EDMC lays off hundreds of administrative and support staff
Education Management Corp. laid off hundreds of employees last week as the nation's second-biggest operator of for-profit post-secondary schools moves to reduce costs in the face of declining student enrollment and the sluggish economy.
The job cuts included positions in Pittsburgh, but spokesman Tyler Gronbach declined to provide specific numbers beyond saying “several hundred” employees were affected. EDMC headquarters and its Art Institute of Pittsburgh are Downtown, and the company's online education hub is based in the Strip District.
EDMC, which operates 110 schools in 32 states and Canada, saw average student enrollment fall to 120,920 as of June 30 from 133,500 a year earlier.
“We took this action based on trends in our business,” Gronbach said of the layoffs. “We're still encountering the headwinds of a struggling economy and declining enrollment.”
The layoffs involve administrative and support staff and represent less than 2 percent of EDMC's payroll of 23,000, Gronbach said. EDMC laid off about 60 employees earlier this year, most of them at local operations.
EDMC has stumbled financially for about two years. The company has warned it would lose between $11 million and $12 million in the July-September quarter.
It reported a loss of $2 million, on revenue of $595 million, in the fiscal fourth quarter ended on June 30, compared with a loss of $1.19 billion, on revenue of $639 million, during the same period a year ago. For the full year, EDMC lost $268 million, on revenue of $2.50 billion, compared with a loss of $1.52 billion, on revenue of $276 billion, the previous year.
Results have included one-time charges to account for lower student enrollments and bad student debt in recent years. For instance, EDMC took a goodwill impairment charge of $495 million to account for projected enrollment trends in third-quarter 2012, when it lost $417 million. Goodwill is the price, or premium, that is paid for an asset above its true value.
Such earnings charges drew a Securities and Exchange Commission investigation that began in March and is ongoing. It was not clear what period the SEC subpoena covered.
The company has made several recent leadership changes as it looks to improve its performance. This month, it tapped former H.J. Heinz Co. CEO William Johnson to become its next chairman, replacing Todd Nelson, whose tenure was marked by a period of aggressive expansion. In June, it announced the resignations of Chief Accounting Officer Randall Killeen and John Mazzoni, president of Education Management's Art Institutes unit.
Shares of EDMC closed on Tuesday at $12.36, up 43 cents.
Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or email@example.com.
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