K12, Inc., the virtual charter chain founded by the Milken brothers, is in big trouble, according to politico.com. Its stock is tanking, and its legal troubles growing. Its virtual charters seldom get good academic results, but a heavy investment in marketing and recruiting have kept the profits flowing. Until now. I have never liked virtual charters. I think they are a rip-off of kids and taxpayers.
TOUGH TIMES FOR K12, INC: The nation’s largest for-profit operator of public schools, K12, Inc., has had a bumpy ride of late. Its stock closed Friday at a 52-week low of 13.82 per share, down from a recent peak of 36.78 in September 2013. What’s behind the slump? For one thing, the company’s astronomical growth has slowed significantly. Just last fall, K12 executives were projecting revenue of $987 million for fiscal year 2014. But actual revenue for the year came in under $920 million. In a conference call last week, executives projected revenues would rise only slightly in the next fiscal year.
– Meanwhile, K12’s academic empire has been in turmoil. The board of Agora Cyber Charter in Pennsylvania, which is one of K12’s largest and most profitable online schools, has signaled its intent to seek new management (though it will continue to buy digital curriculum from K12). Colorado Virtual Academy broke ties with K12 before the start of the school year. And late last week, Delaware’s state board of education voted to close another struggling school operated by K12, the Maurice J. Moyer Academic Institute. Trouble also looms in Tennessee, where Education Commissioner Kevin Huffman has ordered the K12-operated Tennessee Virtual Academy to shut down after this school year unless it shows big gains in academic performance. And last spring, the NCAA said it wouldn’t accept coursework completed at any of two dozen K12-operated schools as proof of a student’s eligibility to compete for Division I or II colleges and universities.
– To top it all off, K12 faces a trademark infringement lawsuit in Florida. The state Supreme Court last month ruled that Florida Virtual School – which was founded in 1997 – could sue K12 Inc. for opening a slew of competing online schools under the name Florida Virtual Academies. Pro Education looked at K12’s business model and examined the shaky performance of online schools in general in a series last fall: