Nine months ago we wrote about the new movement for the companies formerly know as "for-profits" in the education space to convert the actual schools into non-profit entities and declare their intent for parent companies to become a new form of Online Program Management (OPM) providers. Kaplan University, Grand Canyon University, Ashford University (Bridgepoint Education) all made similar declarations, but the problem was that each one was a single-client OPM - serving only their supposedly independent non-profit schools. That's not much of a new market segment.
Today the movement became real as Grand Canyon Education announced their agreement to buy Orbis Education Services for more than $362 million.
Grand Canyon Education, Inc. (NASDAQ: LOPE), a publicly traded shared services partner dedicated to serving colleges and universities, announced today that it has entered into a definitive agreement to acquire Orbis Education Services, LLC, an education services company that supports healthcare education programs for 17 regionally accredited universities across the United States ("Orbis Education"), for $362.5 million in cash. The transaction is expected to close during the first quarter of 2019, subject to customary closing and regulatory conditions.
The acquisition combines the strengths of two of the nation's most innovative service providers in higher education in an effort to align their expertise and better address a nationwide shortage in licensed healthcare professionals.
"This is a natural extension of what Grand Canyon Education is already doing as an education services partner," said Brian Mueller, GCE's CEO. "We are very impressed with the quality of nursing and healthcare education that Orbis Education's client institutions are providing. GCE can help grow that by providing investment capital and advanced technologies with behind-the-scenes support that will help University partners accomplish their goals and increase the number of licensed healthcare professionals they educate with the same high-quality outcomes.
While they use the phrase "education services partner" instead of OPM, Grand Canyon in one move became a competitive provider worth watching. This news is significant.
The large for-profit chains all developed scalable processes for the same functions that OPM vendors provide for non-profit schools - marketing & recruitment, course & curriculum development, technology platform & data analysis, and student support & retention services - and the basic idea of this market change is for the for-profit parent companies to provide these same services for other non-profit schools. With the Orbis acquisition, Grand Canyon will pick up 17 partner institutions.
Orbis Education is a niche-market full-service OPM provider serving pre-licensure healthcare programs (mostly nursing) and was founded in 2003. Parter institutions include Concordia University, Northeastern University, Marquette University and Mercer University.
In a broader sense, this acquisition follows the Wiley acquisition of Learning House for $200 million announced this fall. We'll need to update our graphics, but the OPM market is profitable and growing, but it is also messy and chaotic. OPM vendors are in a battle to have the financial strength and customer scale to survive the chaos and grow in an expensive model.
We'll follow this story and others like it while sharing information on the likely impacts on the overall OPM market. For now the biggest issue is establishing that this for-profit-turned-OPM segment is real.