Back to School: Corinthian Glows During a Slow Economy
By CHRIS CZIBORR
State-funded colleges may be groaning about California’s budget woes, but Santa Ana-based Corinthian Colleges Inc. keeps on smiling.
For-profit Corinthian, which operates a string of private colleges and vocational schools in the U.S. and Canada, earned the No. 12 ranking on this year’s Business Journal list of fastest-growing Orange County-based companies. It was No. 14 on last year’s list.
Corinthian’s annual revenue has grown 203% in the past three years, hitting $517.3 million in the 12-month period ended June 30.
The school operator is one of the largest for-profit post-secondary education businesses in North America. It counts some 34,000 students and offers degrees in healthcare, business, technology and criminal justice.
Corinthian operates more than 80 colleges and two continuing education centers in 21 states in the U.S., and 45 colleges and 15 corporate training centers in seven Canadian provinces.
Record enrollment growth, new school openings, acquisitions and lower debt expense are fueling big revenue and profit gains, in turn driving the company’s stock higher.
Corinthian shares are up 44% to 55.7 in the past 12 months. The gains on Wall Street are in tandem with Corinthian’s profit growth, up three-fold since 2000 to $65.9 million in the 12-month period through June.
Corinthian said the jump in profit is a result of new courses, expanded older schools, acquired new ones and higher student fees.
The college operator has nabbed honors from other publications of late. This month, Forbes put Corinthian at No. 2 on its list of the “200 Best Small Companies,” up from No. 4 last year.
And in August, Fortune had Corinthian No. 6 on its “100 Fastest-Growing Companies” list, up from No. 12 the previous year.
Corinthian has relied heavily on acquisitions to drive growth.
“Our fundamental strategy when we started the company was that we were going to principally grow through acquisitions,” said Corinthian Chief Executive David Moore. “We are simply executing that fundamental strategy.”
Moore, a cofounder, has been Corinthian’s chief executive since the company got off the ground in 1995.
“In the past, we were willing to buy a cash cow as well as a growth company,” Moore said. “Today, growth is more important to us.”
This past year, Corinthian made a number of buys, including East Coast Aero Tech LLC, Career Choices Inc. and 90% of CDI Education Corp.
The acquisitions added 56 colleges and 15 training centers and cost Corinthian about $91 million, which was funded by cash and borrowing.
Other recent buys: two Wyo-Tech Acquisition Corp. campuses and two Learning Tree University training centers.
Although most of Corinthian’s campuses came from acquisitions, it also has grown on its own. Corinthian has opened 18 branch campuses in the past four years.
Corinthian also made progress on bad debt expense. Back in 2001, the company’s shares dipped after it warned about a regulatory change in the way Corinthian refunds tuition to dropouts with government loans. The change shifted the onus of collecting loans from the government to school operators.
While economists predict a general recovery for 2004, Moore said he doesn’t expect that will hurt enrollment at Corinthian’s schools, which historically are counter-cyclical.
“If you listened to me a couple of years ago I would’ve told you that education tends to be counter-cyclical,” he said. “I’m not sure if that’s true in the so-called new economy. Now, when the economy is booming, people are going back to school to get their credentials and to get their next promotion or their next job or the next opening.”
