Career Education Corp.’s second-quarter profit soared as the for-profit college’s student population rose 23 percent and margins improved, though revenue fell short of analysts expectations.
College operators have benefited during the recession as out-of-work adults look to re-train, but their rapid growth has garnered the attention of the Department of Education and Congress.
The Senate Health, Education, Labor and Pension Committee held a hearing Wednesday on aggressive recruiting practices, and the Education Department last week released a proposal that would punish for-profit schools for graduating students with high debt loads, to ensure they are training students for legitimate jobs.
Career Education is being watched closely, with some analysts saying its Le Cordon Bleu culinary arts programs and certain design programs could be particularly vulnerable to the “gainful employment” regulation. The company also offers degrees in business and health.
Career Education reported earnings of $64.3 million, or 80 cents a share, up from $6.49 million, or 7 cents a share, a year earlier. Per-share earnings from continuing operations rose to 81 cents from 27 cents.
Revenue increased 21 percent, to $527.9 million.
Analysts polled by Thomson Reuters expected per-share earnings of 62 cents on revenue of $531 million.
Operating margin jumped to 18.1 percent, from 8.5 percent a year earlier.
Career Education reported total enrollment of 104,505, including 28,820 new students.
Shares of Career Education were flat in after-hours trading after closing up 1 percent, at $23.96. The company’s stock is up 2.8 percent this year.
