For-profit education company Corinthian Colleges, Inc. (COCO) said its profit rose sharply in the fourth quarter, but shares dropped to their lowest in ten years on dwindling enrollment rates in the wake of increased government regulation.
For-profit institutions like Corinthian and Strayer (STRA) have come under intense scrutiny from the Department of Education, which claims that significant portions of students are not able to pay back loans upon graduation.
Under new government regulation, schools with less than 35% of their former students paying down the principal on their federal loans would be ineligible for Title IV funding. Graduates also must have a debt-to-earnings ratio above 30% of discretionary income and 12% of total income.
Corinthian now expects first-quarter pro-forma new student growth of less than 2 percent, down sharply from levels seen from the start of the recession through the recent fourth quarter, when laid off workers went to school.
The company said it has begun to reduce enrollments of students who lack a high school diploma or equivalent, who are most likely to default on their loans.
"We believe we have built a stronger company over the past few years, and that we are thus in a better position to adapt to any changes in regulation," the company said.
The company reported Friday an increase in fourth-quarter profit, helped by 18.2% new student growth as well as the acquisition of Heald College, but missed Street view.
The company also provided earnings outlook for the first quarter, below analysts' expectations. COCO shares are trading down by 15% in the morning session.
For the fourth quarter, the company's net income increased to $33.85 million or $0.38 per share from $23.19 million or $0.27 per share in the previous year. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items. Net revenues for the quarter grew 36.6% to $482.74 million from $353.51 million in the same quarter a year ago. Thirteen analysts were looking for revenue of $477.12 million for the quarter. Total student population at the end of the period increased 28.4% and total new students improved 18.2% from last year. Peter Waller, Corinthian's Chief Executive Officer. "Our new student growth in the fourth quarter was primarily driven by implementation of new programs at existing campuses, continued growth in the online division, and the expansion of our high school recruiting program," "In addition, the Heald College acquisition, completed in January, contributed to growth and earnings in the quarter," added Waller. For the fiscal 2010, the company posted net income of $145.97 million or $1.66 per share, up from $68.76 million or $0.80 per share in the prior year. Annual revenues increased to $1.76 billion from $1.31 billion in the preceding year. Analysts estimated earnings of $1.67 per share on revenues of $1.76 billion for the year. Looking ahead to the first quarter of fiscal 2011, the company expects earnings per share to be in the range of $0.38 to $0.41, based on continuing operations and excluding any one-time charges. The company projects revenues between $492 million and $502 million.
Analysts estimate the company to earn $0.45 per share on revenues of $491.19 million for the first quarter. COCO is currently trading at $4.55, down $0.85 or 15.74%, on a volume of 11.04 million shares. In the past 52 weeks, the shares have been trading in a range of $4.88-$20.29 on the Nasdaq.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.