers are less than the median earnings of working adults aged 25-34 with only a high school diploma, either in the state where the institution is located or, if fewer than 50% of students at the institution reside in the institution’s state, the national average. OBBBA requires that a graduate or professional program become ineligible for Federal Direct Loans if, in two out of three consecutive years, the median earnings of a cohort of program completers are less than the median earnings of working adults aged 25–34 with only a bachelor’s degree. Both the undergraduate and graduate/professional accountability provisions apply to the cohort of students who completed the program four years prior, are working, are not enrolled at any institution, and who received Federal Direct Loan funds for enrollment in the program. If a cohort is less than 30 students, the Secretary of Education may aggregate additional years of programmatic data. Based on data provided by the ED for students that graduated in 2015-2016, all of the programs that we provide services to our university partners passed this metric except GCU’s Masters in Mental and Social Health programs. GCU is currently analyzing the data related to these programs and it appears that most universities that provide these programs online to working adult students fail this metric. To the extent that these or any other programs offered by our university partners pursuant to our services agreements fail these metrics, then this would have an adverse effect on our university partners and thus an adverse effect on our business. We cannot predict with certainty how all of these regulatory requirements under the OBBBA will be applied or what their ultimate impact on our business will be.

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• Our success depends upon our ability and our university partners’ ability to recruit and retain key personnel.

  Could happen

  In addition, our university partners heavily rely on their ability to attract and retain qualified faculty members to effectively educate their students. If our university partners fail to retain sufficient numbers of qualified faculty members, fail to adequately train new faculty members, or allow relations with faculty members to deteriorate, they may be required to reduce the number or scope of classes available to students, which could in turn have a material adverse impact on our business.

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