Education Management Corp. (EDMC), the for-profit college chain partly owned by Goldman Sachs Group Inc., dropped the most in more than a year after lowering its fiscal 2014 profit forecast.
Education Management fell 9.8 percent to $5.58 at 1:19 p.m. in New York, and earlier lost as much as 18 percent to $5.10, its biggest intraday drop since Dec. 21, 2012. The shares had declined 39 percent this year though yesterday.
The for-profit college industry has been hurt by tumbling share prices and enrollment amid competition from traditional universities and federal and state scrutiny over aggressive marketing, high tuition and poor outcomes. While Education Management’s total enrollment declined 22 percent in the past three years to 122,990 students, new enrollment in the second quarter stabilized, dropping 0.7 percent from a year earlier.
Profit excluding some items will be 19 cents a share to 23 cents a share in the year that ends in June, Pittsburgh-based Education Management said yesterday in a statement. That’s below the 24-cent average of analysts’ estimates compiled by Bloomberg. In October, the company had projected a range of 22 cents to 29 cents.
Net income slid 96 percent to $1.09 million, or 1 cent a share, in the three months ended Dec. 31, from $31.1 million, or 25 cents, a year earlier. During the quarter, the company incurred more than $19 million in expenses related to restructuring, asset-impairment and settlement-related costs.
Revenue fell 9.3 percent to $593.7 million, the company said, citing a decline in the average enrolled student body and a higher number of awarded scholarships.
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