Oct 25 (Reuters) - For-profit education company DeVry Inc posted a higher-than-expected quarterly profit on lower costs and strong enrollments at its healthcare colleges.
DeVry’s shares, which have lost 45 percent of their value this year, rose 15 percent to $24.05 in after-market trading.
Student sign-ups at DeVry’s medical and healthcare colleges rose 31 percent on average. Sign-ups at DeVry University, which accounts for the bulk of the company’s revenue, fell about 8 percent for the September session.
The company, which owns DeVry University, Chamberlain College of Nursing and Carrington College, is on track for cost savings of $60 million in fiscal 2013, Chief Executive Daniel Hamburger said in a statement.
DeVry also said it has cut jobs, mostly at DeVry University and Carrington College.
It plans to sell its administrative office building in Wood Dale, Illinois later this year and record a charge of $9 million to $10 million in the second quarter.
Market leader Apollo Group Inc said last week that it would cut about 800 jobs and shut down 25 campuses to save costs amid declining profit and lower student enrollments.
DeVry’s net income fell 44 percent to $32.0 million, or 49 cents per share, in the first quarter, from $57.5 million, or 83 cents per share, a year earlier.
Revenue fell 7 percent to $482.7 million.
Analysts expected earnings of 30 cents per share on revenue of $482.7 million, according to Thomson Reuters I/B/E/S.
The for-profit education industry has struggled to attract students since a U.S. government scrutiny revealed high student debt loads and low graduation rates.
New federal rules that were put in place last year, weak demand and negative publicity have also hurt enrollments.
DeVry is offering more scholarships and grants to attract students but that is hurting revenue. The company’s increased marketing spend is hurting profits, forcing it to cut jobs in an effort to save costs.
ITT Educational Services Inc earlier on Thursday said it cannot predict when a nine-quarter slide in new student enrollments will come to an end, sending its shares down 10 percent.