Corinthian Colleges Postpones Investor Day, No New Date Set

Corinthian Colleges Inc. (COCO) won't hold its investor day as scheduled on Sept. 15, saying uncertainties in the current regulatory environment leave the for-profit college unable to offer much insight into its future operations.

Corinthian, which offers diploma programs for entry-level jobs in health care, mechanical trades and criminal justice, didn't provide an alternate date for the meeting but said it would still participate in a popular industry conference in mid-September.

Shares of Corinthian recently traded down 16.6% to $4.50 on Friday, recovering slightly after falling to their lowest point in a decade. The company's stock is off 67% so far this year.

Corinthian has grown tremendously during the recession as people continue to go back to school to learn new skills. However, it--along with its peers--faces significant scrutiny from a number of government agencies, including the U.S. Department of Education, U.S. Government Accountability Office and Congress, for the way it uses federal student-aid money and for aggressive marketing tactics.

Proposed new rules that would penalize schools for graduating students with high debt loads could significantly restrict Corinthian's access to federal student aid, the source of much of its revenue. The company, along with other schools, has struggled to calculate just what effect the rule could have on its bottom line.

Corinthian said that while increases in student-loan defaults are slowing, rates are still high enough that certain campuses could lose access to that aid under a different measure, already in effect. Three of the company's campuses, representing 6% to 7% of revenue, could exceed a key default threshold that would force sanctions--including the loss of aid money--on the schools beginning in 2012.

"Our expanded default management program is having an impact, but we must do better still," Chief Executive Peter Waller said on a conference call.

In order to help control loan default rates, Corinthian said that beginning Sept. 1 it will no longer accept at some of its campuses students from the federal Ability to Benefit program, which allows students without high school degrees to qualify for entry to college. At the end of June, Ability to Benefit students comprised 15% of Corinthian's total student population, down from 24% a year earlier.

Waller said Ability to Benefit students historically default on their loans at twice the rate of students who graduated from high school.

Corinthian acknowledged that its decision to end enrollment of Ability to Benefit students will cut new student growth, though it hopes to stem those losses with more enrollment from recent high school graduates. The company noted that it is seeing more students enter its programs directly out of high school.

Corinthian forecast fiscal first-quarter earnings of 38 cents to 41 cents a share on revenue of $492 million to $502 million. Analysts had most recently forecast 45 cents and $491 million, respectively, according to Thomson Reuters.

Corinthian, which usually provides full-fiscal-year guidance when releasing fourth-quarter results, declined to do so Friday, citing regulatory uncertainty and the potential effects of the Ability to Benefit program changes.

Earlier Friday, Corinthian reported a profit for the period ended June 30 of $33.9 million, or 38 cents a share, up from $23.2 million, or 26 cents a share, a year earlier. Revenue jumped 37% to $482.7 million.

Operating margin rose to 11.5% from 10.8%.

New-student growth was 18%, as Corinthian's total student population increased 28% to 110,580. The company expects new-student growth of 11% to 13% in the fiscal first quarter.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

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