Technology
GRAND CANYON EDUCATION, INC. REPORTS FOURTH QUARTER 2023 RESULTS
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3 years agoon
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PHOENIX, Feb. 13, 2024 /PRNewswire/ — Grand Canyon Education, Inc. (NASDAQ: LOPE), (“GCE” or the “Company”), is a publicly traded education services company that currently provides services to 25 university partners. GCE provides a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide superior services in these areas on a large scale. GCE today announced financial results for the quarter ended December 31, 2023.
For the three months ended December 31, 2023:
Service revenue for the three months ended December 31, 2023 was $278.3 million, an increase of $19.6 million, or 7.6%, as compared to service revenue of $258.7 million for the three months ended December 31, 2022. The increase year over year in service revenue was primarily due to an increase in GCU enrollments to 117,279 at December 31, 2023, an increase of 8.0% over enrollments at December 31, 2022 and an increase in revenue per student year over year. The increase in revenue per student between years is primarily due to the service revenue impact of the increased room, board and other ancillary revenues at GCU in the fourth quarter of 2023 as compared to the prior year period. In addition, service revenue per student for Accelerated Bachelor of Science in Nursing students at off-campus classroom and laboratory sites generates a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of their students take more credits on average per semester. The increase in revenue per student in the three months ended December 31, 2023 was negatively impacted by the timing of the Fall semester for the ground traditional campus. The Fall semester started one day earlier in 2023 than in 2022, which had the effect of shifting $1.2 million in service revenue from the fourth quarter of 2023 to the third quarter of 2023 in comparison to the prior year.Partner enrollments totaled 121,250 at December 31, 2023 as compared to 112,955 at December 31, 2022. University partner enrollments at our off-campus classroom and laboratory sites were 4,481, a decrease of 3.3% over enrollments at December 31, 2022, which includes 510 and 320 GCU students at December 31, 2023 and 2022, respectively. We opened six new off-campus classroom and laboratory sites in the year ended December 31, 2022 and five sites in the year ended December 31, 2023 increasing the total number of these sites to 40 at December 31, 2023. Enrollments for GCU ground students were 25,209 at December 31, 2023 up from 24,943 at December 31, 2022. GCU online enrollments were 92,070 at December 31, 2023, up from 83,696 at December 31, 2022, an increase of 10.0% between years.Operating income for the three months ended December 31, 2023 was $97.8 million, an increase of $7.1 million as compared to $90.7 million for the same period in 2022. The operating margin for each of the three months ended December 31, 2023 and 2022 was 35.1%. The fourth quarter operating margin was negatively impacted on a year over year basis by the timing difference between years in the start of the Fall semester for GCU’s ground traditional campus.Income tax expense for the three months ended December 31, 2023 was $20.1 million, a decrease of $0.9 million, or 4.4%, as compared to income tax expense of $21.0 million for the three months ended December 31, 2022. Our effective tax rate was 19.9% during the fourth quarter of 2023 compared to 22.8% during the fourth quarter of 2022. The decrease in our effective tax rate between periods was primarily driven by other discrete tax items recorded in the respective periods.Net income increased 13.6% to $80.7 million for the fourth quarter of 2023, compared to $71.0 million for the same period in 2022. As adjusted net income was $82.5 million and $72.7 million for the fourth quarters of 2023 and 2022, respectively.Diluted net income per share was $2.71 and $2.30 for the fourth quarters of 2023 and 2022, respectively. As adjusted diluted net income per share was $2.77 and $2.36 for the fourth quarters of 2023 and 2022, respectively.Adjusted EBITDA increased 8.5% to $110.9 million for the fourth quarter of 2023, compared to $102.2 million for the same period in 2022.
For the year ended December 31, 2023:
Service revenue for the year ended December 31, 2023 was $960.9 million, an increase of $49.6 million, or 5.4%, as compared to service revenue of $911.3 million for the year ended December 31, 2022. The increase year over year in service revenue was primarily due to an increase in GCU enrollments to 117,279 at December 31, 2023, an increase of 8.0% over enrollments at December 31, 2022.Operating income for the year ended December 31, 2023 was $249.3 million, an increase of $11.8 million as compared to $237.5 million for the same period in 2022. The operating margin for the year ended December 31, 2023 was 25.9%, compared to 26.1% for the same period in 2022.Income tax expense for the year ended December 31, 2023 was $54.7 million, a decrease of $0.7 million, or 1.4%, as compared to income tax expense of $55.4 million for the year ended December 31, 2022. Our effective tax rate was 21.1% during the year ended December 31, 2023 compared to 23.1% during the year ended December 31, 2022. The decrease in our effective tax rate between periods is attributable to other discrete tax items recorded in the respective periods and higher excess tax benefits of $0.9 million compared to excess tax benefits of $0.1 million for the year ended December 31, 2022, partially offset by a lower contribution in lieu of state income taxes of $3.5 million in 2023 compared to $5.0 million in 2022.Net income increased 11.0% to $205.0 million for the year ended December 31, 2023, compared to $184.7 million for the same period in 2022. As adjusted net income was $212.2 million and $192.1 million for the years ended December 31, 2023 and 2022, respectively.Diluted net income per share was $6.80 and $5.73 for the years ended December 31, 2023 and 2022, respectively. As adjusted diluted net income per share was $7.04 and $5.96 for the years ended December 31, 2023 and 2022, respectively.Adjusted EBITDA increased 3.8% to $302.3 million for the year ended December 31, 2023, compared to $291.3 million for the same period in 2022.
Liquidity and Capital Resources
Our liquidity position, as measured by cash and cash equivalents and investments increased by $62.8 million between December 31, 2022 and December 31, 2023, which was largely attributable to cash flows from operations exceeding share repurchases, investment purchases, net of proceeds and capital expenditures during the year ended December 31, 2023. Our unrestricted cash and cash equivalents and investments were $244.5 million and $181.7 million at December 31, 2023 and December 31, 2022, respectively.
2024 Outlook
Q1 2024:
Service revenue of between $271.5 million and $273.0 million;Operating margin of between 29.8% and 30.0%;Effective tax rate of 23.4%;Diluted EPS of between $2.15 and $2.18; and29.7 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $1.6 million, which equates to a $0.05 impact on diluted EPS. Thus, as adjusted, Non-GAAP diluted income per share of between $2.20 and $2.23.
Q2 2024:
Service revenue of between $221.0 million and $224.0 million;Operating margin of between 16.1% and 17.0%;Effective tax rate of 24.9%;Diluted EPS of between $0.98 and $1.04; and29.4 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $1.6 million, which equates to a $0.05 impact on diluted EPS. Thus, as adjusted, Non-GAAP diluted income per share of between $1.03 and $1.09.
Q3 2024:
Service revenue of between $236.5 million and $244.0 million;Operating margin of between 20.4% and 22.2%;Effective tax rate of 24.9%;Diluted EPS of between $1.30 and $1.46; and29.1 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $1.6 million, which equates to a $0.05 impact on diluted EPS. Thus, as adjusted, Non-GAAP diluted income per share of between $1.35 and $1.51.
Q4 2024:
Service revenue of between $287.0 million and $299.0 million;Operating margin of between 34.9% and 37.0%;Effective tax rate of 22.8%;Diluted EPS of between $2.75 and $3.03; and28.9 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $1.6 million, which equates to a $0.06 impact on diluted EPS. Thus, as adjusted, Non-GAAP diluted income per share of between $2.81 and $3.09.
Full Year 2024:
Service revenue of between $1,016.0 million and $1,040.0 million;Operating margin of between 26.1% and 27.4%;Effective tax rate of 23.7%;Diluted EPS between $7.17 and $7.69; and29.3 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $6.5 million, which equates to a $0.22 impact on diluted EPS. Thus, as adjusted, Non-GAAP diluted income per share of between $7.39 and $7.91.
Forward-Looking Statements
This news release contains “forward-looking statements” which include information relating to future events, future financial performance, strategies expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; whether regulatory, economic, or business developments or other matters may or may not have a material adverse effect on our financial position, results of operations, or liquidity; projections, predictions, expectations, estimates, and forecasts as to our business, financial and operating results, and future economic performance; and management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, the negative of these expressions, as well as statements in future tense, identify forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause our actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements include, but are not limited to: legal and regulatory actions taken against our university partners that impact their businesses and that directly or indirectly reduce the service revenue we can earn under our master services agreements; the occurrence of any event, change or other circumstance that could give rise to the termination of any of the key university partner agreements; our ability to properly manage risks and challenges associated with strategic initiatives, including potential acquisitions or divestitures of, or investments in, new businesses, acquisitions of new properties and new university partners, and expansion of services provided to our existing university partners; our failure to comply with the extensive regulatory framework applicable to us either directly as a third-party service provider or indirectly through our university partners, including Title IV of the Higher Education Act and the regulations thereunder, state laws and regulatory requirements, and accrediting commission requirements; the harm to our business, results of operations, and financial condition, and harm to our university partners resulting from epidemics, pandemics, or public health crises; the ability of our university partners’ students to obtain federal Title IV funds, state financial aid, and private financing; potential damage to our reputation or other adverse effects as a result of negative publicity in the media, in the industry or in connection with governmental reports or investigations or otherwise, affecting us or other companies in the education services sector; risks associated with changes in applicable federal and state laws and regulations and accrediting commission standards, including pending rulemaking by the United States Department of Education applicable to us directly or indirectly through our university partners; competition from other education service companies in our geographic region and market sector, including competition for students, qualified executives and other personnel; our expected tax payments and tax rate; our ability to hire and train new, and develop and train existing employees; the pace of growth of our university partners’ enrollment and its effect on the pace of our own growth; fluctuations in our revenues due to seasonality; our ability to, on behalf of our university partners, convert prospective students to enrolled students and to retain active students to graduation; our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis for our university partners; risks associated with the competitive environment for marketing the programs of our university partners; failure on our part to keep up with advances in technology that could enhance the experience for our university partners’ students; our ability to manage future growth effectively; the impact of any natural disasters or public health emergencies; general adverse economic conditions or other developments that affect the job prospects of our university partners’ students; and other factors discussed in reports on file with the Securities and Exchange Commission, including as set forth in Part I, Item 1A of our Annual Report on Form 10-K for period ended December 31, 2023, as updated in our subsequent reports filed with the Securities and Exchange Commission on Form 10-Q or Form 8-K.
Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Conference Call
Grand Canyon Education, Inc. will discuss its fourth quarter 2023 results and full year 2024 outlook during a conference call scheduled for today, February 13, 2024 at 4:30 p.m. Eastern time (ET).
Live Conference Dial-In:
Those interested in participating in the question-and-answer session should follow the conference dial-in instructions below. Participants may register for the call here to receive the dial-in numbers and unique PIN to access the call seamlessly. Please dial in at least ten minutes prior to the start of the call. Journalists are invited to listen only.
Webcast and Replay:
Investors, journalists and the general public may access a live webcast of this event at: Q4 2023 Grand Canyon Education Inc. Earnings Conference Call. A webcast replay will be available approximately two hours following the conclusion of the call at the same link.
About Grand Canyon Education, Inc.
Grand Canyon Education, Inc. (“GCE”), incorporated in 2008, is a publicly traded education services company that currently provides services to 25 university partners. GCE is uniquely positioned in the education services industry in that its leadership has over 30 years of proven expertise in providing a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide superior services in these areas on a large scale. GCE provides services that support students, faculty and staff of partner institutions such as marketing, strategic enrollment management, counseling services, financial services, technology, technical support, compliance, human resources, classroom operations, content development, faculty recruitment and training, among others. For more information about GCE visit the Company’s website at www.gce.com.
Grand Canyon Education, Inc., 2600 W. Camelback Road, Phoenix, AZ 85017, www.gce.com.
GRAND CANYON EDUCATION, INC.
Consolidated Income Statements
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
(In thousands, except per share data)
Service revenue
$
278,284
$
258,700
$
960,899
$
911,306
Costs and expenses:
Technology and academic services
39,227
38,357
154,870
150,493
Counseling services and support
82,754
72,540
302,319
273,313
Marketing and communication
46,003
44,853
202,800
196,090
General and administrative
10,397
10,168
43,235
45,491
Amortization of intangible assets
2,104
2,104
8,419
8,419
Total costs and expenses
180,485
168,022
711,643
673,806
Operating income
97,799
90,678
249,256
237,500
Interest expense
(6)
3
(33)
(2)
Investment interest and other
2,970
1,327
10,452
2,621
Income before income taxes
100,763
92,008
259,675
240,119
Income tax expense
20,054
20,981
54,690
55,444
Net income
$
80,709
$
71,027
$
204,985
$
184,675
Earnings per share:
Basic income per share
$
2.73
$
2.32
$
6.83
$
5.75
Diluted income per share
$
2.71
$
2.30
$
6.80
$
5.73
Basic weighted average shares outstanding
29,555
30,669
29,991
32,131
Diluted weighted average shares outstanding
29,761
30,835
30,147
32,237
GRAND CANYON EDUCATION, INC.
Consolidated Balance Sheets
As of December 31,
As of December 31,
(In thousands, except par value)
2023
2022
ASSETS:
(Unaudited)
Current assets
Cash and cash equivalents
$
146,475
$
120,409
Investments
98,031
61,295
Accounts receivable, net
78,811
77,413
Income taxes receivable
1,316
2,788
Other current assets
12,889
11,368
Total current assets
337,522
273,273
Property and equipment, net
169,699
147,504
Right-of-use assets
92,454
72,719
Amortizable intangible assets, net
168,381
176,800
Goodwill
160,766
160,766
Other assets
1,641
1,687
Total assets
$
930,463
$
832,749
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities
Accounts payable
$
17,676
$
20,006
Accrued compensation and benefits
31,358
36,412
Accrued liabilities
26,725
22,473
Income taxes payable
10,250
12,167
Current portion of lease liability
11,024
8,648
Total current liabilities
97,033
99,706
Deferred income taxes, noncurrent
26,749
26,195
Other long-term liabilities
410
436
Lease liability, less current portion
88,257
68,793
Total liabilities
212,449
195,130
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, 10,000 shares authorized; 0 shares issued and
outstanding at December 31, 2022 and December 31, 2022
—
—
Common stock, $0.01 par value, 100,000 shares authorized; 53,970 and 53,830 shares
issued and 29,953 and 31,058 shares outstanding at December 31, 2023 and December
31, 2022, respectively
540
538
Treasury stock, at cost, 24,017 and 22,772 shares of common stock at December 31, 2023
and December 31, 2022, respectively
(1,849,693)
(1,711,423)
Additional paid-in capital
322,512
309,310
Accumulated other comprehensive loss
(57)
(533)
Retained earnings
2,244,712
2,039,727
Total stockholders’ equity
718,014
637,619
Total liabilities and stockholders’ equity
$
930,463
$
832,749
GRAND CANYON EDUCATION, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Year Ended
December 31,
(In thousands)
2023
2022
Cash flows provided by operating activities:
Net income
$
204,985
$
184,675
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation
13,204
12,642
Depreciation and amortization
23,554
22,758
Amortization of intangible assets
8,419
8,419
Deferred income taxes
402
401
Other, including fixed asset disposals
(442)
853
Changes in assets and liabilities:
Accounts receivable from university partners
(1,398)
(7,350)
Other assets
(1,639)
(2,604)
Right-of-use assets and lease liabilities
2,105
1,193
Accounts payable
(3,109)
(3,894)
Accrued liabilities
(1,974)
(1,023)
Income taxes receivable/payable
(445)
4,759
Deferred revenue
—
(10)
Net cash provided by operating activities
243,662
220,819
Cash flows used in investing activities:
Capital expenditures
(44,537)
(35,232)
Additions of amortizable content
(897)
(397)
Purchases of investments
(98,853)
(171,549)
Proceeds from sale or maturity of investments
63,815
110,039
Net cash used in investing activities
(80,472)
(97,139)
Cash flows used in financing activities:
Repurchase of common shares and shares withheld in lieu of income taxes
(137,124)
(604,212)
Net cash used in financing activities
(137,124)
(604,212)
Net increase (decrease) in cash and cash equivalents and restricted cash
26,066
(480,532)
Cash and cash equivalents and restricted cash, beginning of period
120,409
600,941
Cash and cash equivalents and restricted cash, end of period
$
146,475
$
120,409
Supplemental disclosure of cash flow information
Cash paid for interest
$
33
$
2
Cash paid for income taxes
$
59,026
$
48,573
Supplemental disclosure of non-cash investing and financing activities
Purchases of property and equipment included in accounts payable
$
1,909
$
1,131
ROU Asset and Liability recognition
$
19,735
$
15,067
Excise tax on treasury stock repurchases
$
1,146
$
—
GRAND CANYON EDUCATION, INC.
Adjusted EBITDA (Non-GAAP Financial Measure)
Adjusted EBITDA is defined as net income plus interest expense, less interest income and other gain (loss) recognized on investments, plus income tax expense, and plus depreciation and amortization (EBITDA), as adjusted for (i) contributions to private Arizona school tuition organizations in lieu of the payment of state income taxes; (ii) share-based compensation, and (iii) unusual charges or gains, such as litigation and regulatory reserves, impairment charges and asset write-offs, and exit or lease termination costs. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA. All of the adjustments made in our calculation of Adjusted EBITDA are adjustments to items that management does not consider to be reflective of our core operating performance. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period and does not consider the items for which we make adjustments (as listed above) to be reflective of our core performance.
We believe Adjusted EBITDA allows us to compare our current operating results with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by variations in capital structures (affecting relative interest expense, including the impact of write-offs of deferred financing costs when companies refinance their indebtedness), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the book amortization of intangibles (affecting relative amortization expense), and other items that we do not consider reflective of underlying operating performance. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors, and other interested parties as a measure of performance.
In evaluating Adjusted EBITDA, investors should be aware that in the future we may incur expenses similar to the adjustments described above. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine, or non-recurring. Adjusted EBITDA has limitations as an analytical tool in that, among other things it does not reflect:
cash expenditures for capital expenditures or contractual commitments;changes in, or cash requirements for, our working capital requirements;interest expense, or the cash required to replace assets that are being depreciated or amortized; andthe impact on our reported results of earnings or charges resulting from the items for which we make adjustments to our EBITDA, as described above and set forth in the table below.
In addition, other companies, including other companies in our industry, may calculate these measures differently than we do, limiting the usefulness of Adjusted EBITDA as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a substitute for net income, operating income, or any other performance measure derived in accordance with and reported under GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. We compensate for these limitations by relying primarily on our GAAP results and only use Adjusted EBITDA as a supplemental performance measure.
The following table provides a reconciliation of net income to Adjusted EBITDA, which is a non-GAAP measure for the periods indicated:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
(Unaudited, in thousands)
(Unaudited, in thousands)
Net income
$
80,709
$
71,027
$
204,985
$
184,675
Plus: interest expense
6
(3)
33
2
Less: investment interest and other
(2,970)
(1,327)
(10,452)
(2,621)
Plus: income tax expense
20,054
20,981
54,690
55,444
Plus: amortization of intangible assets
2,104
2,104
8,419
8,419
Plus: depreciation and amortization
6,560
5,735
23,554
22,758
EBITDA
106,463
98,517
281,229
268,677
Plus: contributions in lieu of state income taxes
—
—
3,500
5,000
Plus: loss on fixed asset disposal
166
94
741
1,249
Plus: litigation and regulatory reserves
1,057
452
3,628
3,768
Plus: share-based compensation
3,246
3,158
13,204
12,642
Adjusted EBITDA
$
110,932
$
102,221
$
302,302
$
291,336
Non-GAAP Net Income and Non-GAAP Diluted Income Per Share
The Company believes the presentation of non-GAAP net income and non-GAAP diluted income per share information that excludes amortization of intangible assets and loss on disposal of fixed assets allows investors to develop a more meaningful understanding of the Company’s performance over time. Accordingly, for the three-months and years ended December 31, 2023 and 2022, the table below provides reconciliations of these non-GAAP items to GAAP net income and GAAP diluted income per share, respectively:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
(Unaudited, in thousands except per share data)
GAAP Net income
$
80,709
$
71,027
$
204,985
$
184,675
Amortization of intangible assets
2,104
2,104
8,419
8,419
Loss on disposal of fixed assets
166
94
741
1,249
Income tax effects of adjustments(1)
(452)
(501)
(1,929)
(2,232)
As Adjusted, Non-GAAP Net income
$
82,527
$
72,724
$
212,216
$
192,111
GAAP Diluted income per share
$
2.71
$
2.30
$
6.80
$
5.73
Amortization of intangible assets (2)
0.06
0.06
0.22
0.20
Loss on disposal of fixed assets (3)
0.00
0.00
0.02
0.03
As Adjusted, Non-GAAP Diluted income per share
$
2.77
$
2.36
$
7.04
$
5.96
(1)
The income tax effects of adjustments are based on the effective income tax rate applicable to adjusted (non-GAAP) results.
(2)
The amortization of acquired intangible assets per diluted share is net of an income tax benefit of $0.01 and $0.02 for the three months ended December 31, 2023 and 2022, respectively, and net of an income tax benefit of $0.06 for each of the years ended December 31, 2023 and 2022.
(3)
The loss on disposal of fixed assets per diluted share is net of an income tax benefit of $0.00 for each of the three months ended December 31, 2023 and 2022, and net of an income tax benefit of $0.01 and $0.01 for the years ended December 31, 2023 and 2022, respectively.
Investor Relations Contact:
Daniel E. Bachus
Chief Financial Officer
Grand Canyon Education, Inc.
602-639-6648
Dan.bachus@gce.com
View original content:https://www.prnewswire.com/news-releases/grand-canyon-education-inc-reports-fourth-quarter-2023-results-302061042.html
SOURCE Grand Canyon Education
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Market grows at a 9.15% CAGR from USD 15.46 billion in 2025; AI genomics and research computing expands 16.71% a year, while North America holds 46.0% of spending
LONDON, Oct. 23, 2026 /PRNewswire/ — The “Healthcare Data Center Market – Growth, Share, Opportunities & Competitive Analysis, 2026-2035” report has been added to the DC Market Insights offering. The global Healthcare Data Center Market was valued at USD 15.46 billion in 2025, is estimated at USD 17.34 billion in 2026, and is projected to reach USD 37.11 billion by 2035, growing at a CAGR of 9.15% from 2025 to 2035. DC Market Insights finds that healthcare infrastructure is splitting between general-purpose EHR workloads that increasingly move to hosted environments and higher-value AI, imaging, research and resilience workloads that require dedicated or colocated capacity.
Healthcare Data Center Market at a Glance
Metric
Value (DC Market Insights estimate)
Market size, 2020
USD 9.77 billion
Market size, 2025 (base year)
USD 15.46 billion
Market size, 2026
USD 17.34 billion (+12.16% year on year)
Market size, 2030
USD 25.10 billion
Market size, 2035
USD 37.11 billion
CAGR 2025-2035
9.15% (low case 7.13%, high case 10.69%)
Largest component
IT hardware, 70.7% of 2025 value
Fastest-growing workload
AI genomics and research computing, 16.71% CAGR
Leading region
North America, 46.0% (USD 7.11 billion)
Fastest-growing region
Asia Pacific, 11.72% CAGR
Largest end user
Hospitals and health systems, 47.0% of 2025 value
Key Takeaways
IT hardware accounts for USD 10.93 billion, or 70.7% of 2025 market value, reflecting the high server, storage and accelerator content of clinical and research workloads.AI genomics and research computing is the fastest workload, rising 16.71% a year from USD 2.30 billion in 2025 to USD 10.78 billion by 2035.Hospitals and health systems remain the largest end user at USD 7.27 billion in 2025, while pharmaceutical and life sciences grows fastest among end users at 11.61% a year.On-premises owned sites hold 60.0% of 2025 value, but wholesale and build-to-suit grows 14.01% a year as research and AI clusters move into purpose-built capacity.North America leads with 46.0% of 2025 spending, while Asia Pacific grows fastest at 11.72%; India is the fastest-growing large country at 18.37% a year.
Scope & Segmentation – Healthcare Data Center Market
The report analyzes the market across the following segments:
Component: IT Hardware; Colocation and Hosting Services; Electrical and Mechanical Infrastructure; Construction and Fit-OutEnd User: Hospitals and Health Systems; Pharmaceutical and Life Sciences; Payers and Health Insurers; Health IT and Medtech Vendors; Public Health and Research InstitutesWorkload: EHR and Clinical Applications; Medical Imaging and PACS; AI Genomics and Research Computing; Claims and Revenue Cycle; Backup and Disaster Recovery; Collaboration and Other WorkloadsDeployment Model: On-Premises Owned Sites; Retail Colocation; Wholesale and Build-to-Suit; Vendor-Hosted Private CloudGeography: North America; Europe; Asia Pacific; Latin America; Middle East and Africa, with 12 country forecasts
Report Updated: Oct. 22, 2026
Get Free Sample Report – Healthcare Data Center Market
“Healthcare data center demand is moving in two directions at once: hospitals are reducing general-purpose owned halls while AI, imaging, research and cyber-resilience requirements add denser, higher-value infrastructure. Our model shows AI genomics and research computing growing 16.71% a year and wholesale or build-to-suit capacity growing 14.01%, while the owned-site share falls from 60.0% in 2025 toward 45.0% by 2035. That makes compliant hosted capacity, AI-ready infrastructure and recoverability the strongest growth pools through the forecast period.”
— Amit Jain, Senior Consultant, ICT & Emerging Technologies, DC Market Insights, report author
Why This Report Matters
Healthcare data centers sit at the intersection of patient-data availability, clinical application performance, medical imaging, pharmaceutical research and cyber resilience. The report helps health systems, life sciences companies, colocation operators, cloud and hosting providers, equipment vendors and investors size infrastructure demand while separating public-cloud migrations that leave the market from leased and owned capacity that remains in scope.
Key Attributes
Report attribute
Details
Historical Period
2020-2024
Base Year
2025
Forecast Period
2026-2035
Market Size 2025
USD 15.46 billion
Market Size 2026
USD 17.34 billion
Market Size 2035
USD 37.11 billion
CAGR 2025-2035
9.15% (low 7.13%, high 10.69%)
Leading Region
North America, 46.0%
Report Format
PDF + Excel
How Big Is the Healthcare Data Center Market in 2026?
DC Market Insights values the Healthcare Data Center Market at USD 17.34 billion in 2026, 12.16% above 2025, as backup sites, AI clusters for drug discovery and leased halls for electronic health records are added faster than hospital server rooms close. The model places healthcare IT load at 3,300 MW in 2025 and projects it to double to 6,600 MW by 2035, with accelerator racks taking a larger share of the mix.
Year
Market size
2020
USD 9.77 billion
2025
USD 15.46 billion
2026
USD 17.34 billion (+12.16% year on year)
2030
USD 25.10 billion
2035
USD 37.11 billion
Source: DC Market Insights, Healthcare Data Center Market report, Oct. 22, 2026.
Why Do AI and Research Workloads Raise Healthcare Data Center Spend?
AI infrastructure changes the value of each megawatt. DC Market Insights estimates a conventional healthcare MW carries about USD 3.05 million a year of hardware, while an AI MW carries about USD 8.30 million. That premium comes from GPU systems, high-speed networking, large research datasets and the supporting power and cooling required for accelerated computing. The result is that market value grows faster than healthcare IT load as the accelerator share rises from about 5% in 2025 toward 22% by 2035.
Which Component Leads Healthcare Data Center Spending?
IT hardware remains the largest component, but colocation and hosting services grow faster as providers absorb EHR, imaging, backup and research workloads that institutions no longer want to operate in ageing hospital server rooms.
Component
2025 value
Share 2025
2035 value
CAGR
IT Hardware
USD 10,931.24M
70.7 %
USD 24,479.40M
8.40 %
Colocation and Hosting Services
USD 3,136.32M
20.3 %
USD 9,496.08M
11.72 %
Electrical and Mechanical Infrastructure
USD 967.87M
6.3 %
USD 2,058.14M
7.84 %
Construction and Fit-Out
USD 427.77M
2.8 %
USD 1,078.98M
9.69 %
DC Exclusive: Hospital Data Center Exit Tracker
DC Market Insights tracks 14 named healthcare infrastructure moves from 2014 through 2026. Ten moved workloads to public cloud, two went to colocation and two built new owned sites. The pattern explains why owned data centers can lose share even while the overall market expands: general-purpose EHR estates leave older halls, while AI and research clusters arrive as new owned, wholesale or colocated capacity. The model therefore takes the owned-site share from 60.0% in 2025 toward 45.0% by 2035.
Workload
2025 value
Share 2025
2035 value
CAGR
EHR and Clinical Applications
USD 4,638.95M
30.0 %
USD 8,907.02M
6.74 %
Medical Imaging and PACS
USD 2,783.38M
18.0 %
USD 6,309.14M
8.53 %
AI Genomics and Research Computing
USD 2,297.83M
14.9 %
USD 10,777.50M
16.71 %
Claims and Revenue Cycle
USD 2,010.22M
13.0 %
USD 4,082.39M
7.34 %
Backup and Disaster Recovery
USD 2,164.85M
14.0 %
USD 4,453.51M
7.48 %
Collaboration and Other Workloads
USD 1,567.97M
10.1 %
USD 2,583.04M
5.12 %
Which Region Leads the Healthcare Data Center Market?
North America leads because the United States combines a large installed hospital base, near-universal certified EHR adoption and significant pharmaceutical research infrastructure. Asia Pacific grows fastest as India, China and other markets add local capacity under health-data localization and digital-health programs.
Indicator
2025 / Base
Outlook
Leading region
North America, 46.0% (USD 7.11B)
USD 15.77B by 2035; remains the largest regional spending pool
Fastest-growing region
Asia Pacific, 11.72% CAGR
Reaches USD 9.83B by 2035 as India and China add domestic health-data capacity
Fastest large country
India, 18.37% CAGR
USD 247.41M in 2025 to USD 1.34B by 2035
Largest country
United States, USD 6.49B in 2025
Remains the largest national market through the forecast
How Could the 2035 Forecast Change?
The 2035 outcome depends on how quickly hospital EHR estates move to public cloud, how much pharmaceutical AI is purchased as cloud capacity rather than dedicated infrastructure, and how strongly resilience rules push institutions to maintain recoverable private or colocated capacity.
Scenario
Assumption
2035 value
CAGR 2025-2035
Low
Faster EHR migration to public cloud; more pharma AI bought as cloud capacity
USD 30.80B
7.13 %
Base
Healthcare IT load reaches 6,600 MW; 22% on AI racks; 55% leased
USD 37.11B
9.15 %
High
Stricter 72-hour restore requirements and more drug makers build owned AI factories
USD 42.68B
10.69 %
Competitive Landscape and Recent Developments
The five largest colocation providers account for about 31% of the USD 3.14 billion healthcare colocation and hosting market in 2025, leaving the sector fragmented. Competition spans colocation, EHR hosting, cloud services, AI hardware and the power and cooling systems required for hospital and life-sciences infrastructure.
Companies profiled include:
Equinix; Digital Realty; Iron Mountain Data Centers; CyrusOne; NTT DATA; Epic Systems (Epic Hosting); Oracle (Oracle Health); Microsoft (Nuance); Amazon Web Services; Google Cloud; Dell Technologies; Hewlett Packard Enterprise; NVIDIA; Cisco Systems; Schneider Electric; Vertiv.
In July 2026, WellSpan Health completed the move of more than 300 applications and 7.5 PB of data to AWS in 17 weeks.In April 2026, the U.S. Department of Veterans Affairs requested USD 4.2 billion for its EHR in fiscal 2027, including USD 745 million for infrastructure readiness.In February 2026, Eli Lilly’s LillyPod AI factory with more than 9,000 petaflops went live in Indianapolis.In February 2026, five Ontario hospitals in Transform Shared Service Organization moved their EHR to Oracle Cloud Infrastructure, cutting page-load time by 71%.In January 2026, NVIDIA and Eli Lilly agreed to invest up to USD 1 billion over five years in an AI co-innovation lab.In November 2025, India notified the DPDP Rules with an 18-month phased timeline.
Frequently Asked Questions
What is the size of the Healthcare Data Center Market?
USD 15.46 billion in 2025 and USD 17.34 billion in 2026, projected to reach USD 37.11 billion by 2035 at a 9.15% CAGR.
Which component leads the market?
IT hardware, with USD 10.93 billion or 70.7% of 2025 spending.
Which workload grows fastest?
AI genomics and research computing, at 16.71% a year through 2035.
Which healthcare end user spends the most?
Hospitals and health systems, with USD 7.27 billion or 47.0% of 2025 market value.
Which region leads?
North America with USD 7.11 billion or 46.0% of 2025 value; Asia Pacific grows fastest at 11.72% a year.
Who are the leading suppliers?
Equinix, Digital Realty, Iron Mountain Data Centers, CyrusOne and NTT DATA are among the leading colocation providers, alongside major healthcare hosting, cloud, hardware and infrastructure vendors.
Methodology
DC Market Insights builds the healthcare data center market bottom-up from 3,300 MW of healthcare IT load in 2025 and spending per MW for hardware, colocation and hosting, electrical and mechanical infrastructure, and construction and fit-out. The model separates conventional and AI MW, applies leased-capacity economics, and reconciles end-user, workload, deployment, regional and country splits to the total market before applying forecast assumptions.
Download Sample Report – Healthcare Data Center Market
Related Reports from DC Market Insights
Data Center Colocation Market
AI Data Center Market
Data Center Outsourcing Market
Multi-Tenant Data Center Market
Data Center Virtualization Market
DC Market Insights Data & Tools
Explore live datasets and decision tools used across DC Market Insights research:
Data Center Database
Data Center Map
Data Center Operators
Global Capacity Tracker
Deal Tracker
Power & Policy Tracker
PUE Calculator
Construction Pipeline
Deal Comps
Site Risk
Electricity Rates
Data Center Footprint
About DC Market Insights
DC Market Insights is a dedicated research and consulting firm that empowers data center leaders with actionable intelligence. We combine rigorous market research, advanced analytics and practical advisory support to help organizations make confident decisions in an increasingly complex digital infrastructure landscape. Our goal is to transform data into clarity, giving clients the ability to act decisively on strategy, investment and execution.
Contact Us
DC Market Insights
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Technology
City of Hope Cancer Center Chicago Unites Industry Leaders for Health Technology Innovation Roundtable
Published
16 minutes agoon
October 23, 2026By
CHICAGO, Oct. 23, 2026 /PRNewswire/ — Faster access to care, more affordable treatment and policies that support innovation were central themes of a Health Technology Innovation Roundtable convened by City of Hope® Cancer Center Chicago on Thursday, October 15, at its hospital in Zion.
The discussion brought together Congressman Brad Schneider (IL-10) and leaders from City of Hope, Vantive and Zocdoc to examine how technology can help bend the health care cost curve, connect patients with care sooner and expand access to specialized treatment.
“Thank you to City of Hope in Zion for graciously hosting our recent roundtable to discuss how emerging health technologies are shaping patient care, access, and affordability,” said Schneider. “I am proud to represent a district where so many people work in the life sciences field to advance innovation. This convening was an important opportunity to hear directly from health technology innovators about the progress they are making to better connect patients with lifesaving care and how we can work together. I will continue to partner with City of Hope and the health technology experts throughout our district to ensure more people have access to the cutting-edge treatment and testing they deserve.”
The conversation spanned digital appointment scheduling, home dialysis, surgical robotics, artificial intelligence and remote monitoring. Zocdoc’s digital marketplace connects patients with available appointments, helping fill openings that might otherwise go unused. Vantive’s work in kidney care, including home dialysis, illustrated how technology can expand options for where and how patients receive treatment. City of Hope’s experience with advanced surgery and wearable devices highlighted opportunities to bring specialized expertise closer to patients and support recovery at home.
“Technological advancements continue to evolve rapidly, and keeping up with them can feel like a job unto itself,” said Pete Govorchin, president of City of Hope Chicago. “Having an opportunity to pause and reflect on the progress we have seen thus far, as well as look ahead to what’s next alongside a distinguished panel of respected professionals, is critical.”
The discussion also addressed barriers that can keep innovation from reaching patients, including state licensing requirements, limited broadband, outdated regulations and reimbursement challenges. Access for rural communities and veterans was a recurring concern, alongside the need to measure how new technologies improve outcomes and reduce avoidable costs.
“As both a developer and adopter of advanced surgical technologies, City of Hope is well positioned to provide practical, evidence-based insights into how robotic surgery and other procedures, delivered remotely, could improve access, enhance quality, and support the future of patient-centered care,” said Dr. Yuman Fong, a City of Hope surgical oncologist.
Joining Schneider, Govorchin and Fong were Chris Toth, CEO of Vantive; Kyle Jackson, Vantive’s executive director of government affairs and market development; and Ilyssa Meyer, Zocdoc’s director of government affairs.
“I was proud to be part of an important convening of health technology experts discussing how we can continue to work together to connect more patients to care and innovative treatment. Rep. Schneider’s leadership on the bipartisan, bicameral Health ACCESS Act is an important next step in turning the innovations discussed at the recent roundtable into broader access to care,” added Meyer. “By reducing barriers to digital health services and online appointment scheduling, the bill can help connect more patients with the care they need.”
About City of Hope
City of Hope’s mission is to make hope a reality for all touched by cancer and diabetes. Founded in 1913, City of Hope has grown into one of the largest and most advanced cancer research and treatment organizations in the United States, and one of the leading research centers for diabetes and other life-threatening illnesses. City of Hope research has been the basis for numerous breakthrough cancer medicines, as well as human synthetic insulin and monoclonal antibodies. With an independent, National Cancer Institute-designated comprehensive cancer center that is ranked among the nation’s top cancer centers by U.S. News & World Report at its core, City of Hope’s uniquely integrated model spans cancer care, research and development, academics and training, and a broad philanthropy program that powers its work. City of Hope’s growing national system includes its Los Angeles campus, Orange County, California, campus, a network of clinical care locations across Southern California and cancer treatment centers and outpatient facilities in the Atlanta, Chicago and Phoenix areas. City of Hope’s affiliated group of organizations includes Translational Genomics Research Institute and AccessHope™. For more information about City of Hope, follow us on Facebook, X, YouTube, Instagram and LinkedIn.
View original content to download multimedia:https://www.prnewswire.com/news-releases/city-of-hope-cancer-center-chicago-unites-industry-leaders-for-health-technology-innovation-roundtable-302917568.html
SOURCE City of Hope Cancer Center Chicago
Technology
Kin Becomes First U.S. Home Insurer to Enable WebMCP for AI Shopping
Published
16 minutes agoon
October 23, 2026By
Consumers can now use ChatGPT to efficiently shop Kin’s digital home insurance experience
CHICAGO, Oct. 23, 2026 /PRNewswire/ — Building on its recent announcement that AI shopping agents like Meta’s Muse are welcome to shop on Kin.com, Kin is making its digital home insurance experience even easier for AI to shop. Kin, the direct-to-consumer provider of insurance and home finance solutions for homeowners, today announced that it has enabled WebMCP in its digital quoting experience. The new capability gives ChatGPT a faster and more efficient way to interact with Kin.com on a consumer’s behalf.
Homeowners can go from their AI agent prompt to a customized Kin home insurance quote ready for purchase in minutes due to the data-informed Kin.com quoting process.
“We said that Kin will win the AI shopping experience, and we meant it,” said Kin Founder and CEO Sean Harper. “People are going to increasingly ask AI to do the tedious work of shopping for them. We want someone to be able to tell ChatGPT, ‘Help me shop for home insurance,’ and make it incredibly easy for that AI agent to shop Kin.”
Unlike plug-ins that require installation, WebMCP is an open web standard which lets AI agents work directly with Kin.com, creating a more efficient way to interact with Kin’s digital experience, and making it easier for them to help consumers shop for home insurance. For consumers, that means AI can do more of the repetitive work involved in insurance shopping, while Kin makes its experience easier for those AI agents to navigate.
Built for the Way Consumers Will Shop
The launch builds on Kin’s announcement that it would welcome Meta’s Muse and other AI shopping agents to Kin.com rather than block them. In Kin’s testing, Muse was able to retrieve home insurance quotes after asking consumers only a handful of questions. Likewise, with ChatGPT, Kin testing found consumers could easily price out home insurance in a clear side-by-side view with minimal questions. The technology improves daily, and Kin is committed to implementing open standards like WebMCP, which ChatGPT supports for paid users on its browser-based platform. While free ChatGPT accounts cannot use this protocol, consumers can still easily get a quote at kin.com.
Kin was built to sell home insurance directly to consumers through a digital experience, without relying on external agents. It also analyzes thousands of data points about individual homes, meaning much of the information needed to generate a quote can already be gathered without asking the homeowner.
“We didn’t have to reinvent Kin for AI shopping,” Harper said. “We already built a direct digital experience, we already have the data to answer most of the questions about a home, and we don’t depend on someone in the middle to sell the product. AI shopping rewards a lot of the things we’ve been building for years.”
A New Way to Shop for Insurance
Kin expects AI agents to become increasingly capable of helping consumers gather information, understand coverage and shop across insurance providers. As those capabilities improve, Kin plans to continue making its digital experience easier for both people and the AI agents working on their behalf.
“Five years from now, opening a bunch of browser tabs and filling out the same information over and over is going to seem pretty antiquated,” Harper said. “You’ll tell your AI what you need and it will go do the work. We’ve built Kin to win in that world.”
About Kin
Kin helps homeowners save money, simplify tasks, and protect their most valuable assets. By offering direct-to-consumer digital home and auto insurance alongside home finance services, the company focuses on supporting underserved homeowners in states with high catastrophic risk. Kin provides more convenient and affordable home and auto insurance coverage by eliminating the need for external agents and analyzing thousands of data points to provide transparent, accurate pricing. Kin’s AI-native technology platform delivers a seamless customer experience, customized options, and fast, high-quality service. To learn more, visit www.kin.com.
View original content to download multimedia:https://www.prnewswire.com/news-releases/kin-becomes-first-us-home-insurer-to-enable-webmcp-for-ai-shopping-302917809.html
SOURCE Kin Insurance, Inc.
Healthcare Data Center Market to Reach USD 37.11 Billion by 2035 as AI Genomics, EHR Resilience and Hosted Capacity Reshape Healthcare Infrastructure – DC Market Insights
City of Hope Cancer Center Chicago Unites Industry Leaders for Health Technology Innovation Roundtable
Kin Becomes First U.S. Home Insurer to Enable WebMCP for AI Shopping
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