Another quarter means another opportunity to check in with some of the sector’s publicly traded for-profit college operators and online program managers (OPMs). In the last few years, these companies have reacted to the mix of heightened regulation, shifting demand and new competitors affecting for-profit and online education.
While their responses are incremental, they’re still notable. Here are three takeaways and other findings from this quarter’s earnings calls, reports and analyst insights.
An overcorrection — or not?
2U shocked the markets with its announcement that growing competition for online education was causing it to (again) revise down its growth projections and expect smaller program sizes. It also suggested it will offer colleges fee-for-service agreements in addition to the revenue-share model for which it has become known.
While the value of its stock was down 65% by the close of the market the following day as a result of that news, higher ed observers were less surprised.
“Their business model is going to change, and as part of that, the way they have historically made money and the margin profile around that model is going to change as well,” Nick Hammerschlag, president of education investment firm Entangled Group, told Education Dive in July. “But what it also means is they are actually putting themselves in a position to keep more of their customers … by opening up these different ways of engaging.”
Even before the announcement, 2U was making moves to give colleges more ways to work with them. In February, it brought on OPM Keypath Education as a strategic partner that would help the company work with new and existing customers on programs requiring a lower level of capital investment.
And in May, it closed on the acquisition of boot camp provider Trilogy Education. The $750 million cash-and-stock deal gave the company 32 new university partners and a model for offering short-term skills training.
Just days after it shifted its forecast, 2U dropped some slightly more anticipated news: that it would begin offering bachelor’s degrees.
With the latest quarter’s announcement, the OPM is “reacting to the reality of the marketplace,” Trace Urdan, managing director at education investment firm Tyton Partners, told Education Dive in an interview. “That was a milestone event for sure.”
OPM spinoffs continue
2U wasn’t the only OPM to continue to color in its strategy this quarter.
Grand Canyon Education (GCE), which spun off the university of the same name last summer, has its eye on more partnerships. For now, it’s providing educational… (continue reading…)