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EDMC makes another round of layoffs

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Tuesday, June 24, 2014, 4:51 p.m.
 

About 80 employees of Education Management Corp. were laid off on Tuesday, the latest in a series of cuts by the Downtown-based for-profit education company as it battles a decline in enrollment and profits.

Operations and support staff at EDMC's offices in the Strip District and Green Tree were affected, said spokesman Chris Hardman.

“This is all part of our ongoing ability to maintain close alignment between our resources and market demand,” Hardman said. “As such, we have to structure our organization to most efficiently meet the needs of our students.”

EDMC has struggled with declining enrollment and revenue since the recession.

In the quarter that ended March 31, EDMC reported the number of new students fell 9.8 percent from the year before and net income declined $10.1 million, or 33 percent. The company's stock has fallen 90 percent in the past year, ending Tuesday at $1.78 per share.

The company has consolidated programs and slashed staff even as it continues to serve 125,000 students across 110 campuses.

Hardman could not confirm the total number of layoffs at EDMC in the past year. In the spring, it eliminated 200 jobs at its Art Institutes, which total more than 50 nationwide. Forty employees in Pittsburgh were laid off on Feb. 18, and the company cut several hundred in October without announcing a specific number. In July, as many as 90 workers were laid off from its corporate offices Downtown.

EDMC has 23,000-employees, with 2,000 in Pittsburgh. Employees interviewed outside the Strip District offices about 4 p.m. on Tuesday said they were unaware of the layoffs and declined to comment.

EDMC is headed for a third consecutive year of revenue declines and struggling under $1.3 billion in debt. The company expected to violate certain debt covenants as of June 30 but said in a regulatory filing this week that it received lender consent to extend the deadline to Sept. 15.

Trace Urdan, an analyst at Wells Fargo Securities, said cutting staff was “absolutely necessary” to address EDMC's revenue problems.

“The demand for their programs is stressed at the moment,” Urdan said.

The company is also a defendant in a federal lawsuit accusing EDMC of paying recruiters based on the number of students they enrolled, violating federal law.

EDMC is not the only for-profit education company that is struggling. Corinthian Colleges, which runs 107 campuses, said it may have to shut down after the Education Department restricted access to federal funding over concerns about its marketing practices.

Corinthian has since reached a deal with federal regulators to keep operating while it develops a plan to sell some schools and close others.

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or cfleisher@tribweb.com.

 

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