Corinthian Colleges Inc. said Tuesday that its fourth-quarter net income shrank 90 percent as student enrollment fell because of the education company’s tuition increases and measures it took to comply with stricter government regulations.
Its revenue and its first-quarter forecast fell short of analysts’ estimates, and its shares tumbled to a 12-year low Tuesday morning before recovering half that drop.
Corinthian operates 122 Everest, Heald and WyoTech campuses and offers some degrees exclusively online.
The Santa Ana, Calif., company unexpectedly forecast a loss for the current quarter, which ends in September, and it said it plans to change prices and "replace programs" in its associate degree divisions to meet the government’s new "gainful employment" rule. That rule cuts off financial aid funds for schools whose students carry too much debt.
Corinthian’s shares have dropped about 70 percent this year, prompting speculation that private equity firms could attempt to take the company private. Analysts say the company, which offers degree programs in health care, criminal justice, culinary arts and other areas, is among those hit hardest by new federal rules on schools’ marketing and compensation for recruiters and students’ gainful employment.
The company said the number of new students signing up for classes in its fiscal fourth quarter fell 27 percent from a year earlier to less than 25,000, and total enrollment shrank 15 percent to nearly 93,500.
Net income fell to $3.4 million, or 5 cents per share, from $33.9 million, or 38 cents per share. Excluding costs for severances and selling student loans, it earned 13 cents per share. Revenue dropped 11.6 percent to $425.2 million from $481.1 million.
Analysts polled by FactSet expected adjusted earnings of 12 cents per share and revenue of $432.2 million.
The company said it was trying to tap new growth by recruiting more from high schools, resuming accepting people who haven’t graduated from high school and expanding its online programs.
In September, Corinthian stopped enrolling people who haven’t graduated because they were likelier than other students to default on student loans. That had hurt enrollments.
The company forecast that its new student enrollment will drop as much as 25 percent for the current quarter. It expects to post a loss of 2 cents to 4 cents per share and revenue of $414 million to $424 million.
Analysts had had much higher expectations; they were looking for an adjusted net income of 14 cents per share and revenue of $427.9 million.
For the year that ends in June 2012, Corinthian expects to earn 30 cents to 35 cents per share.
For the fiscal year that ended June 30, Corinthian posted a net loss of $111.2 million, or $1.28 per share, compared with profit of $146 million, or $1.66 per share, in its fiscal 2010. Revenue rose to 6.4 percent to $1.87 billion.
By late afternoon, Corinthian shares were down 19 cents, or 9 percent, trading at $1.92. Earlier, the stock fell to $1.57, its lowest point in more than 12 years. The last time it traded that low was in April 1999, a few months after its initial public offering.