Bridgepoint Education BPI – High Growth Potential With Regulatory Risk

Video Summary

About the company

Bridgepoint Education is a regionally accredited provider of postsecondary education services. It offers associate’s, bachelor’s, master’s and doctoral degree programs in business, education, psychology, social sciences and health sciences.

History

Bridgepoint Education was founded in January 2004, by a private equity firm, Warburg Pincus, the current CEO, Andrew Clark, and several other executives. The goal was to establish a postsecondary education provider that was different from other providers. During the years, it acquired two universities that were renamed Ashford University and the University of the Rockies.

Performance

The company experienced strong growth since its inception. It started with 332 students and by 2009, it served over 53,000 students. In 2005, revenues were $8 million and by 2009, they were $454 million. However, it didn’t become profitable until 2007 when net income reached $3.3 million. In 2009, it was $47 million.

Industry

It is evident that the market for postsecondary education is strong. Online education is the fastest growing segment in the education market. The Obama Administration has a goal of providing greater access to and support for higher education. Private education companies are likely to benefit.

Risks

The entire for-profit education industry is not popular with investors because of regulatory concerns. Any regulatory changes are risky because for-profit education companies rely on Title IV loans to generate revenues. Any changes in Title IV programs can be detrimental to the entire industry.

Conclusion

Although this company has many positive attributes, its heavy reliance on Title IV loans creates risk.

Disclosure: The Author does not own BPI.

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