Education Management posts a $284 million quarterly loss
For-profit school operator Education Management Corp. posted a loss of $284 million in the January-March quarter, mainly because of non-cash accounting charges and lower revenue.
The Downtown-based company's revenue fell 9 percent to $639 million from $702 million. Student enrollments declined across its schools by 9.5 percent, compared with the year earlier.
EDMC is the nation's second-largest for-profit educator, with 110 schools in 32 states and Canada, including the Art Institute of Pittsburgh. The company employs 23,000 people, including 2,400 in Pittsburgh.
The quarterly loss, equal to a loss of $2.28 a share, was narrower than the $417 million deficit, or $3.31 a share, the year earlier.
EDMC booked a charge of $295 million during the quarter to write down the value of goodwill on its books. Spokeswoman Jacquelyn Muller said the company took the charge because the company stock price had fallen below its book value at the end of the quarter.
The impairment charge lowered the value of goodwill to $669 million as of March 31 from $964 million as of Dec. 31.
Goodwill is the price, or premium, that is paid for an asset above its true value. EDMC recorded $2.6 billion in goodwill in connection with its 2006 acquisition by private equity firms led by Providence Equity Partners, Goldman Sachs Capital Partners and Leeds Equity Partners, according to securities filings.
EDMC received a subpoena in late March from the Securities and Exchange Commission seeking documents and information related to the corporation's valuation of goodwill and its allowances for bad student loans.
Muller declined to comment about the probe.
EDMC shares closed at $5.71 Wednesday, up 4 cents. Earnings were released after markets closed.
The company also faces federal lawsuits by former employees and the Justice Department that seek to recover about $11 billion in federal and state student aid it received. The claimants argue Education Management obtained the money by violating a federal ban on paying recruiters based on the number of students they enrolled. The company denies the claim.
Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or at firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Experts: If health insurers’ safeguard goes broke, consumers could pay
- Tech sector drives gains on Wall Street
- Rules could kick door open for nuclear power
- California drought may be felt in Pittsburgh restaurants, groceries
- Paper’s prevalence unlikely to diminish
- Nike, Under Armour invest in watching exercisers’ steps
- Visa limits vex businesses
- Pittsburgh area home prices climb in first quarter
- Pittsburgh union serving TV, film production looking for lots of help
- Scented society is killing cheap perfume industry
- Mylan pressured to accept $40B buyout bid by Teva