A massive second quarter loss by Career Education Corp (CECO), sent its shares plunging nearly 16 percent in in pre-market session to new 12-year low of $3.95.
The private education firm reported a loss of $100.2 million, or $1.52 per share, for the quarter that ended June 30. That's compared with net income of $55.4 million, or 73 cents a share, earned in the corresponding quarter of the last year.
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Adjusting for goodwill and impairment charges, the company’s loss calculated at18 cents a share versus profit of 73 cents per share last year, miss widely against analysts targeted break even in terms of bottom line.
Career Education's total revenue dropped to $369 million from $484.9 million on enrolment declines across its programs. Analysts were expecting revenue of $383.6 million.
Shares fell to $3.82 in after-hours trades, after having briefly risen during the day.
The private sector education sector is facing strong headwinds in terms of a difficult regulatory environment that is aimed at reducing the role of private institutions in the overall education sector.
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During the recession, when people were looking to find jobs, companies such as Career Education saw enrolment soaring but the popularity was accompanied by growing criticism and a clamour to clamp down on them, as they were seen to be churning out students who were saddled with a lot of debt but had poor job prospects as unemployment figure grow.