DeVry Inc. (DV), one of the largest providers of higher education services in North America, opened its first LEED (Leadership in Energy and Environmental Design ) certified campus in Cleveland’s Health-Tech Corridor under the Chamberlain College of Nursing. The institution is already accepting applications for admission to Bachelor of Science in Nursing (BSN) degree program for the spring semester that commences on January 7, 2013.
The new facility is the 12th Chamberlain campus in the U.S and will have access to world-famous healthcare research and clinical institutions in the Health-tech Corridor. Also, the students of the Cleveland campus will find perfect learning environments in the high-tech simulated patient care facility of the Chamberlain’s Simcare Center. They will also have access to academic resources and support from the Center for Academic Success.
The Cleveland facility will help to mitigate the shortage of nurses in Ohio, which is expected to be more than 32,000 by 2020.
DeVry has been suffering on account of the persistent decline in enrollment due to the weak macroeconomic environment and subsequent decline in demand for courses (due to the hesitancy over taking a loan) in the U.S. Further, modifications made to the business to comply with new educational regulations have also been hurting enrollment growth.
Other than enrollment declines, DeVry had a tough time due to heavy investments in scholarships to support students who are facing the brunt of recent cuts to the Pell Grant program.
Carrington Colleges Group, which operates under the Medical and Healthcare segments of the company, reported a 19.7% decrease in new enrollment in the fourth quarter of 2012. Total enrollment also declined 25.7% in the fourth quarter of 2012.
In order to improve its performance, Carrington has been focusing on improving its cost structure by streamlining the admission process and raising academic quality. In fact, the location of the new campus is expected to increase enrollment in the near future. Carrington now expects to generate positive new enrollment growth in the October quarter of 2012 and generate savings of at least $50 million in fiscal 2013.
Carrington Colleges are expected to return to positive enrollment and revenue growth in fiscal 2013 and gradually grow its enrollments to 2011 levels. All other institutions are expected to maintain their growth momentum for the 2014-2016 period, which the company defines as the recovery phase.
DeVry Inc. carries a Zacks #5 Rank in the near term (Strong Sell rating). We currently have an Underperform recommendation on DeVry Inc. We believe that though management is trying to boost its business and control costs, it might take time for these initiatives to deliver the desired results.
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