Continuing Education, Domestic, For-Profit, Investors, Required - Written by on Thursday, August 4, 2011 0:36 - 0 Comments

Lincoln Educational Services Tanks 23%: What You Should Know

photo: Andrew Mills/The Star-Ledger

by Elbert Chu


Lincoln Educational Services Corp. (NASDAQ: LINC), opened sharply lower this morning and closed down 23.06% (-4.02) to close at $13.26. Lincoln beat Q2 earnings estimates but guided Q3 estimates sharply down.

Lincoln joins the line of for-profit education companies (see Capella & Strayer) this earnings season who are reporting downright depressing new enrollment numbers. In Lincoln’s case, new enrollments decreased 47.8% Q2 as compared to the prior-year quarter. On top of that, average student population is down 20.2% over the same period.

The West Orange, NJ-based company specializes in working adult degree programs, predominantly health science (39% of students) and automotive (32% of students).

The company attributes the poor performance to adjustments for the new “gainful employment” rules:

“During the first half of 2011, we made certain changes to our business model to address a challenging regulatory environment, anticipation of final rules under gainful employment and assumed the end of the existing 90/10 regulatory remedies,” said Shaun McAlmont, Lincoln’s President and Chief Executive Officer.

McAlmont continues:

“As part of these measures we have implemented a more selective student enrollment policy to ensure that we enroll students that demonstrate a strong ability to achieve successful student outcomes, including higher graduation rates, repayment rates and lower student debt levels.

These changes to comply with the 90/10 rule resulted in average revenue per student rising 5.2% from tuition increases ranging from 3-5%.


Full article at SeekingAlpha.

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