Executives of the parent company of the University of Phoenix attempted to regain investor confidence this morning amid plummeting stock prices and ongoing scrutiny from state and federal officials investigating the for-profit school’s recruiting practices.
During a conference call this morning with investors to discuss the company’s latest earnings reports, Apollo’s chief executive officer, Greg Cappelli, acknowledged that the company is “obviously operating in a challenging environment.”
Cappelli was referring to investigations by the Federal Trade Commission and the California attorney general into the school’s marketing and recruiting practices. He also noted the Pentagon’s decision to place the for-profit
school on probation from participating in the military’s tuition assistance program.
Although he did not mention it during the phone conference, the military also banned the school from recruiting at military facilities.
“We’re cooperating fully. We’ve taken appropriate action to correct any area where there is even the slightest perception that we are not appropriately serving our students or complying with requirements,” he said.
Confidence in the company has taken severe hits in recent months. Apollo stock was trading at more than $95 a share in 2004, but on Monday, it closed at $10.60. It fell further this morning, losing about a fifth of the stock’s opening value following the company’s call with investors.
The University of Phoenix has come under fire by members of Congress and veterans groups after a Reveal investigation raised questions about the school’s recruiting tactics.
In its exposé, Reveal showed how the university paid the military for exclusive access to bases, held recruitment events disguised as job-hunting workshops, and improperly used military insignias on “challenge coins” handed out by recruiters.
Pentagon officials cited Reveal’s findings in a letter notifying the University of Phoenix that it was being put on indefinite probation.
The military’s action will undoubtedly impact future enrollment and revenue, Cappelli said.
“We can’t be certain of timing of reinstatement,” he said.
Last year, the University of Phoenix received $20 million in military tuition assistance from the Pentagon. It has received more than $1.2 billion in GI Bill money for veterans since 2009, but so far, the Department of Veterans Affairs has taken no public action beyond noting the Defense Department’s probation on its website.
During the Q&A segment, one caller brought up the school’s troubles.
“We want to make sure we are doing everything correctly and in compliance. And if there are questions, we will address them, we will answer them, and we’ll ensure that if there’s something to be changed, its changed,” Cappelli responded.
Joe D’Amico, the company’s interim chief financial officer, chimed in, saying that “the VA has come out and said basically the VA program is available to veterans and continues to be. That was after the DOD issued the … put us on probation.”