Corinthian posts 3Q profit, shares jump

Corinthian posts 3Q profit, plans to make up for student losses; shares soar

Associated Press

SANTA ANA, Calif. (AP) -- Corinthian Colleges Inc.'s shares soared Wednesday after the education company reported that it moved to a profit for its fiscal first quarter, beating market expectations.

The company, based in Santa Ana, Calif., operates Everest, Heald and WyoTech colleges and offers online degrees. It said that it beat its own expectations for profit, revenue and new student enrollments in the July-September quarter, and has plans to bolster growth.

Corinthian warned investors in August that it expects a number of challenges for this fiscal year, most notably a loss of federal funding for students who didn't graduate from high school. The company has responded by reducing tuition for some programs, working with lenders to provide funding at reduced interest rates and adding other programs to help students get the equivalent of a high school diploma.

Investors welcomed the better-than-expected results as Corinthian, and the entire for-profit industry, has been struggling for some time. The companies have faced increased scrutiny and stricter regulation that followed a surge in enrollment during the recession.

Corinthian said Wednesday that it earned $1.6 million, or 2 cents per share, for the period that ended Sept. 30. That's compared with a loss of $9.6 million, or 11 cents per share, in the same quarter last year.

Excluding costs for severance and other one-time items, profit came to 6 cents per share in the most recent quarter. Revenue increased 3 percent to $408.6 million from $398.2 million. Analysts polled by FactSet were expecting the company to earn 4 cents per share on revenue of $398.9 million.

Corinthian said that its total student population increased 1 percent to about 92,000 by the end of the quarter, while new student enrollments rose 3.5 percent to nearly 31,500.

While the company said it is pursuing a number of means to make up for its loss of students without high school degrees, it expects student enrollment to be flat during the current quarter, which ends in December. The company stopped enrolling students with high school diplomas or a GED on July 1 after it lost federal student aid funding for the program.

The company expects to earn 5 to 7 cents per share on an adjusted basis for that period on revenue of $402 million to $417 million. Analysts expect profit of 6 cents per share on $401.1 million in revenue.

Shares of the company increased 22 cents, or 9 percent, to $2.66 in late afternoon trading.

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