Dive Brief:

  • Grand Canyon Education announced in SEC filings this week that it has entered into a memorandum of understanding with Valparaiso University, a private Lutheran institution in Indiana, to provide online program management (OPM) services.
  • The agreement involves services relationships between Valparaiso and GCE directly and through Orbis Education, an OPM specializing in healthcare education that GCE acquired in 2019.
  • GCE has in recent years said it plans to add additional university partners, and Valparaiso would be the first of that set.

Dive Insight:

The MOU calls for Orbis to help Valparaiso establish and manage hybrid nursing and healthcare programs at two sites in the Midwest, and for GCE to help the university create and manage certain online graduate programs. The terms of the Orbis agreement would be “generally consistent” with those it has with its 25 other university partners, according to the filings, while key parameters of the second agreement will be negotiated.

Valparaiso and GCE representatives did not answer Education Dive’s emailed questions by publication time on Tuesday. 

GCE executives have been plotting additional university partnerships for some time, however, telling analysts last August they were seeking three or four college partners, likely private institutions in the Midwest or Northeast, and could launch programs as early as the fall of 2020. During a call in February, GCE CEO Brian Mueller was more cautious, telling analysts the company was being “selective” in finding new partners. 

The company announced plans to buy Orbis Education in late 2018, nearly six months after it separated Grand Canyon University as an independent institution to which it provides OPM services. 

But having services agreements with both Orbis and GCE in the Valparaiso MOU was unexpected, said Jeff Silber, managing director at BMO Capital Markets

Trace Urdan, a managing director with investment bank and consulting firm Tyton Partners, agreed. “It was kind of interesting to see them stacked together like this,” he said, noting that he hadn’t previously seen GCE using its relationship with Orbis in this way. “Could that be a lever that GCE has that’s unique in the OPM world?” 

Both Silber and Urdan, who studies OPMs, pointed to strong demand for online education services as a result of the pandemic, which drove many schools to remote instruction. GCE executives, during their latest earnings call, cited an increase in inquiries for online education services in the wake of the crisis. 

OPMs have reported an uptick in business, and some, like 2U, are looking for ways to help college and universities move programs online faster.  

However, Silber noted that while demand has accelerated, “there’s a lot of supply out there, so it’s still very competitive.”

New partnerships and acquisitions in recent months show the extent to which institutions are looking to quickly grow their distance learning capacity. The University of Arizona announced plans last month to acquire the for-profit, online Ashford University, whose parent company will become the resulting entity’s OPM. And the University of Massachusetts said in June it would partner with the nonprofit Brandman University to provide more online options for adult learners.

The proposed Valparaiso deal isn’t so extensive, but Urdan said it is still meaningful for GCE because of the Indiana university’s strong brand and regard. “In terms of (GCE’s) ability to win other work and strike other contracts, I think it’s a home run,” he said.

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