By Tess Stynes
Apollo Education Group Inc. swung to a loss in the quarter ended
in February as continued enrollment declines contributed to a
bigger-than-expected revenue drop.
Shares of the for-profit education company fell 16% to $23.39 in
premarket trading as its outlook for the current quarter came in
below expectations.
The company 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.
Also, an Obama administration initiative announced around the
time Apollo last released quarterly results would make community
college free for many students. Those schools compete directly with
Apollo's flagship University of Phoenix.
During the quarter ended Feb. 28, new enrollments at University
of Phoenix fell 13% to 28,300, while total enrollments decreased
15% to 213,800.
In a research note, BMO Capital Markets said that new
enrollments at University of Phoenix came in below its expectations
for a decline of 4.5%. The decline in total enrollment was also
deeper than its expectations for decrease of 13%.
BMO also said the declines in the latest period were bigger than
the year-to-year decreases of 5% for new enrollment and 14% for
total enrollment the company reported for the previous quarter.
In all, Apollo reported a quarterly loss of $33.6 million, or 31
cents a share, compared with a year-earlier profit of $14.6
million, or 13 cents a share. Excluding items such as
restructuring-related charges and write-downs, the per-share loss
was 10 cents, compared with a year-earlier profit of 30 cents.
Analysts polled by Thomson Reuters had projected a loss of 16
cents a share.
Revenue decreased 14% to $578.6 million, below expectations of
$580 million to $595 million.
Apollo lowered its revenue view to $2.63 billion to $2.68
billion for the year, from its previous estimate of $2.74 billion
to $2.80 billion.
For the quarter ending in May, it forecast revenue of $690
million to $705 million, while analysts expect $741 million.
Write to Tess Stynes at tess.stynes@wsj.com
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