Career Education Profit Leaps, But Sales Sag

HOFFMAN ESTATES, Ill. (AP) — Career Education Corp. posted lower-than-expected first-quarter profit Wednesday as enrollment in one category of its schools sank.

Shares fell $2.23, or nearly 11 percent, to $18.91 in aftermarket trading, having earlier closed down 23 cents at $21.14.

The company's profit jumped 42 percent to $23.3 million, or 26 cents per share, but adjusted profit of 32 cents per share was a penny shy of Wall Street's projections. The Hoffman Estates, Ill.-based company said sales slipped 3 percent to $437.4 million, also missing the $446.7 million estimate forecast by analysts surveyed by Thomson Reuters.

A big drop in revenue from the company's transitional schools was a key reason for the revenue decline. That segment brought in just $6.7 million in revenue in the latest period, versus $24.4 million in the same period last year. Only 10 new students signed up for Career Education's transitional schools in the January-March period. Last year, it was 1,300.

Gary McCullough, the company's CEO, said in a statement that he was encouraged that enrollment in company's health education schools jumped 24 percent to 19,300, and that the culinary schools posted a 13 percent increase in new student starts. But he added he was "not satisfied with the level of student starts" at the university institutions, which make up more than 40 percent of the company's total revenue.