Dive Brief:

• Laureate Education's Walden University is planning for modest enrollment growth after adjusting its operations to compete in a "mature and competitive" U.S. market, CEO Eilif Serck-Hanssen told analysts during a call Thursday to discuss its second-quarter earnings.
• During the quarter, Laureate used nearly $1 billion from its sale of institutions in Spain, Portugal and India to reduce its debt to its lowest level in a decade. The company is expanding in Latin America and online, with strong growth in distance learning in Brazil during the period. 
• Serck-Hanssen also said the company will repurchase up to $150 million in Class A common stock to help raise its trading value.

Dive Insight:

Enrollment at the for-profit online Walden U rose 1% year-over-year during the quarter. Serck-Hanssen expects continued, low-single-digit growth as the university adds programs, expands its competency-based education offering and invests in tools like artificial intelligence and virtual reality.

In the last 18 months, Walden revamped its commercial operations team, improving its digital marketing data analytics capabilities, Serck-Hanssen said. The company considered selling Walden last year but decided it wants to keep a foot in the U.S. market.

"We can conclude that (the) job is done and the focus now is going to be on how to lift the growth rate going forward," he said.

Laureate's financial position has attracted regulatory scrutiny in the U.S. As of June 30, Laureate had posted with the U.S. Department of Education a $127,000 letter of credit, which is typically used to secure Title IV funding in the event of a school closure. As of June 1, Walden was also under heightened cash monitoring by the department.

Serck-Hanssen noted the company reached an "important watermark" during the second quarter after having lowered its debt to about two times its earnings before interest, tax, depreciation and amortization.

The Baltimore-based company's shift toward Latin America reflects a trend among for-profit colleges in the U.S. to find new markets for their services, whether geographic or with different types of customers. Some, including Grand Canyon Education and Zovio (formerly Bridgepoint Education), are becoming education technology services providers to colleges and companies. (Those changes have raised red flags for potential conflicts of interest.)

For-profit college operators are also finding renewed interest from private equity firms, though research has linked such buyouts to lower spending on education and worse student outcomes. Earlier this year, Laureate sold its University of St. Augustine for Health Sciences to a Canadian private equity firm for $400 million, funds it used to pay down its debt.

In June, Laureate announced plans to transfer ownership of its California-based NewSchool of Architecture & Design (not to be confused with The New School) to Ambow Education, a Chinese company. The deal is subject to approvals.

Along with Walden, St. Augustine and NewSchool were under heightened cash monitoring as of June 1 and were included on the letter of credit prior to the sales.