Capella Education Co. reported increased enrollment at its subsidiary, Capella University, but lower-than-expected revenue for the third quarter ended Sept. 30 as fewer students enrolled in Capella's more expensive doctoral programs.
Total enrollment was up 4.2 percent to 36,683, and new enrollment was up 2.3 percent from the third quarter last year. The enrollment numbers were better than guidance provided in the company's second-quarter earnings release in July; the company expected total enrollment growth of 3 to 4 percent and a slight decrease or flat numbers in new enrollment.
The revenue projection for the third quarter was growth of 1 to 2 percent to $104.8 million. However, actual revenue was $103.7 million, up 0.6 percent, over the $103.1 million in the third quarter last year.
Capella's shares finished trading Tuesday at $45.51, down 11.6 percent. Shares are now down 40.9 percent since the beginning of the year.
On the company's third-quarter earnings call with investors and analysts, Steve Polacek, Capella senior vice president and chief financial officer, said the company missed its revenue guidance mainly because of a shift of students from higher-cost programs and a more than expected number of new enrollees starting their courses later in the quarter.
Net income for the quarter was $8.2 million, or 67 cents per share, compared with $7.8 million, or 62 cents per share, in the same period in 2014.
Capella Chairman and CEO Kevin Gilligan said third-quarter results mostly met expectations and continued a seven-quarter streak of new enrollment growth.
While new enrollment growth has averaged just under 8 percent over the last seven quarters, Gilligan is expecting new enrollment growth to slow significantly, as it did in the third quarter.
"I believe mid-single-digit new enrollment growth, on an annual basis, is a challenging but achievable target for Capella," Gilligan said.
Patrick Kennedy • 612-673-7926
