DOWNERS GROVE, Ill. (AP) -- Shares of DeVry Inc. plunged in extended trading Monday after the for-profit education company said enrollment is falling at its schools and it will cut 570 jobs. The company also said that its fourth-quarter results will likely fall far short of market expectations.
Devry and its peers are struggling to cope with a tougher new regulatory environment. Enrollment at these schools soared during the recession as people tried to improve their employment opportunities. But they faced criticism that students were graduating with heavy debt loads and few job opportunities.
The federal government put new rules in place aimed at helping students to find jobs and repay their debt. Schools who fail to meet the rules risk losing federal money. Most for-profit education companies have stiffened enrollment guidelines as a result.
DeVry, based in Downer's Grove, Ill., said Monday that new enrollment for the summer term at DeVry University is expected to fall 15 to 17 percent compared to last year's term. And enrollment at its Carrington Colleges Group fell during its fiscal quarter that ended in June. In response to continued enrollment declines, DeVry is eliminating about 570 jobs across its institutions. The cuts amount to 5.4 percent of the company's total workforce of 10,500.
The company did not immediately return a call for further comment.
DeVry could provide more details when it reports fourth-quarter results Aug. 9, but it warned Monday that those results will likely miss expectations.
The company expects to earn 43 to 46 cents per share for its fiscal fourth quarter. It forecast revenue between $500 million and $510 million for the period. Analysts polled by FactSet estimated DeVry would earn 79 cents per share on revenue of $519.2 million.
DeVry expects to report a charge of approximately $19 million to write down the value of its Advanced Academics business, which performed well below its expectations. And it will take a $7 million pre-tax restructuring charge tied to the job cuts. The company's fourth-quarter earnings forecast does not include those items.
"While we are disappointed with this quarter's results, we are optimistic about mid- and long- term growth in higher education," Daniel Hamburger, DeVry's president and CEO said in a statement. "We are executing a plan to improve DeVry's near-term performance. The most important elements of the plan are to align our cost structure with our enrollment levels, to regain enrollment growth, and to make targeted investments to drive future growth."
DeVry shares lost $6.07, or 22 percent, at $21.49 in after-hours trading. The stock closed down 32 cents at $27.56 in the regular session.
