Education Management lost $13.1M in 3Q as student enrollment fell
Education Management Corp. reported a $13.1 million loss for the quarter ended Sept. 30, as student enrollment fell at its for-profit, postsecondary schools.
The results included one-time restructuring charges of $5.5 million after taxes. The expenses included payments for employee severance, which accounted for most of the charges, as well as for abandoning leases at three school facilities and for accelerating the depreciation of assets.
Based Downtown, the company laid off nearly 100 employees in Phoenix in late July.
EDMC, the nation's second-largest owner of for-profit schools, operates 110 schools in 32 states and Canada.
Total student enrollment at its schools, including the Art Institute of Pittsburgh, fell 12.7 percent, to 132,000 students as of October from 151,200 in October 2011, the company said.
For instance, the number of new students enrolling at its 50 Art Institutes this school year fell 14.6 percent to 17,000 from 19,800 the year earlier.
In a conference call with analysts Thursday, EDMC executives said the company would pull back on some capital expenses and evaluate expenses in light of weaker revenue, which fell 10.6 percent to $610 million from $682 million a year earlier.
“We're making progress,” said CEO Edward West, adding that he expects enrollment to turn upward toward the end of its fiscal year next June.
EDMC stock closed at $3.47 a share yesterday, up 29 cents.
EDMC faces federal lawsuits by former employees and the Justice Department that seek to recover about $11 billion in federal and state student aid the company received. The claimants argue EDMC obtained the money by violating a federal ban on paying recruiters based on the number of students they enrolled. The company denies the claim.
In the year-ago quarter, EDMC posted a profit of nearly $30 million. On a per-share basis, the loss equaled minus 11 cents, compared with a 21-cent profit a year earlier. Most Wall Street analysts had expected the company to lose 8 cents a share.
Thomas Olson is a staff writer for Trib Total Media.
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