Q1 2020 Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to the Grand Canyon Education first quarter 2020 earnings Conference call.
At this time all participants are in a listen only mode.
Later, we will conduct a question I'd answer session and instructions will follow at that time.
If anyone should require assistance during the conference. Please press star zero on your Touchtone telephone.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host Mr., Dan backers Chief Financial Officer.
Thank you 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 involve risks and uncertainties.
These factors could cause our actual results to be materially different from any future results expressed or implied by such statements.
These factors are discussing 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 GC and with that I will turn the call over to Brian.
Good afternoon, welcome to Grand Canyon Educations first quarter Conference call. We are now almost 23 months into our existence as an education services company I want to do three things on this call first continue to emphasize how we think GCU GC he should be positioned with respect to the future of higher education.
Second we view the results that have been produced by each of the four pillars of our business in the first quarter 2020, and third talk about each pillar going forward in the context of the pandemic.
I want to continue to emphasize that it is gcs goal to create models that address the real issues within higher education that are going to be even greater challenges given the impact of the pandemic the challenges are.
College cost too much secondly, the students are taking on way too much debt relative to their income, earning potential three as tuition goes up diversity goes down.
For bachelor's degree should not take 46 years to complete.
Five programs are not tied directly enough to where jobs are and six there are inadequate counseling and support services, especially for first generation students or those studying at a distance.
We're very excited about gcs direction relative to the challenges facing students families in the industries, we are serving.
In 2020, Gcs 24 partner institutions projected produce over 30000 graduates over 11000 health care professionals 7700 education professionals 4600 in the business World 3600 in behavioral health 2500 in public service she'll social.
Science, and theology, and 600 in engineering and computer Science.
These students will graduate with less title for debt than the average state and private University University students in this country. It will have left in the 6% cohort default rate on student loans will graduate from programs that passed the previous debt to income marine ratios that were part of the gainful employment rules and less than 75% other revenues that are.
Generated will be from title for programs.
Now I'd like to review the four pillars in Gcs business.
Grand Canyon University online at 84769 online students as of March 30, Onest 2020, and in the quarter just completed new students grew in the mid single digits. While total students grew 5.7 year over 5% year over year.
GC East core business margin expanded 150 basis points in calendar year 2019, with a net tuition increase that averaged less than 1% at GCU online.
This is important for three reasons, one GCU online to wish it remains affordable and represents good value for our students relative to the positive impact it will have on their careers.
To that will allow GC to continue to invest in advanced learning counseling and administrative technologies as well as rollout at least 20, new academic programs per year.
Three a major factor contributing to GE success in the midst of this pandemics is that we had previously set up over 95% of our staff to be able to work from home.
Initially this was put in place as a benefit of working at GE.
In the case as a pandemic, we could easily transition almost everybody to will work from home environment.
All the work done previously from a campus office setting continues from a home setting and in almost every case productivity levels have gone up.
Everything from addition intake transcript devaluation schedule building financial aid work technical support curriculum development vastly training in evaluation curriculum design student counseling services, HR services, accounting et cetera, including interest in the programs have improved as well.
Result, not only have not been layoffs, we were able to go through with the annual employee salary increases, which our staff are very grateful for.
The second pillar is the GCU traditional campus for traditional campus started this spring semester with approximately 19000 students of which about 12000, our residential which is up 10% over the previous sprint.
Defused campus is profitable without raising tuition in 11 years and it has invested over $1.5 billion in academic and other campus infrastructure.
The campus currently ranks US a 19 best College campus in the nation According to niche Dot com.
Because all ground students and faculty were already set up and using components of our online learning system that transition to online for the last four weeks of this semester went very smoothly.
Successful completion of course work was actually up slightly and the grade distribution was excellent given GCU didnt have to resort to past failed greedy.
Summer classes are all being delivered online so that will be some loss of room and board revenue. However, submarket student enrollments looked likely will be up over our initial projections.
New enrollments, continuing enrollments and residence Hall reservations are all looking strong for the fall.
11 separate but interconnected work groups are developing a plan to open the campus in the fall.
The goal is to create the same vibrant academic and community experienced within the context of safety precautions that will be necessary because of the pandemic.
Students that are not comfortable returning can register to take their classes online in the fall.
Their room reservation will be held for them. So that they can come on campus in the spring if they feel more comfortable at that time.
There has been a lot of talk of students not wanting to pay private or out of state to wishing to go to college online.
Given GCU slow ground campus tuition that has not been raised as an issue to this point.
There were some observers who predicted that the GE GCU partnership would produce good financial results for GE, but would not work financially for GCU.
They were very wrong.
The University as publicly made available its financial statements for the year ended June Thirtyth 2019, and show the University at over $325 million in cash on its balance sheet and had net assets of over 387 million at June Thirtyth 2019.
And is cash flows from operations for the year ended June Thirtyth 2019 were over 123 million.
The positive results for the University continued in the six months ended December 30, Onest 2019.
Based on interim financial statements provided to us by GCU in which GCU has authorized us to discuss.
Overseas cash balance at December 30, Onest 2019 was approximately $250 million. It's net assets grew to almost 400 million it generated over $100 million in cash flows from operations. During the six month period, while funding all of its cap ex through its own cash reserves, while also paying down $100 million.
And its debt.
The University plans to continue using its excess cash to fund its continued growth and pay down its debt.
This was all done without tuition increases on the ground campus and the less than 1% increase in net tuition on its online campus.
It should also be noted that the pandemic is not having a negative financial impact on the university given the structure of the MSA with GE.
The third pillar of the GC strategy is orbis.
This is the strategy most misunderstood and most underestimated by investors.
This purchase greatly accelerated GC as an education services company and it addresses issues that have heard many of the other lpms.
Orbis fits in the GE strategic plan because it originated as the result of a huge marketplace need us we'll need 1 million additional nurses in the next five years alone as well as thousands of nurse practitioners and occupational therapists and is using a very innovative delivery model.
Orbits like GCU online and GCU ground will be profitable profitable both to GC and to the University partner.
The profits will be reinvested into orbis to create more opportunities both in terms of locations and adding programs to current locations.
Self sustaining economic models that don't rely on tax payer subsidies.
Endowments or other philanthropic donations are a huge benefit to the economy and state budgets.
Orbis is growth has been greatly accelerated as a result of gcs considerable support.
Since we bought Orbis seven University partners have been added and as of today, we're up to 24 total University partners, including our first University partner for a new medical Lab Science program.
At the date of the acquisition, we had 18 sites opened among 11 of Orbis Education's University partners as of today, we have expanded a 23 sites locations and opened at 14 of Orbis Educations University partners.
Additionally, we plan to open 11 sites locations in the next 12 months.
Seven in the fall 2020, and four in the spring of 2021, which would put us at 34 locations in the spring semester of 2021.
The accretive delivery model, which combines on ground laboratory work with online delivery of course content is producing tremendous outcomes for students to healthcare community and University partners.
Thousands of Americans will be able to pursue their dream of becoming healthcare professionals, making tremendous contributions to the healthcare industry because of these partnerships.
GC he will continue to support Orbis with capital marketing and operations support including advanced technologies.
In terms of metrics. The graduation rates are approximately 90% in first time pass rates on the Eplex exam are consistently over 90%.
GC used nursing program the last three quarters produced over 95% first time pass rates.
Orbis as revenues grew 53.7% on a year over year basis for the three months ended March 34th first 2020.
And 29.6% on a pro forma basis, including the 21 days in January prior to our acquisition date for the three months that ended March 30, Onest 2019.
Enrollments have grown 18.2% year over year as of March 30, Onest 2020, with accelerated pre licensure nursing enrollments growing 23.4%.
Every new locations opened represents an opportunity for GE that is greater potential than most other LPM contracts in the space.
Each location opened requires less than a 3 million dollar investment and we'll turn profitable in its second year of operation eventually producing greater than 30% margins, which can be reinvested into adding more programs at the site and opening more sites.
The goal is to be in 70 locations in the next a seven years.
To summarize we are very focused on this orbis opportunity for four reasons, one the huge need the country has for health care professionals, especially baccalaureate prepared nurses to the opportunity to grow into 70 potential locations.
Three the locations will become profitable in just their second year of operation for the relatively small amount of investment needed to get locations up and running.
All of the Orbis partners have moved to students through their individual university programs during the spring term.
At this time, we have confirmed at all of our partner programs and tend to continue delivering.
Salty healthcare education in the summer term into the fall and beyond.
The academic delivery in the current environment has been challenging and Orbis team has been working with our University partners to find successful operational modifications to continue success for the student population that will become a central professionals within our communities.
The Orbis team has been involved in several developments within various programs, including but not limited to virtual simulation lab modifications logistic and operation support for curriculum timing adjustments within a term.
Okay and alternative testing.
Some of these developments may become standards within programs as they improve the educational experience and efficiently deliver content to students.
Even with all of the successes Orbis in our University partners have recently achieved there will be some short term impact on the summer term based on students that would normally regal relocate on a state to start a program that are delaying for a semester.
Overall demand for the programs has increased as more potential students fee health care as a solid option for employment the interest level from potential University partners has also increased.
Gcs fourth pillar is to find three or four partners interested in a more comprehensive arrangement.
Since the pandemic began there has been an increase in university inquiries for possible partnerships given that many universities are concerned about their financial future.
We continue to work at this pillar, but we'll be continue will continue to be selective.
The model of May partners, many and load growth enrolled programs at very high price points is not interesting to us because the model does its fundamentally address the real challenges identified earlier in higher education.
We believe we can add tremendous value for University partners in the Midwest and northeast and are in dialogue with a number of them.
Most of them have had partnerships in the past that have not been successful.
Our front ends.
Our strategy of front end services combined with robust back in service is clearly a differentiated approach.
The model, we are suggesting is proven on a very large scale.
Use hybrid campus, having large student bodies in both major markets leveraging a common infrastructure has been successful in unprecedented ways.
Hi quality students producing great outcomes at great value combined with making huge investments to constantly upgrade infrastructure as a matter of fact not opinion.
Everybody that visits that GCU campus comes away impressed.
Our three core pillars are performing well have great potential and as a result, we have the ability to be selective.
If we find the right comprehensive partner, we will sign an agreement if you look at the strategies of other opioids in this space those contracts would most likely be dilutive rather than accretive to our current plan.
In addition, the huge upfront investments of these arrangements would play significant risk on our current business with that I would like to turn it over to Dan Baucus, our CFO to give a little more color on 2021st quarter talk about changes in the income statement balance sheet and other items as well as to provide 2020 guidance.
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 March 30, Onest 2020 in 2019.
The non-GAAP amounts exclude the tax effected 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 first quarter of 2020 in 2019 was 2.1 million a 1.7 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 March 30, Onest 2020 in 2019 is $1.53 and a $1.52 respectively.
Service revenue was slightly below our original expectations in the first quarter of 2020 due to the decrease in ancillary revenues at our primary University partner GCU due to the Cobot 19 outbreak. This had the impact of reducing our revenues by 1.8 million in the first quarter included in both our 8-K and the 10-Q filed today is a detail.
Explanation of the actual and projected cobot 19 impacts on the University spring and summer semesters and I will discuss these in more detail in a few minutes.
Excluding the cobot 19 impact on Gcs ancillary revenues service revenues was slightly above our expectations.
As we have discussed previously overall enrollment growth has been pressured over the last few years last few quarters by an increase in the graduation of online students year over year and the fact that professional study students and ground commuter students are flat to down year over year, but revenue per student continues to increase as we continue to see very encouraging growth in the areas of.
Our focus including online residential and Orbis enrollments, where revenue per student is the highest.
The decline in professional studies accelerated in the first quarter 2020, we believe due to the cobot 19 outbreak, but other revenue sources more than made up the difference, including higher orbis revenues due to slightly higher than expected enrollments and higher than expected Orbitz and online revenue per student and accelerate revenues prior to the cobot 19.
An outbreak.
Our effective tax rate for the first quarter of 2020 was 24.2% compared to 13.5% in the first quarter of 2019, and our guidance of 23.3%.
The lower rate in 2019 resulted from an agreement with the Arizona Department of revenue regarding previously filed refund claims for income tax obligations for prior calendar years resulted in a favorable discrete item of 5.9 million in the first quarter of 2019.
Also we had a decrease in excess tax benefits from 4.5 million in the first quarter of 19 to 0.6 million due to a decrease in our stock price between years, resulting in a higher effective tax rate than our initial guidance for the first quarter. We're also experiencing an increase in state income tax rates due to the growth of Orbis.
We repurchased 786503 shares of our common stock in the first quarter of 2020 at a cost of approximately 60.7 million and another 100000 shares at a cost of 7.5 million subsequent to March 30, Onest 2020, we had 66.6 million available under our share repurchase others.
Patient as of March 30, Onest 2020.
Turning to the balance sheet and cash flows total unrestricted cash and short term investments at March 31, 2020 were 149.5 million.
GC Capex in the first quarter 2020, including Capex for New Orbitz partner sites was approximately 6.1 million or 2.7% of net revenue.
We continue to anticipate Capex will be between 30, and 35 million in 2020 due to the build out of the 11 Orbis partnership locations.
We provided no funding to GCU for cap total expenditures in the first quarter of 2020.
We anticipate GCU will make some additional repayments in the second half of 2020 on the capital expenditure loans as a reminder to investors. The note due from GCU is secured by all of its assets. Given this it is very difficult for the University get financing from any other source that GC GCU as informed us that it has the ability to fund is capped.
Expenditures going forward, but under the agreement we are required to provide them funding if they want to borrow for short term cash flow purposes.
Last I would like to provide color on the guidance we have provided for 2020.
The company initially provided guidance for fiscal 2020 by quarter in its fourth quarter and full year 2019 earnings release issued on February 19 2020.
The company has provided provided a revised outlook for the second quarter 2020, and its 8-K filed today that takes into account our best estimate of the impact of Cobot 19 outbreak on our University partners revenue and operating income for their spring and summer semesters as Brian described earlier, new enrollments continuing enrollment.
And resident halls reservations, all its very strong for the fall our University partners all of plants that have face to face construction in the fall. However, there is a level of uncertainty given what might happen in the next 90 days. Therefore, we are withdrawing our guidance for the third and fourth quarters of 2020.
The guidance that we have provided for the second quarter continues to be non-GAAP as adjusted net income and as adjusted diluted income per share as we exclude amortization of acquired intangible assets, we have adjusted down our revenue and earnings guidance due to lower anticipated revenue on our GCU contract as as result of reduced ancillary revenues.
Do you see we will realize less revenue and board revenue related to both the spring and summer semesters. The majority of universities residential students moved off campus in mid March when the spring semester courses or transition to an online format and summer school classes will also be delivered online.
It will also realized less revenue from its businesses such as the golf course hotel and low SAP, which were closed in mid March. The University will also recognized less revenue as doctoral residency schedules. We held on the university's campus have been canceled through the end of May.
We have provided ranges for revenue and EPS for the second and third quarters with a high end at the impact being if these businesses are not able to open up until the start of the fall semester and if the doctor residencies in June and July our cancel.
We have not included in the Cobot 19 projections any adjustments in revenue earnings related to Gcs fall semester at this time, including ancillary revenues.
Even if face to face construction begins in the fall on schedule there could be an additional decrease in revenue on the GCU MSA that is not included in the estimates provided beginning in late August.
Included in the essence provided is reduced revenue and operating profit from our other University partners of 850001 point 7 million in the second and third quarters, respectively. As Brian discussed earlier, although we believe this rig spring semesters for our other University partners will be completed without interruption and each university partner still pay.
Plans to begin at summer semester is currently anticipated that some students that were scheduled to start in the summer semester will delay their start until the fall semester, which will result in lower enrollments of approximately 200 in the summer semester, which represents a decline of approximately 20% of the originally projected summer new enrollments.
Our revenue guidance uses the midpoint of the range of the projected decrease in revenue.
We partially offset this by increasing our revenue projections by approximately 700000 do it do a projected increase intuition revenues from higher traditional summer school enrollments and higher revenue per student for Orbis and online students.
On the expense side, we have not changed our expense projections materially we do anticipate lower travel and other costs during the second and third quarters, but we plan to utilize the majority of those dollars and other ways to ensure that we meet our partners enrollment expectations.
We have slightly decreased our net interest expectations due to lower interest rates on invested cash and lower excess cash we've kept the effective tax rate the same for the second quarter as we did not originally projected much of an excess tax benefit in the corner. We have decreased our weighted average shares outstanding amount based on stock repurchases although.
We might repurchase additional shares to during 2020. These estimates do not assume repurchases other than those already made.
With that I'll now turn the call over the mob moderator. So we can answer questions.
At this time, if you like to ask a question. Please press Star then another line on your touched on telephone.
If your question asked and answered any was showing those yourself from the Q. Please press the pound key.
And your first question comes from the line is Alex Paris.
Research.
Good afternoon. This is Chris outstanding for Alex.
Hey, Chris.
Hey.
Just wanted to go through some of your comments earlier.
Just about some of the things that you're seeing within the environment as it relates to.
Partnership opportunities.
And so.
Excited about the first pillar.
We had a really good April.
Very good very excited about the second pillar.
Extremely excited about the third color.
And the fourth pillar still sitting there, but it's it has to be done in a way that fits into our core strategies and if we can't do it we're not going to get so pessimistic about that at all we won't do it because it doesn't fit with.
Well, we think where where the or the future of higher education is going.
That's excellent very helpful into me. This just I'll highlight the after to see the services that you offer as well as the quality of these two should that G.C.U. is.
I'm thinking of that.
Not to pay too much of the negative perspective, if we look at.
Market that you're targeting that have been the hardest hit by the pandemic, whether it be the mid west or east.
California.
Any change or shift you're marketing strategy of some look to capture market share in these territories and to me. It just highlights T.C.U.M. that online L.D. at the University.
Well I think.
Not really a a shift but I think and people are writing about it it's it's going to be very difficult. It looks like for universities to be successful in the future. If they are in a growth smoke.
That size is going to be important leverage is going to be important you know will come out of this and there's going to be the top one or two presented can go to the Ivy League schools, there's nothing wrong with that I mean, it's fantastic they will benefit from it you know so I'll be fantastic, but when you think of Middle America.
And you you think of a smaller both private and state institutions that are not in the growth mode. Yeah that that haven't invested in technology to do things more efficiently.
There are surviving a lot on international students.
That pay very high tuition rates.
Out of state students should pay high tuition rates.
That.
That financial model is gonna be stressed in the next 12 to 24 months.
You know, we've been pressured a lot about or international strategies and and our response is always band.
We have got to be <unk>, we've got to make sure that we're providing private higher education, it's affordable to all socioeconomic classes of Americans and we need to get a a greater percentage of our.
High school graduates involved in very affordable high quality programs to us that's a lot more important than those international strategies.
And in in is in this case, it's going to beat some so much more benefit.
<unk> <unk> I.
Thank you.
And your next question I spend online I've <unk>, what's bad.
Thank you good afternoon, so Oh key off a few things that you just said and some of your tone, but you said that interesting programs has improved and you had a very good April can you just put some.
I guess either numbers around it are qualitative detailed sounds like demand is accelerating for T.C.U. online on hearing it correctly.
Yeah, you know and and it is is.
Yeah.
The one thing we did a couple of things that really helped US you know one was our ground campus with you know every.
<unk>.
Set up.
I mean, they do use it even know classes are have fast.
We transition those students that went very smoothly eight and and you do.
Yeah.
Got those things back to families were very excited and very happy about that.
Online standpoint, 95% of our people work already said unable to work from home you know almost every single one of our position and those processes hasn't been automated agents involved.
And when students are we prospective students or even current students are calling somebody is picking up on the first friends.
And and that person that it did picking up suddenly they just it's it's their counselling.
And you can't underestimate.
<unk>.
Now a lot of businesses, including universities, they're hard to do business with because you can't get a hold of anybody.
And and so.
Just think about all the electronic signatures and all that work we did on all of that.
Yeah, we started thousands of students in April.
And we did all that admissions work and all that transcript evaluation and all that Oh financial aid work and all that technique or all the all the technical support work, it's picking up a student under <unk> <unk> all of that was done.
Through automation and technology, and so and we have the ability to look at the productivity levels.
<unk> all those processes and.
And productivity actually went up.
Art staff was extremely excited to number one they they keep their job.
They keep their income.
They are at home, which means they can watch their children and we didn't approve a a married increase which which you know that goes along way with both faculty and and in our staff in terms of.
Providing high levels of of service and we're getting a lot of.
Feedback from our students that they are very very happy that this is one place that they Ah argh.
[noise] stable in their world.
And of course, it you know what enabled us to to return all the cares money to students we didn't keep any of that and and that made our students very happy and so we're in a pretty good situation now <unk>.
<unk>, it's well see what I always it's still competitive.
But.
Yeah, we're <unk>, we feel good about what's gonna happen going forward and the biggest challenge and it's going to be the biggest challenge. We've had in 12 years, maybe the biggest challenge within 30 years, it's the opposite of what people think our parents in our students whose kids expect to be on this campus and all kinds of they expect to be honest campus.
And they are.
Incredibly looking forward to it and so we've got 11 work groups that are in place right now and we are building a plan to cover every aspect of what happens here in.
Obviously, our goals to keep people safe, especially our professors from any of our over 60 years old.
So there'll be a lot of technology applied to our ground based classrooms to in order to make all this work safely but.
Like other universities were working very hard.
And in terms of the increase G.C.U. online demand is it coming from.
Individuals that are not currently enrolled in college or is there a sizable amount that's coming from universities that our current or students that are currently enrolled at other universities that like you said don't want to pay a high tuition to do online.
There's a little there's a little bit of that we are getting stories. You know you know how it is on ground students apply to three or four different places.
So if you're a four or five different places and they look to where they get the best deal and <unk> you know they they.
Whatever gets so what's happening is they they can't get a hold of other people in so.
Getting service by our person very well and then we get the student so there's a little bit of that going on.
But that's ground online. It's it's no there's not a lot of students leading other institutions coming here as a 19 year old online. This this is mainly.
Par successful April was mainly the same kind of students that have always come to home like 33 year 32, 33 years old working adults mid career professionals wanting to complete a doctoral masters or or Baccalaureate degree.
Okay and then just all this can you help me better understand kind of what they've changed from an academic delivery perspective, and I guess what are they still doing in person and.
Has there been disruption to the ability to get slots at hospitals for that part of education.
<unk> are you talking about orbits now or yes, yes orbits she <unk> yeah. Some the some of the work they did in the classroom setting is done through virtual simulation.
A little bit more of its dunkin virtual simulation then was done in the past.
Until that helped some that's help some but I think.
What's gonna happen is that now that they have.
Two three months to plan for the phone.
Good thing about or bus is even the lab work that happens in person happens in small groups and so they will be able like we will be able to hear on our campus is organized go simulation labs organize the biology labs, the chemistry labs.
So that there are groups of less than 15, maybe less than 10.
There'll be adequate spacing there'll be protective equipment. They will in many cases there'll be a rat assistant in the classroom with a professor beans zoom D.N. Those are all things that they will do and we will do here on this campus.
To make sure that the students get their work done in a safe environment and we are we are very dialed into having to keep our professor safe because you know many of them are are older and more vulnerable, but but we're getting so good at zoom and and have been so good at those kinds of things that those those adjustments are not going to be huh.
Hard.
Or even lamb programs.
And in terms of the in hospital components is getting that capacity a greater challenge as they you know focus on prior to number one the covered or something.
In this short right, yes, but in the long run the <unk>, they're they're figuring things out you know it.
You know, it's it's just one of those things where.
The the in the short run there was such a panic in terms of the hospitals and their utilization in there and the overcrowded.
No stuff they were anticipating that hasn't really happened <unk> adjustments are being made and I think everybody will be in a good position in the fall.
Now you know.
We are all understand and that the flu season comes back.
In November and December and everybody's <unk> cognizant of that I think everybody's anticipating that and we're trying to make every preparation put every <unk> preparation we can't in place to make sure you were better prepared for that.
Okay, and then last one just given that I I understand everyone wants to be back on campus. This fall, but in any event that they're not can you just give us a sense of how much ancillary revenue from G.C.U.G.C.E. generate so that we have some sensitivity if the campus would remain.
Closed on a more prolonged basis. Thanks.
Yeah, G.C.U. generates about $100 million, a year or $50 million a semester from from its answer has revenues, including room and board.
So G.C.E. you know it'd be 60% of those numbers.
Thank you.
Yeah.
<unk>.
Captain.
Hey, Jeff.
Yeah.
Maybe I've original by it being in the North teams, but you know <unk>, we're seeing anecdotally a number of parents wanting to key their college age students closer to home I'm curious if you're seeing any of that that might shift you know the mix of students. We have two more local based student.
As opposed to folks coming in from out of town.
[noise] My my I.S. answer to that as I was hoping to see more of that.
With.
It'd be a were clearly saying to students and families from our ground campus said if you are in any way uncomfortable with coming to campus. The classes that you're currently scheduled for you can take online.
So if you have pre existing conditions have any kind of lung problems and you can stay home. We're we would encourage you to do that you know we have basically.
<unk>.
[noise] hospitals plenty of 450 bad set up here. So that you any student it was test positive we can quarantine damn professional nurses if that would happen.
But we we would prefer that if they have conditions that make 'em susceptible that they do stay home. We're just not hearing a lot one.
Hmm for hearing that many parents feel like this is they say place for them to be and I try to emphasize that lives in college campuses are very dense places and we will do everything we can.
But.
Right now you sit here today.
We are fully booked in residence halls and.
So.
[noise] things change Okay <unk>.
90 days, we think it's going to be a fairly full campus.
So let's assume that the case, but you know they're still concerns about the virus going there probably will be how will the campus experience different I mean, how are you can institutes social pistol thing are you going all out bands with the basketball Arena I'm just curious what you thought process are.
Yeah, there's there's gonna be some significant differences that's for sure you know we're doing a lot of work around our classes in our classrooms in our professors and there'll be some adjustment.
There's 30 students in a class at least twice a week they might meet once a week or you know in 15. So we can keep better spacing and then the professor could possibly be zoomed in with a graduate assistant <unk> Arena class. So there'll be there'll be adjustments made with our classrooms are classes in our.
Classifiers right now it just you left things changed a lot in the next 90 days, we're not sure about large gatherings, which is a a big part of what we do here.
So chapel services up 7000 basketball games that are sold out I'm, intending to president eating in the N.C. double A. I.
I see things.
<unk> people are talking about I I think we're gonna have athletics without fans for at least the first semester.
And we'll have to make those adjustments.
We've got a lot very open space you.
And.
A lot of very open space for activity.
And you know people. If you are hearing then 20 times safer outside and is inside a lot of this is airborne stuff and our weather's really nice after we get through a little bit of heat, but even the heat. We're <unk>, we're thankful for now and so.
We will organize activities outside and use all use our outside venues and more than than we have in the past and and.
I think we're in well, it's not going to be exact.
Experience, but we'll make it as close to that as we possibly can and.
Yeah.
<unk>, we'll know more than 90 days.
Alright, great. Thanks, so much.
Alright. Thank you we have reached the end of our first quarter conference call. We appreciate your time and interesting Grand Canyon Education. If you still have questions. Please contact myself Dan Baucus. Thank you.
Ladies and gentlemen, <unk>. Thank you for your participation and how they want to for a day you may all disconnect at this time.
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