HERNDON, Va. (AP) — School operator Strayer Education Inc. said Thursday its second-quarter profit skidded 28 percent lower on a hefty drop in enrollment, a trend weighing heavily on the for-profit education business.
The company fell short of estimates and lowered its third-quarter guidance. Its stock price tumbled.
Enrollment at for-profit schools has been hurt by a federal government crackdown on student lending. The U.S. Department of Education put new regulations in place last summer that forced education companies to tighten enrollment standards or risk losing the ability to dole out federal student aid, a key source of their revenue. The rules were a response to criticism that for-profit schools were leaving students ill-prepared and with slim odds of finding a job and, by extension, paying off college loans.
For the quarter ended June 30, Strayer reported net income of $21.2 million, or $1.85 per share, down from $29.6 million, or $2.53 per share, a year earlier.
Lower enrollment pushed revenue 11 percent lower to $146.3 million, compared with $163.8 million in the second quarter of 2011.
Analysts surveyed by FactSet had forecast slightly better results: earnings of $1.86 per share on revenue of $147.7 million.
Strayer said enrollment at Strayer University, which operates in 23 states as well as online, decreased 7 percent to 44,236 students for the summer term, down from 47,790 a year ago. New student enrollments increased 9 percent but were more than offset by an 11 percent decline in continuing enrollments, reflecting a continuing trend.
The for-profit education slump has not halted Strayer’s expansion plans. It said it opened four new campuses for the summer term — two each in Minneapolis and Chicago — and plans to open four more by year’s end.
Shares in the company fell $9.99, or 11 percent, to $80.71 in afternoon trading after falling as low as $69.80.
