Embattled vocational school operator Corinthian Colleges Inc. saw its shares plunge Friday after reporting a profit that fell short of expectations and issuing a weak forecast weighed down by the threat of government regulation.
Shares of the Santa Ana-based company closed down 16% to a market value of $395 million.
Corinthian runs more than 100 campuses in the U.S. and Canada that offer degrees in healthcare, criminal justice and other areas.
For the three months through June, Corinthian reported a profit of $33.9 million, up 46% from a year earlier but short of the $34.8 million analysts expected on average.
Revenue was up 36% to $482.7 million and topped the $477.1 million Wall Street expected.
Including an acquisition, students who signed up for Corinthian’s campuses grew 28% from a year earlier to 34,486.
Corinthian, which has been hit hard by critics and the threat of regulation, spooked investors with a weak outlook for the current quarter.
The company forecast a profit for the three months through September of $33.9 million to $36.6 million. That was well below the $41 million analysts had been expecting.
Revenue is seen coming at $492 million to $502 million, topping the $491.7 million analysts had been expecting.
“We are actively monitoring proposed changes in federal regulation and congressional actions that pertain to private sector education,” the company said. “Given the information currently available, we are unable to gauge the full impact of these proposals on our students and the company.”
Corinthian and other for-profit school operators face new regulations and a potential cutoff in financial aid for their students.
The school operators, which saw big growth during the recession, have come under fire for students who took on more debt than they could afford.
Private sector and government critics also contend the companies fraudulently mislead students about job prospects after graduation.
Last week, an Education Department report showed that fewer than 20% of students at Corinthian and other schools are repaying federal loans.
The department plans to use the loan repayment figures to determine whether school operators can remain eligible for federal loans.
Corinthian gets the bulk of its revenue from students with federal loans.
