Falling enrollment weighs on DeVry revenue
DOWNERS GROVE, Ill. (AP) — DeVry Inc.'s revenue dropped for the sixth straight quarter as fewer students enrolled in its classes. But the decline wasn't as bad as analysts had expected and there were signs of improvement in some student trends.
Shares jumped nearly 12 percent after-hours on the report, rising $3.08 to $29.20.
The company's fiscal second-quarter profit rose nearly sixfold to $50.3 million — but that was because a huge charge to write down the value of one of its school divisions had dragged down earnings at the end of 2011. Stripping out such one-time items, the company's profit dropped 10 percent in the October-December quarter, better than expected.
DeVry and other for-profit education companies have struggled for more than a year with the impact of new government regulations and increased scrutiny from the media. Critics say the companies are providing poor education that doesn't translate into good jobs for graduates, are graduating too few students and burdening many with excessively high debt that they can't repay. Many of the education companies have tightened their admission standards in response, which has dented admissions and revenue. They've also started downsizing their operations as fewer students sign up.
DeVry says it expects at least $80 million in cost cuts this fiscal year.
For the quarter through Dec. 31, profit came to 78 cents per share, compared with $8.7 million, or 13 cents per share, in the same months in 2011. Excluding one-time items, profit totaled 87 cents this quarter — less than the 92 cents per share that it reported the year before but far surpassing the average analyst estimate of 57 cents, per FactSet.
Revenue dropped 4 percent to $505.2 million from $524 million. Again, analysts expected an even worse decline to $497.7 million. Total enrollments fell 5.4 percent to 124,000, but new enrollments rose 5.6 percent to 16,000 — a positive sign for the company.
At the biggest division, DeVry University, the number of undergraduate students enrolled fell nearly 18 percent in the November session and 15 percent for the January school session.
New undergraduate enrollments fell 15.5 percent for the November school session, but declined less — nearly 5 percent — in the January session.
DeVry graduate student numbers also dropped steeply for both terms.
Enrollments at the company's smaller divisions, including its medical school and nursing school, grew.
The stock had closed up 59 cents to $26.12 during the regular trading day before the news, still down 32 percent over the past 12 months.