Apollo Education Group APOL.O reported lower-than-expected quarterly revenue as enrollments declined 16.8 percent at its flagship University of Phoenix, sending its shares down more than 9 percent in extended trading.
The company also said it had received a subpoena from the U.S. Department of Education's Office of Inspector General, seeking information about the operations of the Northeast region of the University of Phoenix. (r.reuters.com/huj28v)
Apollo said it expected to end fiscal 2014 with about 230,000 students at the University of Phoenix, Chief Financial Officer Brian Swartz said on a conference call.
The university ended the second quarter ended February 28 with about 250,300 students and contributed 87 percent of the company's revenue.
Apollo, which took a beating from the U.S. government's investigations in 2010 that showed high debt levels and low graduation rates, said new enrollments fell 16.5 percent.
Revenue per student fell 5.6 percent, Swartz said.
Apollo had announced a number of scholarships and fee reductions at its universities last year to stem dropouts.
The government has proposed regulations that could force for-profit colleges to revise course structures or risk losing aid if 30 percent or more students default on their loans.
Net income attributable to Apollo Education rose to $14.6 million, or 13 cents per share, for the second quarter from $13.5 million, or 12 cents per share, a year earlier.
Excluding items, the company earned 28 cents per share.
Revenue fell 18.6 percent to $679.1 million, missing the average analyst estimate of $689 million, according to Thomson Reuters I/B/E/S.
Apollo also reiterated its full-year revenue forecast of $3.00 billion-$3.10 billion.
Apollo's shares closed at $35.16 on the Nasdaq.
(Additional reporting by Sagarika Jaisinghani in Bangalore; Editing by Don Sebastian)