SCHAUMBURG, Ill. (AP) -- Career Education Corp. reported a massive second-quarter loss Tuesday, making it the latest for-profit educator to show poor financial performance amid a more difficult operating environment.
"We are facing the same stiff headwinds as others in private sector higher education," CEO Steven Lesnik said in a 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. We are dealing with these headwinds like others, but progress is slow."
Shares plunged in after-hours trading on the news.
Career Education and other companies saw their enrollment soar in the recession as people turned to training to find jobs. But as popularity of these for-profit schools grew, so did the criticism.
Some said the schools were graduating students with high levels of debt and poor job prospects and in some cases, graduating too few people at all. New federal regulations were put in place aimed at lowering student debt and improving their job prospects, which ultimately lowered enrollment at some schools.
And a Senate Democratic report released this week stoked concerns further. The staff report issued by Sen. Tom Harkin, D-Iowa, chairman of the Health, Education, Labor and Pensions Committee, determined that for-profit colleges put revenues above education, charging students high tuition and loan rates that could leave them in debt for years. It also noted while students are aggressively recruited, they often drop out without the degree or certificate they sought.
Career Education Corp. said this environment has taken a toll on its business. The company reported a loss of $100.2 million, or $1.52 per share, for the quarter that ended June 30. That's compared with net income of $55.4 million, or 73 cents per share, earned in the same quarter last year.
After adjusting goodwill and impairment charges, the company posted a loss of 18 cents per share versus profit of 73 cents per share last year. Analysts polled by FactSet were expecting the company to break even on a per-share basis for the period.
Career Education's total revenue dropped to $369 million from $484.9 million on enrollment declines across its programs. Analysts were expecting revenue of $383.6 million.
The company's total student population was down 24 percent for the quarter compared to last year. Its new student starts were down 40 percent, with declines in all segments except its international business.
Career Education said that it has improved its regulatory and compliance procedures and CEO Lesnik said the organization sets its standards high. He predicted that 2012 will be a year of transition for the company.
The company, based in Schaumburg, Ill., operates a number of education and career training programs around the globe, such as Le Cordon Blue North America, Harrington College of Design and Colorado Technical University.
Its shares plunged 18 percent to $3.84 in after-hours trading after the report. The company had closed regular trading up 11 cents at $4.71.
