Education Management Reports 9 Percent Enrollment Decline
Olson, Thomas, Tribune-Review/Pittsburgh Tribune-Review
Enrollment at Education Management Corp.'s for-profit schools fell more than 9 percent in the past year, partly because of changes in how recruiters are paid, CEO Todd Nelson told Wall Street analysts on Thursday.
The company's stock plunged more than 17 percent yesterday, closing at $21.20, down $4.40.
The conference call followed Pittsburgh-based Education Management's report on Wednesday that net income fell 26 percent to $63 million, or 49 cents a share, for the quarter ended Dec. 31. That compared with $85 million, or 61 cents a share, a year earlier. Revenue declined 4.5 percent, to $737 million from $772 million.
Education Management is the nation's second-largest operator of for-profit schools, with 107 locations in the United States and Canada, including the Art Institute of Pittsburgh.
Nelson said regulatory changes have affected the "productivity" of its admissions staff, along with the "tough economy." He added that long-term enrollment trends are "favorable."
Total enrollment fell 9.3 percent to 142,600 at the end of the year from 157,200 at the start. Online program enrollment fell a steeper 18.5 percent to 35,800 from 43,900.
For-profit school operators are facing profit pressures, said Jerry Herman, a Cleveland-based analyst at Stifel Nicolaus & Co.
He said the sluggish economy has cut into enrollments because fewer people believe that even a for-profit school degree will get them a job. School operators are now banned from paying recruiters for how many students they bring in.
Education Managment faces a federal lawsuit over incentive pay. The Justice Department claimed in a lawsuit filed in August that the company bilked the government out of more than $11 billion in federal student grants and loans since 2003. …