Earnings Call Transcript - LOPE Q3 2020

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the Third Quarter 2020 Grand Canyon Education Incorporated Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Chief Financial Officer, Dan Bachus. Please go ahead, sir.

Dan Bachus, CFO

Joining me on today's call is our Chairman and CEO, Brian Mueller. Please note that many of our comments today will contain forward-looking statements that involve risks and uncertainties. Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings including our annual report on Form 10-K quarterly reports on Form 10-Q and current reports on Form 8-K. We undertake no obligation to provide updates with regard to the forward-looking statements made during this call and we recommend that all investors review these reports thoroughly before taking a financial position in GCE. And with that, I will turn the call over to Brian.

Brian Mueller, CEO

Good afternoon, and welcome to Grand Canyon Education's third quarter conference call. GCE is gaining real momentum as an educational services provider. We are building three platforms that will provide significant growth over the next 10 years. The pandemic has been a serious challenge for universities throughout the country and many are facing financial problems. Recent college graduates who are new to the job market are also having a difficult time. Many have degrees that aren't serving them well in the current economy. It has been GCE's goal to create educational models that address the real issues within higher education. The first six I have talked about before: one, the out-of-control rising cost of university education; two, the increasing student debt levels that will seriously hinder graduates as they begin their adult lives; three, as tuition levels go up, diversity on college campuses goes down; four, bachelor's degrees should not take four to six years to complete; five, programs and delivery models lack the creativity necessary to address critical shortages in some industries; six, there are inadequate counseling and support services, especially for first-generation students or those studying at a distance. In a recent article written by history professor Steven Mintz at the University of Texas, Austin, entitled, Higher Ed's Dirty Little Secrets, he made the following observations. Three-fifths of college graduates would change their majors if they were starting over, 30% for better job opportunities and 20% to pursue their passions. Next, prior to the pandemic, 43% of college graduates were underemployed in their first job, two-thirds remained in jobs that don't require college degrees five years later, and last, most professors have no formal training in teaching, learning or course design. Grand Canyon Education is a large organization, with over 4,000 professional staff. It's in a very strong financial position and can invest in educational infrastructure to help institutions address some significant opportunities in the employment marketplace. One of our partner institutions now derives 13% of their total revenues from GCE Orbis healthcare programs, and they want to do more. The combination of institutions looking for additional revenue streams and our ability to help them launch programs locally that prepare students for in-demand occupations is creating rapid partnership growth and a very bright future for GCE. Let me explain how GCE is in a great position to support the three main pillars or platforms of our business. The first pillar, Grand Canyon University Online, has 90,418 students as of September 30, 2020, and in the quarter just completed, new students grew on a comparable start basis in the mid-single digits, while total students grew 7.5% year-over-year. The total number of GCU Online students continues to exceed our expectations driven by very strong start growth in the second quarter and higher-than-expected retention rates during the second and third quarters of 2020. Year-over-year, new student growth in the third quarter was down sequentially from the second quarter, as we expected and discussed on last quarter's call due to a much higher year-over-year comp and the fact that we had one less bachelor's degree start date in the third quarter of 2020 than in the third quarter of 2019. We continue to see strong interest in GCU online programs and the percentage of students attending at the graduate level continues to increase which is why retention rates are so high. GCE continues to work with GCU to ensure that student growth takes place at levels and in programs that will produce high-quality outcomes. This is the pillar of our business that is the most competitive. I have spoken previously about our strength in new program development, understanding where the economy is going, understanding where the jobs are going to be, and creating programs that help students get those jobs, which is a differentiating factor for us. A second differentiating factor is offering programs that lead to licensure. Programs in education, counseling, healthcare, etc., that lead to licensure tend to have more clearly defined career paths and higher retention and graduation rates. Those programs are far more difficult to offer because it's difficult to manage at scale and at a distance the many details and requirements that are often state-specific. GCE has invested heavily in personnel, technology, and automation that allows GCU to offer those programs and to ensure that students meet all state-specific requirements of GCU's 90,500 online students, over approximately 40,000 are in those programs. The second pillar or platform to our business is the GCU traditional campus. As many of you know, GCU shifted its start date for the fall semester for its students from August 24 to September 8. And they shifted the move-in date for residential students to September 21, 2020. Approximately 4,900 of GCU's traditional campus students elected to attend the fall semester entirely in the online modality, which was higher than expected at the time of our last conference call resulting in approximately 11,500 residential students compared to bed capacity of approximately 14,500. Although this resulted in less room and board revenue in the fall semester, the number of students electing to take all of their classes online had the effect of increasing our capacity, allowing the university to exceed its enrollment expectation by roughly 600 students to a total of 22,363. This is in stark contrast to what many universities in the country are experiencing. Ground enrollments in the spring 2021 semester look strong, and at this time, we have a large number of traditional students that stayed home during the fall semester telling us they plan to return to campus in the spring. We expect 750 new enrollments and approximately 2,600 that stayed home in the fall to return. That would bring the spring enrollment to 20,250 and residential students to 13,000. This would represent approximately 10% growth in ground traditional students year-over-year and approximately 9% growth in residential students year-over-year. GCU's traditional campus is in a very strong position and is becoming a bigger part of the strategy every day. GCU's goal is now to have 40,000 students on its traditional campus in West Phoenix, and they are once again exploring developing a second campus in the East Valley. The pandemic has made it abundantly clear that 18-year-old students desire to have a campus experience as much now as they ever have. It just needs to be affordable. The combination of GCU and GCE in building out the traditional campus has many strategic advantages: one, Phoenix is a destination city and Arizona is a destination state. Two, GCU has invested $1.5 billion in educational infrastructure and the campus is currently ranked 19th in the country. GCU hasn't raised tuition in 12 years, and their students take out less debt than the average state university student. Four, GCU now has nine colleges that have over 270 academic programs, including certificates. Five, GCU is adding more than 20 new programs per year targeted at growing occupational areas. Sixth, the university will invest an additional $500 million in the next four years with the planned growth of its campus to accommodate 40,000 students. GCE has almost 200 people involved in the recruiting process. GCE has a state-of-the-art marketing and advertising agency to develop efficient and productive campaigns. I want to correct that. Number seven, GCE has almost 200 people involved in the recruiting process. GCE has a state-of-the-art marketing and advertising agency to develop efficient and productive campaigns. Nine, GCE has invested heavily in building out virtual tours of the campus and live lab classroom demos to expose current high school students to GCU during the pandemic when travel is limited. GCU's Christian free market positioning makes it attractive to a large national audience with very few affordable and scalable options. The third pillar or platform of the business is Grand Canyon Education/Orbis. Going forward, we are combining how we talk about what we used to refer to as the third and fourth pillars in order to simplify and better explain our strategy. Our goal is to continue the rapid expansion of partners, some of which will have both healthcare programs and non-healthcare programs. GCE bought Orbis 20 months ago. Since that time, we have expanded to 25 partners and 30 locations. The goal is to have over 40 locations by the end of 2022, 50 locations by the end of 2023 and eventually to grow to 80 locations. This is a huge national platform to enroll students. GCE now has not only the largest partner in this space but is also rapidly adding partners. This is happening because, first, many quality universities are experiencing financial stress and looking for options to increase their revenues. Second, there are important healthcare careers that are experiencing serious shortages. Third, universities don't have the resources to scale many of these programs. Fourth, GCE has the capital and the know-how to scale these programs and create opportunities for thousands of underemployed young adults, while helping universities create more important additional revenue streams. Most locations start with the ABSN program, but most have the ability and desire to scale up through as many as ten additional programs. Sites will eventually accommodate between 250 and 1,000 students in multiple programs. Programs will cost between $30,000 and $60,000, take between 12 and 24 months and lead to jobs paying between $50,000 to $100,000. 90% of the students in these programs will have already completed a bachelor's degree but consider themselves underemployed. GCU will fill many of the sites in the West and along with Valparaiso become the model for how to expand into additional healthcare and non-healthcare academic areas. Grand Canyon Education has three large, well-financed, highly professional platforms to grow with in the next five years. Each platform is addressing real needs in the market and is producing high-quality outcomes for our partners and the economies. I have never been more excited about the future of GCE. With that, I would like to turn it over to Dan Bachus, our CFO, to give a little more color on our second quarter 2020, talk about changes in the income statement, balance sheet and other items, as well as to provide 2020 guidance.

Dan Bachus, CFO

Thanks, Brian. Included in our Form 8-K filed with the SEC, we have included non-GAAP net income and non-GAAP diluted income per share for the three months ended September 30, 2020, and 2019. The non-GAAP amounts exclude the tax-affected amount of the amortization of intangible assets, the loss on transaction amounts, and the impact of a large state tax refund received in the first quarter of 2019 related to taxes paid in previous years. The amortizable intangible assets acquired in the Orbis acquisition totaled $210.3 million, and amortization expense in the third quarter of 2020 and 2019 was $2.1 million and $2.2 million, respectively. We believe the non-GAAP financial information allows investors to develop a more meaningful understanding of the company's performance over time. As adjusted, non-GAAP diluted income per share for the three months ended September 30, 2020, and 2019 is $1.14 and $1.24, respectively. Service revenue exceeded our expectations in the third quarter of 2020 primarily due to slightly higher-than-expected enrollments at our university partners. GCU had a greater-than-anticipated number of students decide to take all of their courses online in the fall semester, but given the timing of the fall semester start, this only had a small impact on third quarter revenue. It will have a much greater impact on the fourth quarter. The decline in revenue growth rate in the third quarter was anticipated as we had a shift in tuition revenue from the third quarter to the fourth quarter as a result of GCU's decision to move its fall traditional start from August 24 to September 8 resulting in 13 fewer revenue-producing days in the third quarter of 2020 compared to 2019. GCU also shifted its move-in date for residential students back to September 21 resulting in lower room and board and certain ancillary revenues in the third quarter by three weeks. Approximately 4,900 of GCU's traditional campus students elected to attend the fall semester entirely in the online modality. Last, limited residential students remained on campus during the summer semester, most doctoral residencies were canceled through July, and doctoral programs in August and September were held at another location with lower than normal attendance and ancillary businesses operated by GCU, such as the hotel and merchandise shops were closed for most or all of the third quarter of 2020 due to the COVID-19 outbreak. We estimate that the impact of all these changes made by GCU, along with slightly lower-than-expected summer semester new starts at some of our other partners, resulted in reduced revenues of $22.9 million in the third quarter. Included in both our 8-K and 10-Q filed today is a detailed explanation of the actual and projected COVID-19 impacts on the University spring, summer and fall 2020 semesters, and I will discuss these in more detail in a few minutes. Excluding the COVID-19 impact on GCU's ancillary revenues, revenue per student grew year-over-year. Our effective tax rate for the third quarter of 2020 was 20.2% compared to 20.7% in the third quarter of 2019 and our guidance of 20.7%. In the third quarters of 2020 and 2019, the effective tax rates were impacted by contributions made in lieu of state income taxes to school-sponsoring organizations, $4 million in the third quarter of 2019 and $5 million in the third quarter of 2020 partially offset by lower excess tax benefits of $0.1 million in the third quarter of 2020 compared to $0.4 million in the third quarter of 2019 due to a lower stock price and fewer stock option exercises in the third quarter of 2020. We repurchased 266,641 shares of our common stock in the third quarter of 2020 at a cost of approximately $23.3 million and another 184,486 shares at a cost of $15.1 million subsequent to September 30, 2020. We had $85 million available under our share repurchase authorization as of September 30, 2020. Turning to the balance sheet and cash flows; total unrestricted cash and short-term investments at September 30, 2020, was $179.8 million. GCE CapEx in the third quarter of 2020 included CapEx for new off-campus classroom and laboratory sites, was approximately $9.9 million or 5% of net revenue. We continue to anticipate CapEx will be between $30 million and $35 million in 2020 due to the opening of seven off-campus classroom and laboratory sites in the second half of 2020 and four more sites in the first half of 2021. As of September 30, 2020, we have 30 off-campus classroom and laboratory sites opened compared to 23 as of September 30, 2019. As we discussed last quarter, we provided GCU $75 million of funding for short-term cash flow purposes at the end of the second quarter of 2020 which was repaid by GCU in July 2020. Last, I would like to provide color on the guidance we have provided for the fourth quarter. Guidance we have provided for the fourth quarter 2020 continues to be non-GAAP as adjusted net income and as adjusted diluted income per share, excluding amortization of acquired intangible assets. We have lowered our revenue guidance for the fourth quarter of 2020 by $1.5 million due to the lower GCU room board fee and ancillary revenue as a result of the fewer fall semester residential students, partially offset by slightly higher university partner enrollments. On the expense side, we have lowered our expense projections for the fourth quarter as we continued to trend slightly lower in headcount and travel and other costs than originally anticipated. We will continue to utilize some of these savings in other ways to ensure that we meet our partners' enrollment expectations. Our net interest expectation for the fourth quarter is $14.1 million which is down slightly from our previous expectation of $14.4 million as we anticipate we will earn less interest on invested cash as a result of our stock repurchases. Our expected effective tax rate for the fourth quarter remains at 22.4%. We have decreased our weighted average shares outstanding amount based on stock repurchases. Although we might repurchase additional shares during the fourth quarter of 2020, these estimates do not assume repurchases other than those already made. I will now turn the call over to the moderator so we can answer questions.

Operator, Operator

Your first question comes from Jeff Meuler at Baird. Please proceed.

Jeff Meuler, Analyst

Yes. Thank you, Brian. Could you discuss the exploration on the university side regarding the expansion of the campus to 40,000 students and a potential East Valley campus? Has a decision been made at this point or what is the timeline for it? How would it be financed? Would it come from GCE or other sources?

Brian Mueller, CEO

The decision has been made to expand the West Valley campus to 40,000 students. We are currently close to 300 acres and are seeking an additional 100 acres, allowing us to develop classrooms and laboratories across 400 acres that can accommodate 1,000 GCU students. GCE will be responsible for increasing the student body, while GCU will handle the campus development. We also own a significant property at 27th Avenue and Camelback, previously used for our call center, which we will convert into classroom buildings as many employees will continue working from home. Expansion in terms of space and funding is well planned; the focus will now be on attracting students, and the demand is strong. In the coming years, college enrollments are expected to reflect more practical decision-making. Students desire on-campus living and a traditional college experience, and there are few affordable options like ours. We see a clear opportunity in the rapidly growing East Valley, which is vital for economic growth. We've previously explored this area and are doing so again, especially focusing on young adults facing challenges in the job market—those who are unemployed or working outside their field of study. This is a significant issue in higher education, as many students pursue degrees that do not lead to successful careers. Our target includes this group, along with some Orbis programs and other STEM initiatives we are monitoring closely. While we haven't finalized any plans for the East Valley, we are making progress.

Jeff Meuler, Analyst

Okay. And then, apologies if I missed it, but any update on Valparaiso and moving that from an MOU to a contract?

Brian Mueller, CEO

So we did mention Valparaiso. We've got two large markets that we have pinpointed for them in the Midwest that we expect them to fill with the healthcare programs, and we are also in the process of finalizing the contracts so that we eventually will start marketing their other graduate programs.

Jeff Meuler, Analyst

I have two questions that I frequently hear from investors, which I would like to address. The first is whether there will be a tuition-free public university option for families earning below a certain income level in the event of Biden's election. The second question concerns the impact of nearly every university in the country now offering some form of online options. Specifically, what could be the effect on GCU and your other partners from these two developments? Thank you.

Brian Mueller, CEO

The second question is an important one, and it's one that investors should consider. Interestingly, many newcomers to the online education sector are largely mimicking what we established at the University of Phoenix many years ago. The simplest entry point into this realm tends to be through programs that are straightforward to convert and implement. As a result, this area has become quite congested, with significant price competition. We are still thriving in this segment, and interest in GCU's programs remains strong, yet we prefer to concentrate on the more complex programs. That's why I mentioned the licensure programs. For a long time, we have focused intently on programs with clear career pathways. These programs typically have well-defined metrics concerning job openings and salary levels. However, they are often more challenging to offer due to specific state requirements, such as fingerprinting, internships, clinical placements, and observation hours. This applies to fields such as education, healthcare, counseling, and certain tech areas. The state-specific platform we have built gives us a significant advantage because we handle those logistical hurdles for students, unlike many universities that expect students to manage them independently. We've invested heavily in personnel, technology, and automation to support this, which strengthens our position in the GCU online market. As we've noted, traditional ground-based offerings for students can be very lucrative, and a hybrid model that combines online learning with high-level lab work on-campus presents a significant barrier to entry without the necessary capital and expertise, which is why we’re aiming for 80 platforms. Achieving that target will place us in a strong strategic position. There’s no shortage of interest; universities reach out to us daily, eager to enter this market. There's a clear demand and established metrics regarding pricing and completion timelines. Additionally, these programs boast graduation rates exceeding 90%. So while the competition is intensifying, we believe we remain well ahead in all three of those platforms and can effectively compete on both quality and price. The first question was about...

Dan Bachus, CFO

Free college.

Brian Mueller, CEO

There is potential for expanding programs related to free college. Currently, for low-income students, college is essentially free due to the Pell Grant, which adequately covers community college tuition and nearly meets the costs for the last two years at a state university, especially after scholarships. As a fully accredited institution, an increase in Pell Grant funding would enhance our competitiveness, and we would welcome that development.

Jeff Meuler, Analyst

Got it. Thanks, Brian.

Operator, Operator

Your next question comes from the line of Henry Chien with BMO. Your line is open.

Henry Chien, Analyst

Hey, everyone. I wanted to ask if there are any updates on finding a larger partner for online and campus services that you mentioned previously. Is the focus now more on university partnerships with Orbis? I’d appreciate any insights you can share.

Brian Mueller, CEO

We are focusing on rapid expansion, and the return on our capital investment is realized quickly. We expect to establish more than eight to ten healthcare programs, coming through various universities such as GCU and Valparaiso, among others. We are eager to invest in reaching our goal of 80 locations. The investment involves $1.5 million for physical infrastructure, another $1.5 million for initial setup in the first year, and achieving profitability at a rate of 30% by year three. Compared to other markets, this investment significantly returns value to shareholders. Establishing a presence in 80 locations over the next five or six years will allow us to grow in less competitive areas, which are more challenging to penetrate. Our platform, along with the ground campus, provides unique opportunities that few others possess. As more universities seek diverse revenue streams and enter the easier segments of the market, competition increases, leading to greater pricing pressure. While we are performing well in those areas and will continue to do so, we find the less competitive, more challenging sectors exciting and believe they offer great potential for investors.

Henry Chien, Analyst

Yes, I understand. That makes sense. In terms of the overall environment, it seems that many universities are trying to transition online, which indicates a lot of changes. How does our strategy align with this environment? It seems like there may not be much of a shift, but I would like to hear your insights on this.

Brian Mueller, CEO

Yes, that's a fascinating aspect. The traditional students and how they are navigating the COVID situation is interesting. We've learned several things in the first few months. One significant takeaway is that students really want to be on campus. You can walk around some universities during the day and hardly see any students because many have transitioned almost entirely to online formats. However, the students aren't going home; they prefer being on campus. Our experience shows that students absolutely want to be there. Initially, we were cautious and wanted them to make decisions based on what was best for them, rather than our revenue needs. So, we took a conservative approach, and 4,900 stayed home. But our focus is on what's going well; students are attending classes. If you walk around our campus during the day, it is bustling with students going in and out of classrooms, laboratories, and dining facilities. We are testing students to identify positive cases, isolating those who test positive, and quarantining those in contact, which is a small number compared to the 18,000 students on campus daily. The positives we have are definitely not due to classroom settings. We are confident of that. Issues arise when students leave campus in the evenings, but we have minimized those. We have exceeded our total number of students by 600 and also surpassed our new enrollment goal. We have found a balance, and we expect the spring semester to be even stronger, with a significant proportion of those 4,900 students planning to return to campus and live in residence halls. I'm hopeful, but we'll see what happens in the next four weeks. Overall, we believe we've established a solid foundation for fall 2021, which could be very promising. Of course, we need a vaccine and better treatments, but we anticipate that happening, and we believe fall 2021 could be incredibly successful for us.

Henry Chien, Analyst

All right. Yes, that's great. That's really interesting. Thanks.

Brian Mueller, CEO

Thank you.

Operator, Operator

Your next question comes from the line of Greg Pendy with Sidoti. Your line is open.

Greg Pendy, Analyst

Thanks for taking my question. Just kind of curious, correct me if I'm wrong, but there wasn't a demand issue, but it was a bit of a bottleneck at Orbis during a heightened wave of COVID, I think, with clinicals, if I'm not mistaken. What is the risk that we see that again under a third wave, or are hospitals more kind of prepared to operate, and would that go much smoother even if there is a third wave?

Brian Mueller, CEO

The thing that will go smoother, we believe, is that our university partners now know that most of our facilities, the 14,000-foot facilities that are heavily lab-intensive, are 45 minutes to one hour from the lead campus. Those facilities do not serve traditional age students. I think they've gotten very comfortable with that; nurses run those facilities and nurses do the teaching in those facilities for the most part, and they really know how to protect themselves and how to create a safe environment. And so even if there is a third wave that impacts the main campus, for example, at a place like Marquette or Loyola or one of those places, we believe that we know enough now that we can keep that Orbis campus operational. A lot of effort was put into replacing certain of the clinical requirements with simulation labs. So a lot of investment was made in the last four or five months in building simulation experiences for students that nursing boards have considered to be effective and pass the requirements. This has improved the possibility that hospitals can take care of our clinical requirements going forward. So are we in a perfect situation, though? No, but we're in a better situation than we were in the summer because we've gone through it and we have made adjustments that we think will serve us well if there is a third wave.

Greg Pendy, Analyst

Got it. Thanks a lot.

Brian Mueller, CEO

Thank you.

Operator, Operator

Your next question is from the line of Brett Knoblauch with Berenberg Capital. Your line is open.

Brett Knoblauch, Analyst

Hi, guys. Thanks for taking my question. Maybe the first one for Brian. Given your rollout at GCU, would like to hear how you're thinking about maybe the current environment? Like, if you were present at another university that didn't already have such high exposure and maybe online efficiency as GCU does, how would you be going about trying to expand that university's online presence?

Brian Mueller, CEO

If I were at another institution facing potentially another 12 months of this situation, I believe it would be essential to allocate significant resources towards faculty training. It's crucial to ensure that approximately 90% of the faculty are prepared to adapt quickly and effectively deliver online instruction. Given the abundance of technology available now, aside from the clinical experiences in nursing and some laboratory-intensive courses in premed and engineering, I would want to be ready to pivot swiftly through faculty training and by providing the necessary infrastructure. This way, for areas that can transition quickly, we could significantly reduce the number of students on campus or in classrooms. At that point, we could likely accommodate the engineering, nursing, and premed students who need to be on-site. We have nine colleges and nine deans, and the strong cooperation from our faculty throughout this process has been vital. Many faculty members already had a considerable head start, making it less challenging for us. Ultimately, many of these programs can still be taught effectively if the faculty is well-prepared for online instruction.

Brett Knoblauch, Analyst

Okay, got it. Very clear. And then maybe just notwithstanding maybe the potential for campus expansion to East Valley with residential programs. I guess what is the maximum capacity without additional expansion at the current moment?

Brian Mueller, CEO

On the traditional campus or?

Brett Knoblauch, Analyst

Yes.

Brian Mueller, CEO

We're currently able to accommodate just over 30,000 students. Next year, we plan to build three new residence halls, a new parking garage, and 50,000 additional square feet of classroom space. From a classroom standpoint, we're well set for the next three years, which is encouraging. We will need to keep adding residence halls, as this is a key factor that attracts investors to our campus. Students living on campus tend to have higher retention and graduation rates. Our residence halls are attractive, offering apartment-style living with private bedrooms, along with amenities like 32 restaurants, five pools, and five fitness areas. This creates a very appealing school environment, and despite being low-cost, the profit margins on these residence halls are significant. Investors want GCU to continue building residence halls since the combination of tuition and room makes these students quite valuable. Importantly, we have managed to do this without raising tuition for students. Overall, everyone benefits from this model, which is crucial. The typical student on our campus pays between $8,600 and $9,000 in tuition, enjoying state-of-the-art classrooms and laboratories, living in new residence halls, and dining at 32 different restaurants. With room and board averaging around $7,000 for most students, our offering is very competitive compared to other institutions. Our profitability stems from being part of a larger operation. We capitalize on our infrastructure, which supports 90,000 online students and 22,000 on-campus students, generating significant efficiencies. We believe this positions us well for the future. Historically, higher education has favored smaller and more elite institutions, but we believe that those able to scale and offer flexibility in delivery will be the long-term winners. The K-12 education sector is recognizing this, and the pandemic has accelerated the need for higher education to adapt to the varying lifestyles and goals of students. Those institutions that embrace flexibility in their approach will likely thrive.

Brett Knoblauch, Analyst

All right. Thanks so much. Appreciate it.

Brian Mueller, CEO

Yes.

Dan Bachus, CFO

We've reached the end of our third-quarter conference call. We appreciate your time and interest in Grand Canyon Education. If you still have questions, please contact myself, Dan Bachus. Thank you.

Operator, Operator

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.