Dive Brief:

• The parent company of the for-profit National American University last week removed its stock from the Nasdaq exchange after its market cap fell below the $5 million minimum necessary to stay listed, according to a securities filing. The company is transferring its stock to the penny exchange OTCQB Market later this month.
• The company said it has until June 24 to regain compliance with Nasdaq's requirements. Over the past year, its stock has fallen from around $1.40 a share to 18 cents.
• The delisting comes as the company has been trying to improve its financial performance. In the fall, NAU announced a strategic plan centered on expanding its online and national security programs. As part of the plan, NAU said it would suspend new student enrollment in 34 of its 128 programs starting Nov. 1, 2018.

Dive Insight:

NAU's fortunes have fallen with the for-profit sector as a whole. Its exit from the Nasdaq exchange may be largely symbolic for non-investors, but it reflects real financial troubles that have affected many in the sector, including two large for-profit operators that abruptly shuttered operations in December.

From 2014 to 2018, NAU's revenue dropped nearly 40% to $77.2 million in the fiscal year ending in May 2018, due primarily to enrollment declines. During that time, the company went from making profits of $3.5 million to a loss of $12.1 million in 2018, though it has been able to lower its costs in recent quarters by consolidating campuses.

Before its board approved the new strategic plan, NAU was already deep into a shift toward online education. The chain, founded in 1941, began offering online degrees in 1998. By the end of May 2018, it had 724 students enrolled at physical locations compared to 4,342 in its online programs and an additional 582 in hybrid programs. The company also supported online instruction of another roughly 3,735 students at partner institutions that use NAU online course hosting and tech support.

The company is also targeting military students, and it beefed up its security and intelligence training offerings through the acquisition of Henley-Putnam University, a deal that closed in March. NAU has seen growth in Canadian and graduate student enrollment as well.

For-profit colleges have been scrambling in recent years to remake their business model to adapt to regulatory shifts and public scrutiny resulting from media reports and government investigations that have alleged aggressive marketing, low-quality education and poor student outcomes.

Some have adapted by seeking nonprofit status or shifting to a services model (or both, as in the case of Grand Canyon Education). Others have merged or sold themselves, including Kaplan University, which Purdue University acquired last year.

Others have folded, most recently Education Corporation of America and Vatterott Educational Centers. Both closures were sudden, dramatic and followed restricted access to federal aid programs due to existing financial problems. Made without full teach-out plans in place, those closures also sent tens of thousands of students scrambling for ways to finish their programs or recoup their financial losses.