Education Management Sees Enrollment Falling Through 2015

Career College Central Summary:

  • Education Management Corp. (EDMC:US), operator of the Art Institutes chain of for-profit colleges, said it expects enrollment and revenue to continue to decline through the end of fiscal 2015, which ends June 30.
  • New student sign-ups will drop 4.8 percent in the period, and total enrollment will fall 7.6 percent to 109,890, Pittsburgh-based Education Management said today in a filing (EDMC:US) with the U.S. Securities and Exchange Commission. Revenue will decline 11 percent to $2.05 billion, the company said.
  • Education Management, which said that it would cede control to its creditors in a swap of debt for equity, released the projections as part of a forecast extending through 2019.
  • The company, which has been beset by falling enrollment during government investigations and intense competition for students, sees enrollment and revenue climbing beginning in fiscal 2016 through 2019.
  • “The way the stock is valued and the way the Street is thinking about these companies, this is a reasonably bullish scenario,” said Trace Urdan, an analyst at Wells Fargo Securities in San Francisco who rates the shares “market perform (EDMC:US),” the equivalent of neutral.
  • Education Management fell 8.5 percent to $1.29 in New York. The stock had slid 87 percent this year. Education Management forecast fiscal 2015 earnings before interest, taxes, depreciation and amortization of $130 million. That compares with $244.8 million, the average of eight analysts’ estimates (EDMC:US) compiled by Bloomberg.

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