Illinois-based for-profit school operator DeVry Inc. is looking to Mission Viejo’s U.S. Education Corp. to gain a foothold in healthcare education.
DeVry bought U.S. Education for $290 million in July.
Now the company plans to use U.S. Education’s schools to build its business on the West Coast with more programs and certificates in healthcare.
U.S. Education generated more than $100 million in yearly sales before the buyout.
The company runs schools under the Apollo College and Western Career College brands, which offer training in nursing, ultrasound, ra-diography technology, surgical technology and other healthcare areas.
U.S. Education has grown by acquiring schools catering to high school graduates.
In 2002, the company received $50 million from Newport Beach private equity firm ClearLight Partners LLC and Chicago’s William Blair & Co. to buy Silicon Valley College, a San Jose-based college specializing in healthcare and technology.
More acquisitions followed.
Today, the company counts more than 8,700 students at 17 campuses in California, Nevada, Washington, Oregon, Idaho, Arizona and New Mexico.
U.S. Education has 1,200 employees including faculty and administrative staff at its Mission Viejo headquarters and elsewhere.
DeVry, which had a recent market value of about $3 billion, is one of the biggest operators of vocational schools in the nation, along with Santa Ana-based Corinthian Colleges Inc. DeVry offers training in technology, healthcare, automotive and other areas.
The company is keeping U.S. Education’s brands and offices in OC and elsewhere, said U.S. Education President George Montgomery.
Montgomery, who served as U.S. Education’s chief executive before the buyout, continues to oversee the company and splits his time between OC and Illinois.
The buyout gives both companies a chance to grow, Montgomery said.
DeVry, which offers associate, bachelor’s and master’s degrees, will be able to use U.S. Education’s niche in training programs to offer more certificates and lower-level degrees in healthcare, Montgomery said.
For U.S. Education, the deal gives it the backing of a big company and the chance to expand nationally, he said.
“The partnership provides capital resources, but, most importantly, DeVry’s an expert in post-secondary education,” Montgomery said.
The acquisition “makes a lot of sense,” said analyst Amy Junker of Robert W. Baird & Co.
“These are two high-quality companies with quality management teams,” she said. “I’m looking forward to seeing how they perform as a combined company.”
DeVry, which has some 300 campuses across the U.S. and abroad, likely will give U.S. Education a chance to broaden its reach by offering programs at DeVry’s campuses, Junker said.
“The facilities are in place and the capacity is there so they can grow within that existing facility base without much capital expenditure,” Junker said.
Weak Economy
The companies, along with other vocational school operators, could benefit from a weak economy.
Historically, the biggest jumps in for-profit education come amid economic slowdowns, Junker said.
“This is a great time in post-secondary education because a lot of adults are going back to school looking to get that bachelor’s or master’s in order to get more money,” Junker said.
Rivals include Phoenix-based Apollo Group Inc. and Corinthian Colleges, which also offer healthcare degrees.
“It’s very competitive,” Montgomery said. “As long as we create a quality education that enables our students to succeed, we’ll succeed.”
