First Quarter Revenue at Kaplan Takes a Hit

The Washington Post Company released its first quarter financial results on Friday and business continues to suffer at Kaplan, the company’s education division and typically its highest performer.

Revenue from Kaplan, including its higher education, test preparation, international education businesses, is down 11 percent in the first quarter of 2012, compared to the same period last year. Kaplan Higher Education, which includes online and facility-driven post-secondary education, saw a 20 percent drop in revenue and its test-preparation business experienced a 14 percent drop, compared to last year.

Kaplan operated at a loss of $13.2 million this quarter, compared to an operating income of $20 million during the first quarter of 2011. Much of that difference is attributed to an 82 percent drop in operating income—from $50.65 million in first quarter 2011 to about $9 million this year—in its higher education business.

Those results appear to be the continuing consequences from “gainful employment” rules set by the U.S. Department of Education last year that limit financial aid dollars for programs where graduates can’t repay student loans or earn sufficient income. Average enrollments were down 18 percent as of March 31, compared to the same date last year, though new student enrollments increased 5 percent, the company reported. Kaplan University and Kaplan Higher Education enrolls about 76,000 students.

Kaplan’s only area that showed significant improvement is its international division, which posted a 16 percent increase in revenue over the first quarter of last year. Ten percent of that increase is attributed to 2011 acquisitions of education providers in Australia and Spain.
The Washington Post Company’s stock, traded on the New York Stock Exchange, is down to $344.51 per share as of 11:35 a.m. Monday, after beginning the day at $354.54 per share.

(Disclosure: I’m a former employee of The Gazette Newspapers, part of Post-Newsweek Media, a subsidiary of the Washington Post Company.)

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