For-profit school enrollment up
Despite a federal crackdown on for-profit school’s recruiting practices, student enrollments at Education Management Corp. jumped 14 percent during the summer quarter along with profit and revenue, the Pittsburgh-based company said Wednesday.
Education Management is the nation’s second-largest operator of for-profit schools, including the Art Institute of Pittsburgh. As of Oct. 1, the company had 158,300 students enrolled in its 101 locations in the United States and Canada, compared with 138,800 in July, and 136,000 in October 2009.
In a statement, CEO Todd Nelson called the latest student body figures, “another enrollment milestone of over 150,000 students” and “evidence of the quality of our broad range of academic offerings.”
Quarterly revenue, which comes from students’ tuition, jumped nearly 25 percent, to $666 million from about $534 million the year earlier, the company said yesterday after stock markets closed.
The stock closed yesterday at $11.72 a share, down 70 cents.
Wall Street is wary of how for-profit schools will be affected by new federal regulations. A major change is that they can no longer pay recruiters incentives based on how many students they enroll.
A draft of the restrictions on such sales practices released in June did slow enrollment growth at Apollo Group Inc., it said last week. The nation’s largest operator of for-profit schools, which owns the University of Phoenix, had eliminated enrollment targets for recruiters.
Education Management is “going to have to dial back their growth,” said Piper Jaffray & Co. analyst Peter Appert before the for-profit school owner released results.
In the first fiscal quarter ended Sept. 30, however, Education Management’s net income more than doubled. It earned $36.4 million, or 25 cents a share, versus $15.8 million, or 13 cents a share, the year earlier.
The current results were better than expected by most analysts polled by Bloomberg who estimated Education Management would earn 22 cents a share.