Good afternoon. Thank you for joining Grand Canyon Education's First Quarter 2025 Conference Call. GCE had another strong quarter, producing online enrollment growth of 7.9%, and hybrid growth, excluding the close side and those in teach-out of 16.5%. We also continue to produce strong retention rates, while at the same time investing heavily initiatives for our university partners.
The investment GCE and its 22 partner institutions are making are based on the belief that there is a vast amount of untapped potential in today's workforce. Many recent high school graduates did not go to college this year because of exorbitant tuition rates, potentially exorbitant debt levels and difficulty managing the FAFSA website. Many working adults who could benefit from higher education are not attending because of the lack of creative delivery models that do not take into account their life situations and the nature of what it is they need to learn. Grand Canyon Education will continue to grow at our stated goals over the long run because we are addressing those challenges in ways that work for students and employees.
With that, I would like to review the results of the 4 delivery platforms at Grand Canyon Education. First, the online campus in Grand Canyon University. New starts were up in the low teens in the first quarter of 2025, which exceeded our expectations and total enrollment growth was 7.9%, which slightly exceeds our long-term objectives. And there are many reasons for this point, but I want to highlight four. Number one, we have stayed focused on opportunities that exist in today's labor markets and continue to roll out at least 20 new program for a year for our university partners.
Since January 1, 2023, GCU has rolled out 48 new programs, emphases and certificates across the 10 colleges, to bring the total of 353 programs emphases and certificates. These programs are tied directly to labor market opportunities for students. One of the responses of universities to declining, is to reduce the number of programs they offer. Two, we continue to work with employers directly to address their workforce shortages. This effort is focused on the industry specification, health care, engineering, technology, manufacturing, public safety and in military.
In the first quarter, new starts from this work increased 18.2% year-over-year. Three, retention of students in the first quarter increased which we believe continues because of the relevancy of the programs that students are handling and their direct tie to the students' career aspirations. Fourth, GCU has resisted responding to the slower growth in higher education overall by raising tuition significantly which many institutions have done. While a few GCU online delivery programs have gone up approximately 1% per year, overall online net tuition rates at GCU have gone down. GCU continues to build technology and deliver other services to it's 22 partner institutions, resulting efficiencies that address the financial crisis that exists in higher education today with regard to rising tuition and (inaudible).
Given the tough comps, we are still projecting new start growth will be in the mid- to high single-digit rates during the rest of 2025. Second, the GCU ground campus for traditional students. As has been previously discussed, new and total traditional campus enrollments were down slightly year-over-year in fall of 2024 for the reasons discussed on previous calls. Although the spring intake is much less than the fall, we did see an increase in new students starting at GCU in spring 2025 as compared to spring 2024, which helped offset the increasing number of students that graduated at the end of the fall semester.
We believe GCU will reaccelerate growth on ground campus because of the significant advantages, including a very low price point, very low average debt levels, percent of students completing in less than four years and the relevancy of GCU's academic programs. GCU still plans to grow its traditional campus out to 50,000 students. It is our understanding that the Department of Education continues to work that fixes to the FAFSA issues and that the initial results have been positive. We believe that this, along with a number of strategy changes to address this specific challenge for 2025, '26 that we have made will help us meet the university's new enrollment growth goals.
We remain ahead of last year in new student registrations for the fall of 2025. So although it is still early in the recruitment cycle, the current trends are positive. Third, Grand Canyon Education's hybrid campus had an increase in enrollment year-over-year of 12.1% in the first quarter. Excluding the closed sites and those that are on teach-out, enrollment increased 16.5% year-over-year. We expect the new enrollment rate to maintain up in the low to mid-teens during the spring -- summer 2025 and the rest of 2025.
There are two main reasons for this continued growth. One, almost all of our active ABSN partners have responded to the younger students interested in ABSN programs by many advanced standing students or are in the process of making that change. Students with partially completed degrees haven't accumulated a great deal of debt and are very interested in nursing careers but didn't have an efficient way to earn the prerequisite science course work.
GCU created the science courses and some other gen ed courses, so they could be delivered in online in eight weeks. Students can access these courses from anywhere in the world. There are start opportunities almost every week. These courses have been made very affordable.
Our top line experienced faculty have class sizes are low, and there is a tremendous amount of academic support, including an artificial intelligence project, which provides students 24/7 access to tutoring. Since implementing these courses, we have already enrolled over 14,000 students.
We have a waterfall report which allows us to know how students are progressing through their pre-req courses and when they will be eligible to start at one of our ABSN sites. The success rate of students who successfully entered the ABSN programs is in the high 80% range and our first-time pass rate on the NCLEX stands approximately 90%.
We now have an extremely efficient way to get students academically eligible and prepared to enter the program. These positive results we anticipate will continue. There has never been greater interest among potential students for entering the health care professions and specifically nursing. Because of the low unemployment rate, the interest has shifted to these younger students having accumulated a great deal of debt completing a bachelor's degree in another area and are underemployed.
Nearly all our partners have responded positively to the change needed to serve the advanced gaming students. Our goal is to still have 80 locations. Non-GCE partners will have approximately 40 of the locations and GCU will have approximately 40 of the locations.
In 2025, we will open a total of five additional sites, including our second location in the Boston area in the fall, another site in New York City and GCE will open up three new sites in 2025 in Albuquerque, New Mexico, which was opened in the first quarter of 2025, Lake Mary, Florida near Orlando and in Amglwood, Colorado, South of Denver.
The addition of GCU's three new site openings will bring its ABSN total locations to 11. We will also expand our programmatic offerings with our hybrid partners by adding a graduate nursing program with seven specializations with Northeastern University, including masters and doctor level degrees starting this summer at some of our East Coast locations.
A hybrid occupational therapy bridge to master's program to our already successful St. Kate occupational therapy Assisted hybrid program; an online health science degree with Utica University and GCU will launch a Bachelors Science and Occupational Therapy Assistance program and a speech language pathology program in 2025 at our West Valley Phoenix location. Adding additional programs at our hybrid location is an important component of our business plan. Fourth, Center for Workforce Development at Grand Canyon University.
In the 2022-'23 school year, we started 80 students in GCU's electricians pre-apprenticeship program in partnership with companies that are experiencing labor shortages in that area and are excited about hiring GCU's graduates. The program consists of 4, 4 credit courses and runs 1 semester. 212 students successfully completed the program in 2024, '25, including 11 in Austin, Texas. In fall of 2023, we started GCU's manufacturing CNC Machinist Pathway in partnership with companies that are experiencing labor shortages in that area and are excited about hiring GCU grads. The program consists of 4, 4 credit courses and runs 1 semester.
33 students completed this program in 2024, '25 fiscal year. These students attend school for 20 hours a week and then work in the facilities were paid employee for 20 hours. At the end of the semester, they received a manufacturing certificate became eligible for employment in Arizona's fast-growing manufacturing industry. Students in GCU's growing engineering college are gaining experience in this manufacturing facility, which is adding to their engineering education.
Recently, manufacturing company owned and operated by a recent GCU graduate bought an additional manufacturing company, which has more than doubled its capacity and has the opportunity to significantly grow the number of students involved in this program. I started out talking about the development programs and creative delivery models that GCE has implemented with 22 partner institutions. In the 6-plus years since GCE has become a service provider, this helped its partners accomplish the following.
In that time, GCE has helped Grand Canyon University graduate 189,107 students, 51,381 in education, including 24,247 first-time teachers at a time when teacher shortages have created a national crisis. 50,615 in nursing and health care professionals, including 2,836 pre-licensure nurses at a time when there is a huge shortage of nurses. 38,586 in the College of Humanities and Social Sciences, including thousands in counseling and social work, where there are also huge shortages.
College of business could become one of the largest business schools in America and has produced 32,900 graduates. College of Science, Engineering and Technology has grown by 217% and provided 7,806 graduates. The Doctoral College, Honors College and College of Theology also continue to grow. In addition, GCE has helped its other partners graduate 18,472 pre-licensure nurses and occupational therapist assistants. The numbers that I just cited have all happened in the past 6-plus years since the GCU, GCE transaction and since GCE has become an education services provider.
Service revenue was $289.3 million for the first quarter of 2025, an increase of $14.6 million or 5.3% as compared to $274.7 million for the first quarter of 2024. The increase year-over-year in service revenue was primarily due to an increase in partner enrollments of 5.8%, including an increase in GCU online enrollment of 7.9% and university partner enrollments at our off-campus classroom and laboratory sites of 12.1%, partially offset by a decrease in revenue per student year-over-year primarily due to last year being a leap year in previously discussed contract modifications.
Operating income and operating margin for the three months ended March 31, 2025, was $88 million and 30.4%, respectively, as compared to $84.5 million and 30.8%, respectively, for the same period in 2024. Net income increased 5.3% to $71.6 million for the first quarter of 2025 compared to $68 million for the same quarter of 2024. GAAP diluted income per share for the three months ended March 31, 2025, is $2.52. As adjusted non-GAAP diluted income per share for the three months ended March 31, 2025, is $2.57, which is $0.05 above consensus estimates.
With that, I'd like to turn it over to Dan Bachus, our CFO, to give a little more color on our 2025 first quarter, talk about changes in the income statement, balance sheet and other items as well as discuss the 2025 guidance.
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The investment GCE and its 22 partner institutions are making are based on the belief that there is a vast amount of untapped potential in today's workforce. Many recent high school graduates did not go to college this year because of exorbitant tuition rates, potentially exorbitant debt levels and difficulty managing the FAFSA website. Many working adults who could benefit from higher education are not attending because of the lack of creative delivery models that do not take into account their life situations and the nature of what it is they need to learn. Grand Canyon Education will continue to grow at our stated goals over the long run because we are addressing those challenges in ways that work for students and employees.
With that, I would like to review the results of the 4 delivery platforms at Grand Canyon Education. First, the online campus in Grand Canyon University. New starts were up in the low teens in the first quarter of 2025, which exceeded our expectations and total enrollment growth was 7.9%, which slightly exceeds our long-term objectives. And there are many reasons for this point, but I want to highlight four. Number one, we have stayed focused on opportunities that exist in today's labor markets and continue to roll out at least 20 new program for a year for our university partners.
Since January 1, 2023, GCU has rolled out 48 new programs, emphases and certificates across the 10 colleges, to bring the total of 353 programs emphases and certificates. These programs are tied directly to labor market opportunities for students. One of the responses of universities to declining, is to reduce the number of programs they offer. Two, we continue to work with employers directly to address their workforce shortages. This effort is focused on the industry specification, health care, engineering, technology, manufacturing, public safety and in military.
In the first quarter, new starts from this work increased 18.2% year-over-year. Three, retention of students in the first quarter increased which we believe continues because of the relevancy of the programs that students are handling and their direct tie to the students' career aspirations. Fourth, GCU has resisted responding to the slower growth in higher education overall by raising tuition significantly which many institutions have done. While a few GCU online delivery programs have gone up approximately 1% per year, overall online net tuition rates at GCU have gone down. GCU continues to build technology and deliver other services to it's 22 partner institutions, resulting efficiencies that address the financial crisis that exists in higher education today with regard to rising tuition and (inaudible).
Given the tough comps, we are still projecting new start growth will be in the mid- to high single-digit rates during the rest of 2025. Second, the GCU ground campus for traditional students. As has been previously discussed, new and total traditional campus enrollments were down slightly year-over-year in fall of 2024 for the reasons discussed on previous calls. Although the spring intake is much less than the fall, we did see an increase in new students starting at GCU in spring 2025 as compared to spring 2024, which helped offset the increasing number of students that graduated at the end of the fall semester.
We believe GCU will reaccelerate growth on ground campus because of the significant advantages, including a very low price point, very low average debt levels, percent of students completing in less than four years and the relevancy of GCU's academic programs. GCU still plans to grow its traditional campus out to 50,000 students. It is our understanding that the Department of Education continues to work that fixes to the FAFSA issues and that the initial results have been positive. We believe that this, along with a number of strategy changes to address this specific challenge for 2025, '26 that we have made will help us meet the university's new enrollment growth goals.
We remain ahead of last year in new student registrations for the fall of 2025. So although it is still early in the recruitment cycle, the current trends are positive. Third, Grand Canyon Education's hybrid campus had an increase in enrollment year-over-year of 12.1% in the first quarter. Excluding the closed sites and those that are on teach-out, enrollment increased 16.5% year-over-year. We expect the new enrollment rate to maintain up in the low to mid-teens during the spring -- summer 2025 and the rest of 2025.
There are two main reasons for this continued growth. One, almost all of our active ABSN partners have responded to the younger students interested in ABSN programs by many advanced standing students or are in the process of making that change. Students with partially completed degrees haven't accumulated a great deal of debt and are very interested in nursing careers but didn't have an efficient way to earn the prerequisite science course work.
GCU created the science courses and some other gen ed courses, so they could be delivered in online in eight weeks. Students can access these courses from anywhere in the world. There are start opportunities almost every week. These courses have been made very affordable.
Our top line experienced faculty have class sizes are low, and there is a tremendous amount of academic support, including an artificial intelligence project, which provides students 24/7 access to tutoring. Since implementing these courses, we have already enrolled over 14,000 students.
We have a waterfall report which allows us to know how students are progressing through their pre-req courses and when they will be eligible to start at one of our ABSN sites. The success rate of students who successfully entered the ABSN programs is in the high 80% range and our first-time pass rate on the NCLEX stands approximately 90%.
We now have an extremely efficient way to get students academically eligible and prepared to enter the program. These positive results we anticipate will continue. There has never been greater interest among potential students for entering the health care professions and specifically nursing. Because of the low unemployment rate, the interest has shifted to these younger students having accumulated a great deal of debt completing a bachelor's degree in another area and are underemployed.
Nearly all our partners have responded positively to the change needed to serve the advanced gaming students. Our goal is to still have 80 locations. Non-GCE partners will have approximately 40 of the locations and GCU will have approximately 40 of the locations.
In 2025, we will open a total of five additional sites, including our second location in the Boston area in the fall, another site in New York City and GCE will open up three new sites in 2025 in Albuquerque, New Mexico, which was opened in the first quarter of 2025, Lake Mary, Florida near Orlando and in Amglwood, Colorado, South of Denver.
The addition of GCU's three new site openings will bring its ABSN total locations to 11. We will also expand our programmatic offerings with our hybrid partners by adding a graduate nursing program with seven specializations with Northeastern University, including masters and doctor level degrees starting this summer at some of our East Coast locations.
A hybrid occupational therapy bridge to master's program to our already successful St. Kate occupational therapy Assisted hybrid program; an online health science degree with Utica University and GCU will launch a Bachelors Science and Occupational Therapy Assistance program and a speech language pathology program in 2025 at our West Valley Phoenix location. Adding additional programs at our hybrid location is an important component of our business plan. Fourth, Center for Workforce Development at Grand Canyon University.
In the 2022-'23 school year, we started 80 students in GCU's electricians pre-apprenticeship program in partnership with companies that are experiencing labor shortages in that area and are excited about hiring GCU's graduates. The program consists of 4, 4 credit courses and runs 1 semester. 212 students successfully completed the program in 2024, '25, including 11 in Austin, Texas. In fall of 2023, we started GCU's manufacturing CNC Machinist Pathway in partnership with companies that are experiencing labor shortages in that area and are excited about hiring GCU grads. The program consists of 4, 4 credit courses and runs 1 semester.
33 students completed this program in 2024, '25 fiscal year. These students attend school for 20 hours a week and then work in the facilities were paid employee for 20 hours. At the end of the semester, they received a manufacturing certificate became eligible for employment in Arizona's fast-growing manufacturing industry. Students in GCU's growing engineering college are gaining experience in this manufacturing facility, which is adding to their engineering education.
Recently, manufacturing company owned and operated by a recent GCU graduate bought an additional manufacturing company, which has more than doubled its capacity and has the opportunity to significantly grow the number of students involved in this program. I started out talking about the development programs and creative delivery models that GCE has implemented with 22 partner institutions. In the 6-plus years since GCE has become a service provider, this helped its partners accomplish the following.
In that time, GCE has helped Grand Canyon University graduate 189,107 students, 51,381 in education, including 24,247 first-time teachers at a time when teacher shortages have created a national crisis. 50,615 in nursing and health care professionals, including 2,836 pre-licensure nurses at a time when there is a huge shortage of nurses. 38,586 in the College of Humanities and Social Sciences, including thousands in counseling and social work, where there are also huge shortages.
College of business could become one of the largest business schools in America and has produced 32,900 graduates. College of Science, Engineering and Technology has grown by 217% and provided 7,806 graduates. The Doctoral College, Honors College and College of Theology also continue to grow. In addition, GCE has helped its other partners graduate 18,472 pre-licensure nurses and occupational therapist assistants. The numbers that I just cited have all happened in the past 6-plus years since the GCU, GCE transaction and since GCE has become an education services provider.
Service revenue was $289.3 million for the first quarter of 2025, an increase of $14.6 million or 5.3% as compared to $274.7 million for the first quarter of 2024. The increase year-over-year in service revenue was primarily due to an increase in partner enrollments of 5.8%, including an increase in GCU online enrollment of 7.9% and university partner enrollments at our off-campus classroom and laboratory sites of 12.1%, partially offset by a decrease in revenue per student year-over-year primarily due to last year being a leap year in previously discussed contract modifications.
Operating income and operating margin for the three months ended March 31, 2025, was $88 million and 30.4%, respectively, as compared to $84.5 million and 30.8%, respectively, for the same period in 2024. Net income increased 5.3% to $71.6 million for the first quarter of 2025 compared to $68 million for the same quarter of 2024. GAAP diluted income per share for the three months ended March 31, 2025, is $2.52. As adjusted non-GAAP diluted income per share for the three months ended March 31, 2025, is $2.57, which is $0.05 above consensus estimates.
With that, I'd like to turn it over to Dan Bachus, our CFO, to give a little more color on our 2025 first quarter, talk about changes in the income statement, balance sheet and other items as well as discuss the 2025 guidance.
