DeVry sees cost savings in 2013, more medical students

Wed Feb 6, 2013 7:50pm EST

* Second-quarter adj earnings per share $0.87 vs est. $0.56

* Revenue $505 mln vs est. $496.6 mln

* Raises fiscal 2013 cost savings forecast to $80 mln

* Shares up 13 percent in extended trading

By Ritika Rai

Feb 6 (Reuters) - For-profit education company DeVry Inc posted a higher-than-expected quarterly profit on lower costs and higher enrollments at its medical and healthcare colleges in the United States and Canada.

Shares of DeVry, which had risen about 40 percent in the six months to Wednesday's close, were up a further 13 percent in extended trading at $29.40 on the New York Stock Exchange.

The company, which owns institutions such as DeVry University, Chamberlain College of Nursing and Carrington College, raised its forecast for cost savings in the current fiscal year by one-third to at least $80 million.

"The cost savings are being driven by structural changes made to these institutions, like revisions to staffing models, course scheduling and e-books," Chief Financial Officer Tim Wiggins said in a post-earnings conference call with analysts.

Advertising expenses in the second quarter were $7 million less than in the previous three months, but the company said it expected higher advertising expenses again in the third quarter.

"Looking to the third quarter, we now expect total costs and expenses to be up sequentially about 3 percent to 4 percent," said Wiggins.

"The biggest driver is expected to be advertising spending for the third quarter, which should be more in line with first-quarter levels."

DeVry and some of its peers, including Washington Post Co's Kaplan business and ITT Educational Services Inc , are among the 25 biggest advertisers on Google.

DeVry's second-quarter net income rose to $50 million, or 78 cents per share, from $9 million, or 13 cents per share, a year ago. Earnings, excluding items, were 87 cents a share.

Revenue fell about 4 percent to $505 million.

Analysts had expected earnings of 56 cents per share on revenue of $496.6 million, according to Thomson Reuters I/B/E/S.

For the three-month period to Dec. 31, 2012, new student enrollment for DeVry's Carrington Colleges Group, which caters to medical students, increased 12.7 percent from a year ago.

Chamberlain College of Nursing's new student enrollment in the November session increased 13.5 percent. For the January session, new student enrollment increased 87.8 percent to 2,120 students.

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