U.S.’s largest for profit education chain, Apollo Group Inc. (NASDAQ: APOL) reported on Monday that its fiscal third quarter profit dropped sharply owing to lower enrollment. However, company’s shares jumped to an eight month high on Tuesday as its quarterly earnings and revenues surpassed Wall Street expectations. The company also raised its full-year profit guidance.
Apollo, the owner of Phoenix University, reported that its net income for the three-month period ended 31st May stood at $134 million or $1.13 per share compared to $212.4 million or $1.51 per share, in the same period last year. .
After adjusting for onetime expenses (restructuring costs and other special items), Apollo earned $1.20 per share from continued operations for the latest fiscal quarter, against $1.45 per share last year.
Company’s revenue dropped to $1.1 million from $1.2 million, mainly due to fall in enrollment at University of Phoenix; however this was partially offset by higher tuition and fees.
Meanwhile, company’s total enrollment for degree programs dropped down to 346,300 against 398,400 last year.
According to a survey conducted by FactSet, analysts were expecting Apollo to earn an adjusted 97 cents per share on revenue of $1.1 million.
Just like many other for profit education chains, Apollo too has been confronting with the impact of new federal enrollment regulations.
While the enrollment skyrocketed for many of these for -profit education companies early in the recession when lackluster economy and high unemployment made their programs more alluring to job-seekers, stricter government regulations legislated last summer impelled these companies to raise admissions standards, consequently cutting enrollment and profitability.
However, amid falling enrollment the company effectively controlled some of its issues. It cut down its marketing cost, started a career services program alongside investing in other programs, aimed at improving the performance of its students.
In a statement to investors, Company’s co-CEO and chairman Greg Cappelli said, “We are committed to being part of the solution to empower our country by providing access to affordable education and helping students develop the skills they need to succeed.”
For the full fiscal year, company expects revenue of $4.2 billion to $4.3 billion even as analysts are expecting for $4.28 billion.
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