Apollo Education Group Inc. said its earnings fell 27% as the
for-profit education company continued to struggle with declining
enrollment during the quarter ended in May.
Shares fell 4% to $14.92 in recent after-hours trading as
revenue missed expectations and the company lowered its guidance
for the fiscal year.
For the year ending in August, Apollo Education now expects
operating earnings of $190 million to $200 million on revenue of
$2.6 billion to $2.62 billion, compared with its previous estimate
for operating income of $200 million to $230 million on revenue of
$2.63 billion to $2.68 billion.
Apollo, which runs schools including the University of Phoenix,
has seen its enrollment numbers pressured as stricter regulation
has reduced for-profit colleges' share of U.S. financial aid for
students that such schools depend on for most of their revenue. The
company has moved to shut some of its locations and trim jobs,
while also expanding abroad
Since its last financial report, Apollos's chief financial
officer has resigned, rival Corinthian Colleges Inc. filed for
bankruptcy protection and another competitor, ITT Educational
Services Inc., became the target of a Securities and Exchange
Commission fraud investigation. President Barack Obama also has
proposed this year making junior college, a key competitor to
for-profit schools, free for most students.
During the quarter ended May 31, new enrollments at the
University of Phoenix fell 13% from a year earlier to 29,400, while
total enrollments decreased 14% to 206,900.
Overall, Apollo reported a profit of $48.1 million, or 44 cents
a share, down from $66 million, or 59 cents a share, a year
earlier. Excluding acquisition- and restructuring-related charges
and other items, per-share earnings fell to 53 cents from 78 cents.
Analysts polled by Thomson Reuters expected per-share profit of 47
cents.
Revenue decreased 14% to $681.5 million, below expectations for
$690 million to $705 million.
Write to Tess Stynes at tess.stynes@wsj.com
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