Orange County Business Journal

Corinthian Misses Expectations, Projects Revenue Fall for Current Quarter

Kari Hamanaka Tuesday, May 3, 2011

Santa Ana-based vocational school operator Corinthian Colleges Inc. reported disappointing results for the three months through March as it warned of a revenue shortfall for the current quarter.

Corinthian runs more than 100 campuses in the U.S. and Canada offering degrees in healthcare, information technology, criminal justice and other areas.

The company had a recent market value of $366 million.

Corinthian projected revenue of $423 million to $433 million for the three months through June.

That's lower than the $449.7 million Wall Street analysts had been expecting on average.

The company expects a profit of $9.3 million to $11 million for the current quarter, which is in line with the $9.3 million analysts expected on average.

Corinthian warned of a 24% to 27% drop in student enrollment at schools as it raised prices and stopped enrolling ability-to-benefit students, or those without high school diplomas, in September.

The company and other for-profit school operators have come under fire for high student loan default rates and what federal regulators have called predatory recruiting practices.

The industry now faces about a dozen regulations that could threaten some schools' ability to received federally-backed loans.

Corinthian reported average two-year default rates of 9% to 12% for the 2010 group of students.

That’s down from the 22% average loan default rate in 2009 and 19% in 2008.

“Our decision to stop serving ATB students was one of several measures to reduce cohort default rates,” said Corinthian Chief Executive Jack Massimino. "We have made excellent progress in reducing defaults, and as a result we plan to begin enrolling ATB students again in the near future.”

The guidance for the current quarter followed Corinthian's results for the three months through March.

Corinthian reported a profit of $16.1 million, lower than the $17.8 million analysts had been expecting and down nearly 60% from a year earlier.

Revenue was down 3.3% from a year earlier to $462.3 million and was also down from the $467.2 million analysts expected.

Student enrollment for the three months through March was down 21.5% from a year earlier to 29,390.