Career Education's third-quarter new student enrollment and margins slid sharply hurt by changes made to comply with stricter education rules, and the for-profit education provider said its chief executive had resigned.
The company, which runs the American InterContinental University, Le Cordon Bleu North America and the Sanford-Brown colleges among others, said Chairman Steven Lesnik will replace Gary McCullough as CEO on an interim basis as it conducts a search for a new chief.
"Given the complexities of the regulatory environment and other issues that have arisen over the last year, Career Education is moving toward a new phase and the board views it as the appropriate time to start the process of putting in place fresh leadership at the CEO level," Lesnik said.
The company said new student enrollment fell 22 percent to 31,230 students, while total student enrollment fell 12 percent.
Career Education, along with peers such as Corinthian Colleges, DeVry Inc and ITT Educational Services, has seen student sign-ups decline after tough new government regulations prompted stricter admission standards.
The changes were prompted by lengthy government investigations of the sector that unveiled unethical practices, low graduation rates and huge student debt loads.
Career Education said that its internal investigation had confirmed the existence of improper placement determination practices at certain courses. It said it made changes to its policies to correct these practices.
It posted third quarter net income of $10.6 million, or 14 cents a share, compared with $26.1 million, or 33 cents a share, a year ago. Revenue fell 18 percent to $431.3 million.
Operating margins in the period declined to 3.7 percent compared with 7.5 percent last year.
Earlier in the day, Bridgepoint Education and Corinthian Colleges reported results and said they were upbeat about signing up new students entering 2012.
Shares of the Hoffman Estates, Illinois-based company closed at $15.95 on Tuesday on Nasdaq and was halted ahead of the news in the after market. (Reporting by Megha Mandavia in Bangalore, Editing by Anthony Kurian)