Regulatory pressure, sliding enrollment and demand for education online continue to characterize the market in which for-profit colleges operate. And their latest financial quarter offers more insight into how they are doing so. 

For instance, with banks wary of loaning to for-profit colleges, National American University Holdings (NAUH) is looking to a peer company for help maintaining Title IV eligibility as it attempts to pivot to operate entirely online. Others, like Zovio (formerly Bridgepoint Education), are using acquisitions to shift their market approach to educational services.

Partnerships with traditional colleges and universities will be important for Zovio and others looking to do the same.

"For-profit companies providing services for nonprofit or traditional universities, 10 or 15 years ago you never heard of that," said Jeff Silber, an analyst at BMO Capital Markets. "It's becoming a lot more common because traditional universities are realizing that some of these for-profit companies can actually help them. ... Public-private partnerships, as they call them, can benefit both sides."

To learn more about how for-profit colleges are adapting, we examined their SEC filings for their most recent quarter. Here are some of the trends we observed.

Acquisitions and partnerships help scale

As the market for online education grows, for-profit college operators are extending their reach through partner programs and acquisitions that help harness enrollment. 

Adtalem Global Education, which last December sold its for-profit DeVry University and Carrington College, is using that approach to expand its educational services. In May, the company announced a collaboration with Northeastern University to offer an online, nondegree certificate course in artificial intelligence for financial services. 

In June, the company closed on its acquisition of OnCourse Learning's financial services education division, boosting its professional services training in the banking, credit union and mortgage licensing markets. The decision reflects the company's desire to be a "leading workforce solutions provider," and it helps expand its customer base and program offerings, said Adtalem President and CEO Lisa Wardell in a call with analysts in early May to discuss the company's latest earnings. 

Analysts with Barrington Research were also confident about the acquisition's prospects, writing in a note following the release of its most recent financials that Adtalem will "further grow and enhance" OnCourse's position. 

After spinning off Grand Canyon University (GCU) into a nonprofit last year, owner Grand Canyon Education (GCE) is also looking to grow its lineup of partners. In January, the company completed its acquisition of Orbis Education Services, which provides prelicensure online education in the health care field. 

Its latest quarter offers more details on how that acquisition is playing out.

Orbis students generate four times more revenue than the average GCU student due to the higher tuition they pay, making growth in Orbis enrollment more significant to GCE's financial performance, Piper Jaffray analysts wrote in a June note. In a May earnings call, GCE CEO Brian Mueller said it "is in a strong position to support the rapid expansion of Orbis," with that company's partner count expected to rise to 20 or 22 by the end of 2019. It currently has 17 under contract. 

Enrollment in the programs that GCE services increased 11.3% year-over-year to 101,679 in the latest quarter, ended March 31. 

Barrington analysts note GCE is pursuing partnerships with colleges and universities that don't directly compete with GCU. Specifically, it is eyeing larger programs that want to combine the strength of their local or regional brands with GCE, analysts note. In the earnings call, Mueller said GCE is working with four institutions in the Midwest and Northeast as possible partners.

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"Traditional universities are realizing that some of these for-profit companies can actually help them. ... Public-private partnerships, as they call them, can benefit both sides."

Jeff Silber

Analyst, BMO Capital Markets

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In a similar vein, Zovio is morphing from a for-profit college operator into an educational services provider. The company is also using an acquisition strategy, picking up boot camp specialist Fullstack Academy in March and online services provider TutorMe in April. It may also acquire a "more traditional" online program manager, its chief operating officer, Greg Finkelstein, told Education Dive in April. 

Going forward, Zovio is expected to partner with colleges and employers as a "best-in-class education technology services provider," Barrington analysts wrote in a note discussing investor meetings held in May. Management expects double-digit revenue growth over the course of the next three years, analysts say. 

Another for-profit on the acquisition track is Career Education Corp., which closed all of its teach-out campuses last year and in March announced plans to acquire the for-profit online Trident University International. It will combine Trident with its American InterContinental University (AIU).

Barrington analysts call the combination "a perfect fit," bolstering AIU’s graduate and military student populations and giving it the scale needed to widen its operating margins. The company is expected to consider acquiring other "high-quality educational institutions and programs," they noted. 

Targeted outreach and expansion to boost enrollment

As Zovio moves into the role of ed tech services provider, it is directing its marketing efforts at three areas, said Nolan Sundrud, the company's director of corporate communications. Those are: drawing students to Ashford University; attracting learners looking to advance their careers with specific skills through services such as boot camps and tutoring; and employer partnerships. 

The latter group accounted for 25% of Zovio's total enrollment as of March 31. It includes companies such as trucking firm US Xpress and T-Mobile, which offer employees subsidized college degrees through Ashford University.

Although momentum is building online, some for-profit colleges also are expanding their footprints on the ground in an effort to attract more students. Strayer and Capella universities, whose parent companies merged last year and now operate as Strategic Education, are doing just that.

Strayer has more than 70 campuses nationwide and plans to open four to six more this year. That's in addition to two opened during the last quarter, company officials said on a call with analysts to discuss the period. The addition of physical locations has a positive impact on the enrollment of new students, Strategic Education President and CEO Karl McDonnell said during the call.

Capella announced in June that it plans to open two ground-based centers in the coming months that will offer students study space and access to academic advisors. Capella's new student enrollment grew around 15% year-over-year in the latest quarter, driven by gains in its self-paced FlexPath program, which represents one-third of all its nondoctoral students.

Speaking to analysts, McDonnell called FlexPath one of the company's "primary drivers of growth" because of how quickly students move through the program.

Early insight into nonprofit conversions

As some for-profit college operators convert to, or partner with, nonprofit institutions, earnings reports offer an update on the outcomes of those moves.

Kaplan Higher Education, which last year transferred Kaplan University's institutional assets to a Purdue nonprofit subsidiary, has since provided services to the resulting institution, Purdue Global, in exchange for 12.5% of its annual revenue. The segment's revenue fell 17% year-over-year during the quarter, which parent company Graham Holdings attributes to the Purdue transaction.

The company collected "a portion of" the service fee from Purdue Global, though it noted it is still determining how best to record it on a quarterly basis.

GCE, which had been trying to convert GCU to a nonprofit for years, got the green light last year. GCE continues to provide support, such as upgrading its learning management platform and providing marketing and recruitment services, to the nonprofit in exchange for 60% of its tuition and fee revenue. The Orbis acquisition and increase in GCU enrollment together drove the service fee up 19.3% for the latest quarter compared to a year ago. GCU's enrollment grew 7.6% year-over-year in the latest quarter to 98,295 students. 

Zovio, meanwhile, continues to look to spin off the for-profit Ashford University as a nonprofit, a process that got the IRS' sign-off earlier this year, though it still needs the U.S. Department of Education's approval.

Big moves shift strategy for survival

Some for-profit colleges are taking more significant steps in response to market shifts and regulatory scrutiny.

National American University Holdings (NAUH), which has been operating as a going concern since January, continues to close ground-based locations and cut staff as it pivots online. However, that might not be enough.

In March, the Ed Department asked National American University (NAU) to post a letter of credit for as much as 50% of its Title IV awards in order to maintain its eligibility for the program because it wasn't meeting the federal agency's fiscal responsibility standards. In May, the NAUH subsidiary that runs NAU announced it would get a one-year, $8.5 million loan from another college operator, the Center for Excellence in Higher Education, which operates CollegeAmerica and has been sanctioned by its accreditor.

Meanwhile, Laureate Education, which has historically pursued a global expansion strategy, is narrowing its focus to two markets, Barrington analysts wrote: Latin America and online, the latter for English-language higher ed that includes its Walden University. The company hopes to have the restructuring mostly completed by the end of 2019, which should yield better and more consistent enrollment growth and stronger margins, according to Piper Jaffray analysts in a note.

As part of that effort and to help pay down its debt, Laureate announced in June the sale of its institutions in Spain and Portugal, following announcements last year of plans to divest business units in Europe, Asia and Central America as well as the University of St. Augustine for Health Sciences, in the U.S.