From Non-profit To IPO: The Turnaround Of Grand Canyon University: Brent Richardson (Part 4)

SM: Has your move to online education met your expectations in terms of your business model?

BR: The online educational side is a very profitable model because it is mostly variable costs. In that aspect, it differs from traditional education. Additionally, the potential number of students increases as you make the courses and programs more readily available. It is a significant benefit.

SM: Who pays for your courses, the students, or do you have some employer-paid models? You mentioned that you were working closely with the school districts and hospitals, but my assumption is that the students are paying for the majority.

BR: We have many situations where employers assist. Almost all of the hospitals we work with are on some sort of arrangement. We have about 1,500 students across 70 hospitals and in 99% of the cases the hospitals are paying.

Schools for the most part do not pay. In every state teachers get a raise if they get more education. An average point across the US is a $6,000 pay increase for a master’s degree. That is why most of the educators pursue those particular programs.

We do have companies that reimburse students for their MBA programs. In those arrangements students attend knowing beforehand that their costs will be covered by the company.

SM: You said that you reached the 12,000 student enrollment benchmark three years after raising capital.

BR: Approximately, yes. It may have taken us slightly more than that time, but we were close enough in our ranges that I feel comfortable saying that we met the goals we set out to accomplish.

SM: What does that translate to in revenue terms? What do those masters programs cost, and what is your revenue level based on that number of students?

BR: At the time it was between $12,500 and $15,000 to get a masters in nursing. We had some programs that were 30 credit hours but most were 36-39 credits. The credit cost at the time was probably $350 per hour. Three years in our revenue levels were around $70 million.

SM: You remained a private company throughout that phase?

GR: Yes.

SM: Were you profitable at that stage?

BR: We were. The first year we lost an incredible amount of money. The second year we were just under break even. The third year we were profitable in the ballpark of $7 million. That was 2006.

SM: What has your strategy been since 2006?

BR: I never had a history of running a public company prior. My goal at that time was to build it up for five years and sell it. What ended up happening was completely different. We ended up having an IPO last fall.

This segment is part 4 in the series : From Non-profit To IPO: The Turnaround Of Grand Canyon University: Brent Richardson
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