WALL STREET JOURNAL: Apollo Education Swings to Loss as Enrollment Declines

Career College Central Summary:

  • 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.

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WALL STREET JOURNAL

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