Grand Canyon Education (LOPE) risk factors, FY2025 10-K

Risks Related to Our Relationship with GCU

1. 01We earn a large percentage of our revenue through our contractual relationship as a service provider to GCU, and a decline in GCU’s enrollment could significantly reduce our revenue and impact our overall financial performance
2. 02GCU’s board of trustees and management have fiduciary and other duties that require them to focus on the best interests of GCU and, over time, those interests could diverge from those of GCE
3. 03Our Chief Executive Officer’s role as President of GCU may adversely affect his ability to run GCE
4. 04If we are determined to have paid improper incentive compensation to our covered employees, or tuition sharing arrangements are deemed to violate the incentive compensation regulations, our business will be impaired
5. 05payments to its employees, and the institution does not pay the entity separately for student recruitment services provided by the entity.”
6. 06Our success depends, in part, on our ability to recruit new students to enroll with our university partners
7. 07Macroeconomic conditions and aversion to debt could adversely affect the ability of our university partner institutions to recruit new students and adversely affect our business
8. 08Our failure to keep pace with changing market needs and technology could harm our ability to meet the needs of our university partner institutions44% rewritten
9. 09A decline in the overall growth of enrollment in post-secondary institutions, or in the number of students seeking degrees online, could cause our university partner institutions to experience lower enrollment, which could negatively impact our future growth
10. 10We expect existing competitors and new entrants to the educational services market to revise and improve their business models constantly in response to challenges from competing businesses, including ours53% rewritten
11. 11We face risks of cyber and other security incidents, which can impact our business, result in harm to our operations, and require costly remediation measuresNew
12. 12We are required to comply with The Family Educational Rights and Privacy Act, or FERPA, and failure to do so could harm our reputation and negatively affect our business
13. 13Capacity constraints, system disruptions, or security breaches in our online computer networks and phone systems could have a material adverse effect on our ability to attract and retain students
14. 14We may have difficulty integrating future acquisitions, which would reduce the anticipated benefits of those transactions

Risks Related to the Extensive Regulation of the Higher Education Industry

1. 15Our failure, or our university partners’ failure, to comply with the extensive regulatory requirements governing institutions of higher education could result in financial penalties, restrictions on our operations or growth, or loss of external financial aid funding for our university partners’ students
2. 16Rulemaking by ED and Congressional legislation could materially and adversely affect our businessNew
3. 17In addition to other regulations discussed elsewhere (such as those related to the OBBBA), on July 1, 2024 new regulations became effective covering the areas of financial responsibility, administrative capability, certification standards and procedures, and ability to benefit
4. 18disbursement of Title IV funds in a timely manner, compliance with high school diploma requirements, preventing substantial misrepresentations, complying with gainful employment requirements, and avoiding significant negative actions with a federal, state, or accrediting agency
5. 19These changes are effective July 1, 2026, except for the reporting requirements related to distance education and correspondence courses, which take effect on July 1, 2027
6. 20liabilities and sanctions, and potential loss of Title IV eligibility if our efforts, or the efforts of our university partners, to modify operations to comply with the new regulations are unsuccessful, which could have a significant impact on our business and results of operations
7. 21A university partner institution may lose eligibility to participate in the Title IV programs if its student loan default rates are too high
8. 22If our university partner institutions do not meet specific financial responsibility standards established by ED, they may be required to post a letter of credit or accept other limitations in order to continue participating in the Title IV programs, or could lose eligibility to participate in the Title IV programs
9. 23If our university partner institutions do not comply with ED’s administrative capability standards, we could suffer harm
10. 24A finding by ED or other regulators that we or our university partner institutions misrepresented the nature of our partner institutions’ educational programs could materially and adversely affect our business
11. 25To the extent we are performing return to Title IV calculations for our university partner institutions, we are subject to sanctions if we fail to correctly calculate and timely return Title IV program funds for students who withdraw before completing their educational program74% rewritten
12. 26If our university partner institutions do not maintain state authorization, they may not operate or participate in the Title IV programs55% rewritten
13. 27institutions must agree to meet certain requirements to participate. As of December 31, 2025, all states other than California are members of SARANew
14. 28Government agencies, regulatory agencies, and third parties may conduct compliance reviews, bring claims, or initiate litigation against us or our university partners based on alleged violations of the extensive regulatory requirements applicable to us and our university partners53% rewritten
15. 29The regulatory guidance governing third-party servicers imposes a number of requirements on our business and may expose us to liability for certain regulatory violations that are coextensive with our university partner institutions34% rewritten
16. 30ED has indicated that it may revisit the scope of third-party servicer requirements through future rulemaking or guidance, which could expand compliance obligations and increase our costsNew
17. 31Proposed legislation, additional rulemaking or additional examinations from U.S. Congress may impact general public perception of the industry in a negative manner resulting in a material and adverse impact on our business
18. 32Changing requirements related to data privacy may create increased costs and operational difficulties for university partner institutions and, potentially, for GCE

Other General Risks

1. 33Our success depends upon our ability and our university partners’ ability to recruit and retain key personnel37% rewritten
2. 34A failure of our information systems to properly store, process and report relevant data may reduce our management’s effectiveness, interfere with our regulatory compliance and increase our operating expenses
3. 35If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired
4. 36Occurrence of natural or man-made catastrophes could materially and adversely affect our business, financial condition, results of operations and prospects

Risks Related to Owning our Common Stock

1. 37Provisions in our charter documents and the Delaware General Corporation Law could make it more difficult for a third party to acquire us and could discourage a takeover and adversely affect existing stockholders
2. 38If securities analysts do not publish research or reports about our business or industry or if they downgrade their evaluations of our stock, the price of our stock could decline
3. 39Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment