Career Education Corp. (CECO:US), a for-profit college chain with more than 90 campuses, fell as much as 18 percent in extended trading after reporting a second-quarter loss and disclosing a regulatory investigation.
The company said it had a net loss of $100.2 million, or $1.52 a share, compared with net income of $55.4 million, or 73 cents, a year earlier, according to a statement yesterday. Career Education, in a regulatory filing (CECO:US), also said that the U.S. Securities and Exchange Commission is conducting an inquiry of its job-placement rates.
The U.S. Justice Department and state attorneys general have been investigating the marketing practices of for-profit colleges. Tom Harkin, the Iowa Democrat who heads the U.S. Senate education committee, issued a report this week critical of the industry’s academic outcomes and student recruitment and called for more regulation.
“We are facing the same stiff headwinds as others in private-sector higher education,” Steven H. Lesnik, Career Education’s chief executive officer, said in the statement. “Withering public criticism, combined with a game-changing regulatory environment aimed at reducing the role of private- sector educational institutions, is effectively constraining growth.”
Career Education, based in Schaumburg Illinois, slid as low as $3.84 after the close of regular trading yesterday. The shares have fallen 41 percent this year.
The second-quarter results included an $85.6 million non- cash writedown for reducing the value of its health education and art and design programs, the company said.
Its loss per share excluding the writedown was 18 cents, according to the statement. Analysts on average had estimated a break-even result, according to data compiled by Bloomberg.
Accrediting agencies and New York Attorney General Eric Schneiderman are also investigating the company’s job-placement claims, Career Education has previously said.
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