Grand Canyon Education (NASDAQ:LOPE) reported higher second-quarter revenue and earnings, while executives outlined plans to expand enrollment through its online, traditional campus and hybrid healthcare education platforms.
Service revenue rose 6.7% year over year to $264 million in the second quarter of 2026, driven primarily by a 7.6% increase in university partner enrollments. Operating income increased to $58.2 million from $51.8 million a year earlier, and operating margin expanded to 22.0% from 20.9%.
“With all the headwinds in the higher ed landscape and the very difficult second quarter comps, GCE delivered another great quarter,” Mueller said.
Enrollment Trends Across Three Platforms
Mueller highlighted Grand Canyon Education’s three principal growth platforms: Grand Canyon University’s online operations, its traditional ground campus and its hybrid campus network focused on nursing and other healthcare programs.
New online enrollments increased by a low-single-digit percentage in the quarter against what Mueller described as difficult comparisons, while total online enrollment grew just under 8%. The company’s long-term targets call for mid-single-digit new online enrollment growth and annual total enrollment growth of 6% to 7%.
Mueller said more than 32% of GCU students are generated through an outside development team that works with more than 6,000 organizations, including school districts, hospitals, counseling centers and military bases. He also said more than 70% of online GCU students are pursuing degrees in licensure-related fields such as education, healthcare, counseling and social work.
Chief Financial Officer Dan Bachus said the company expects new online enrollments to rise in the mid- to high-single-digit range during the second half of 2026. Total online enrollment growth continues to face pressure from higher graduation levels and fewer students reentering after breaks, he said.
Online revenue per student is expected to decline slightly year over year because of a mix shift toward programs with lower net tuition rates, according to Bachus.
At GCU’s traditional ground campus, enrollment is expected to be about 25,000 students in the fall. Mueller said GCU is pursuing a longer-term goal of reaching 50,000 ground-campus students, supported by the expansion of its honors college, a new College of Construction and Industrial Technologies, and a planned law school.
- The Sheila and Mike Ingram Honors College is expected to grow from 3,000 to 3,500 students this fall, with a target of 7,000 students by 2030.
- The College of Construction and Industrial Technologies will begin its first full year of operation in September with two bachelor’s programs and 11 one-year certificate programs.
- GCU plans to open a law school in fall 2027 and is hiring a dean after completing the program curriculum.
Mueller said the construction and industrial technology programs include offerings in advanced manufacturing, construction and microchip technology. He also cited partnerships and opportunities related to companies including Taiwan Semiconductor Manufacturing Co. and Amkor.
Hybrid Growth Exceeds Expectations
Enrollment at Grand Canyon Education’s hybrid campuses increased 18.5% year over year during the second quarter, excluding closed and teach-out sites. The company operates 47 locations, which were slightly above 60% capacity, and nearly 6,000 students attend hybrid campuses.
The company’s objective is to operate 80 locations with roughly 300 nursing students and another 300 students in other healthcare-related programs at each site. Bachus said the company plans to open one location in fall 2026 and three to five additional sites in 2027.
Mueller said hybrid-campus revenue per student is more than three times that of an online student. The prerequisite business supporting hybrid programs has enrolled more than 25,000 students to date, he said.
Bachus said the hybrid programs are expected to be profitable in 2026. While the company does not allocate all costs to assess standalone profitability, he said site-level margins could reach about 20% as enrollment scales.
Some hybrid locations are constrained by state-authorized capacity. The company has 14 locations at or near capacity, and Bachus said 22 locations will not show year-over-year new-enrollment growth in the fall because some started the maximum allowable number of students in fall 2025.
Amended GCU Agreement and Updated Outlook
Grand Canyon Education entered into an amended and restated master services agreement with GCU on July 29. The agreement took effect July 1, has an initial 15-year term through June 30, 2041, and can renew for up to three additional five-year periods unless either party provides notice of non-renewal at least 18 months before the end of a term.
The revised agreement eliminates GCU’s ability to terminate the agreement for convenience and changes service fees to 60% of tuition and academic-related fees. Ancillary fees and other revenue will belong solely to GCU, while an academic-cost reimbursement payment previously made by Grand Canyon Education will be eliminated.
The company estimates the amended agreement will reduce annual service revenue by about $20 million. However, Bachus said the operating-income impact should be immaterial and should not exceed $1 million per quarter because the academic reimbursement payment has been eliminated.
For the second half of 2026, the company expects the amended agreement to reduce revenue by $4 million in the third quarter and $6 million in the fourth quarter. It expects costs and services to decline by $3 million and $5 million in those respective quarters.
Bachus said the updated outlook implies adjusted EPS that is $0.03 above consensus expectations for the second half, after accounting for approximately $1 million of revenue recognized in the second quarter that had previously been expected in the third quarter. Full-year adjusted EPS is projected to be $0.14 above consensus, according to the company.
Cash Position and Share Repurchases
Grand Canyon Education ended June with $274.5 million in unrestricted cash, cash equivalents and investments. Capital expenditures totaled about $10.7 million during the second quarter, and the company expects 2026 capital expenditures of $30 million to $35 million.
The company repurchased 471,489 shares during the second quarter for approximately $75.3 million and bought another 169,106 shares after June 30. It had $124.1 million remaining under its repurchase authorization.
Bachus said the company is working with its primary banking partner on a line of credit it hopes to have in place by mid-August, which could support continued share repurchases. Details, including the size of the facility, had not been finalized at the time of the call.
About Grand Canyon Education (NASDAQ:LOPE)
Grand Canyon Education, Inc provides a suite of higher‐education services through a long-term agreement with Grand Canyon University (GCU), one of the nation’s largest private Christian universities. The company’s offerings encompass a full range of academic and operational support functions, including enrollment management, student recruitment, curriculum development, instructional delivery, and technology infrastructure. Through its online program management capabilities, Grand Canyon Education helps design, market and deliver undergraduate, graduate and certificate programs to meet the needs of both traditional and non‐traditional learners.
Core services include digital marketing, admissions support, student success coaching, learning management systems and faculty recruitment.
