Tag Archives: ESI

ESI 10-K Highlights, the “More You Learn, the More You Earn” Student Covenant Continues to Slip Away While Cohort Default Rates Remain Surprisingly Low

February 21, 2010 – 12:08 pm

ESI released its annual 10-K filing on Friday. We wanted to provide you with a few key observations and revisit some of the original tenets of our short thesis on the stock.  Overall, there was nothing in the 10K that we would characterize as “earth shattering”, although we anticipate many investors will be interested to [...]

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PAA Research For-Profit Education Survey Suggests Enrollment Growth for the Winter Term Remained Robust, Some Slowdown Expected in 2010, and Some Schools Have Already Introduced “Self Regulation”

January 26, 2010 – 4:39 pm

We recently conducted a survey of privately-held for-profit postsecondary education institutions.  Our goal was to gain a better understanding of enrollment trends, identify which programs are resonating most with the education consumer, evaluate lead flow trends, learn more about cost-per-lead expectations in 2010, and to determine how institutions are preparing for the transition from a [...]

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ESI Reports a Solid Quarter, New “Private Student Loan Program” Optically Looks Good, Economically “Kicks the Can Down the Road”

January 21, 2010 – 10:36 am

ESI reported 4Q09 results this morning. You can read the full press release here. Overall we would characterize the results as a solid beat relative to consensus.  Here are the quick highlights:

Revenues of $374.4 million vs. consensus of $370.6 million (we had forecast $378 million)
Gross margin of 67.6% increased an astounding 400 bps YOY.  Clearly [...]

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ESI 4Q09 Preview: The Last Days of Operating Margin Leverage?

January 19, 2010 – 5:50 pm

ESI will report 4Q09 results on Thursday, before the market opens.  Here are the issues which we expect to be at the forefront of investor concerns heading into and subsequent to the company’s earnings release:

Sustainability of enrollment growth – On the heels of APOL’s 1Q10 results, we think investors are increasingly concerned about the implications [...]

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The Dept. of Education Fires A Shot Across the Bow of the Higher Learning Commission (HLC)

December 17, 2009 – 4:33 pm

The education stocks are trading off today following the release of a memorandum from the Department of Education’s Office of Inspector General (OIG).   You can find the memorandum here.  Effectively the OIG has asked the Department of Education to review the status of the HLC and potentially “limit, suspend, or terminate HLC’s recognition by the [...]

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Unofficial FY07 3-Year Cohort Default Rates Come In-line With Expectations, Now Comes the Hard Part for COCO and WPO

December 14, 2009 – 6:51 pm

The Department of Education released unofficial 3-year cohort default rate data this morning.  You can find the DOE’s press release here, which also contains a link to an excel file with school by school 3-year cohort default rate data.  Overall, the data was more or less inline with our expectations.  The addition of an extra [...]

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Details of Department of Education Negotiated Rulemaking Proposals Leak Out – Incentive Comp and Program Affordability Changes Would Have Large Implications

December 1, 2009 – 12:37 pm

The U.S. Department of Education (DOE) distributed its first round of proposals to the negotiated rulemaking panel on Monday on Program Integrity Issues in the higher education space.  The initial hearings for this year’s negotiated rulemaking sessions were held from November 2-6.  You can find more details on the initial hearings and the schedule for subsequent [...]

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WPO Alters Revenue Recognition Policy for Kaplan Higher Education, More Enrollment Reconcilliation

November 8, 2009 – 6:58 pm

In a recent letter to Warren Buffet, we voiced our concerns about what seem to be growing regulatory issues at Washington Post Company’s most important division, Kaplan Higher Education.  From an outsiders perspective the magnitude and rate of increase in 2-year cohort default rates at many of the company’s schools is alarming in the context of [...]

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WPO’s 3Q09 Results, What is an Enrollment at Kaplan? COCO’s 10-Q Filing

October 30, 2009 – 4:16 pm

We wanted to address a few issues related the for-profit education sector: WPO’s 3Q09 results, a few thoughts on COCO’s 10-Q filing and a playbook for the Negotiated Rulemaking sessions (NegReg) to be held next week.
Washington Post Company is a For-Profit Education Company That Also Owns Newspaper, Cable, Magazine and Broadcasting Businesses, Please Act Accordingly…
We continue [...]

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Apollo Group’s 4Q09 Results Send Shockwaves: Could the SEC Inquiry Relate to Accounting for Student Withdrawals? APOL Backs Away From Lower Quality Students

October 28, 2009 – 1:08 am

Readers of our research know that we have been bearish on the for-profit education sector for the past few quarters based on our concerns about growing fundamental headwinds, increasing regulatory scrutiny, and what we view as significant structural issues for a few operators in the sector. Outside of our analysis of COCO’s bad-debt expense recognition, [...]

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