* Cuts FY EPS view to $2.40-2.50 from $2.50-$2.60
* Cuts FY rev view to $645-$650 mln from $650-$655 mln
* Q2 EPS $0.50 vs est $0.44
* Revenue $152.8 mln vs est $153.1 mln
* Shares touch 52-week low
(Recasts; adds conference call details, updates share
BANGALORE, Aug 5 For-profit education provider
Lincoln Educational Services Corp (LINC.O) cut its outlook for
the full year, citing uncertainty in the current regulatory
environment, sending its shares down 17 percent to a 52-week
Shares of the West Orange, New Jersey-based company, which
posted a better-than-expected quarterly profit, touched a low
of $17.12 before recouping some losses and trading down 15
percent at $17.50 Thursday afternoon on Nasdaq.
For-profit education companies, including Lincoln, Apollo
Group APOL.O and DeVry (DV.N), could soon have to prove that
their former students are either paying off their loans or are
capable of doing so, under proposals being considered by the
Department of Education.
"The current regulatory environment has created uncertainty
in our sector as the Department of Education has placed a
greater emphasis on regulating quality outcomes, student debt
levels and overall return on educational investment," the
company said in a statement.
Programs would lose their federal funding eligibility if
more than 65 percent of former students failed to pay the
principal on federal loans, and if their graduates' debt was
more than 30 percent of discretionary income and 12 percent of
total income. [ID:nN22158531]
Lincoln, which expects student starts to remain essentially
flat for the remainder of 2010, said its actions to reduce the
percentage of higher risk students in its enrollment and to
raise student outcomes contributed to the lowered outlook.
The company cut its earnings outlook by 10 cents a share to
$2.40 to $2.50 per share. It cut its revenue outlook by $5
million to a range of $645 million to $650 million.
"There will be trade offs in the short term. Our new
student start growth will be limited by the actions we are
taking to raise our student outcomes," Executive Chairman David
Carney said on a conference call with analysts.
The company also saw an increased number of students who
enrolled but did not start their programs due to financial
hardships in the second quarter, and it expects the trend to
continue in the current and fourth quarters.
Lincoln, which offers diploma and degree courses in the
areas such as health sciences, business and information
technology, and hospitality services, said second-quarter net
income rose to $13.2 million, or 50 cents a share, from $7.4
million, or 27 cents a share, a year ago.
Revenue rose 19 percent to $152.8 million. Average student
population rose about 18 percent.
Analysts on average were expecting the company, which also
competes with Corinthian Colleges COCO.O and ITT Educational
Services ESI.N, to earn 44 cents a share on revenue of $153.1
million, according to Thomson Reuters I/B/E/S.
(Reporting by Megha Mandavia in Bangalore; Editing by Anne