K12 Earnings Call

This week CAVA’s management company K12 Inc. held its third quarter earnings call with executives, reporting revenue growth of 4 percent “year over year” and operating income (profit) of just about $19 million for the quarter.  On the conference call, recently-hired CEO Stuart Udell expressed his delight with being one of the newest members of the K12 executive team as well as his excitement about what he sees as K12’s potential to deliver for students.  It’s no surprise that Udell, whose pay and employment depends on improving K12’s stock performance and investor satisfaction, presented an extremely optimistic front as he speculated that K12’s fourth quarter will be even better.

This despite a rough start for the company’s current fiscal year – one that essentially began with a shareholder revolt that resulted in the voting down of K12’s executive compensation proposal, CAVA

teachers delivering a report card of straight F’s to K12’s leadership for its failure to invest in students and teachers, the removal of Nate Davis as the company’s CEO, and sharp criticism of the for-profit company following the release of a series of studies pointing to problems with virtual charter schools due to weak oversight and the industry’s misplaced priorities.

But, if you ask Stuart Udell, at K12 everything is awesome.  This is an interesting contrast to the doom and gloom the company sought to broadcast as early as last week in response to the recent articles published by the San Jose Mercury News, which raise very serious questions about how CAVA and K12 are using the public education dollars they receive – millions of dollars intended to provide instruction to our kids but instead funneled out of the state.  CAVA and K12 have yet to respond to the actual merits of the news story, instead opting to blame it all away on teachers who have stood up for our students by forming a union.  Hmmm.

Oh, and speaking of contradictions, did you know that one of K12’s newest ventures is in partnership with – wait for it – a labor union?!  That’s right.  Executives on this week’s conference call also touched on their excitement around K12’s Destinations Career Academy – a new technical education online high school in Wisconsin that offers a construction apprenticeship program in partnership with the International Union of Operating Engineers Local 139.  Imagine that – K12 seeking to deliver for students in partnership with organized labor.

We sincerely look forward to the day decision-makers at our school embrace a partnership with teachers and our union too – not only for the benefit of shareholders and the bottom line, but for the success of CAVA’s students.  Now, talk about awesome.

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Nashville Public Radio | Will Tennessee Continue Allowing Virtual Schools To Operate Statewide?

Will Tennessee Continue Allowing Virtual Schools To Operate Statewide?


K-12 students end up getting most of their instruction online, though the youngest grades spend less time in front of a computer. Credit: K-12 via Facebook

This year, Tennessee lawmakers must decide whether or not to stay in the statewide cyber school business. The legislative act that paved the way for the troubled Tennessee Virtual Academy needs to be renewed.

For-profit virtual school operator K12 Inc. needed state law changed in order to pull students from all 95 counties. House Education Committee chairman Harry Brooks sponsored the bill in 2011.

Since then, Tennessee Virtual Academy has enrolled thousands of students and posted such bad scores that it’s on the brink of forced closure. But Brooks points to other smaller virtual schools performing well, and some have students from outside the typical geographic boundaries. Shelby County, which has 150 students, has opened enrollment statewide.

“My argument would be do you want to continue what Memphis is doing?” Brooks asks. “You have other virtual academies that have students from within their district and from outside their district.”

Rep. Joe Pitts (D-Clarksville), who is a member of the House Education Committee, says he would “hate to just wipe them all off.”

“But we’ve got to do something about this Tennessee Virtual Academy,” he says. “What a mess.”

Pitts says there’s nothing wrong with virtual education. But the legislature should consider adding oversight before extending the law another four years. He suggests enrollment caps and allowing the state to intervene after one year of poor test results instead of two.

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A front-page Washington Post article today links K12 Inc. to Jeb bush’s Foundation for Excellence in Education, which Lyndsey Layton notes “has been criticized as a backdoor vehicle for major corporations to urge state officials to adopt policies that would enrich the companies.” Earlier this week, in the Jefferson (NC) Post, Matt Ellinwood reported that the state board of education granted K12 a new charter.

So, if the Post had published the article while the North Carolina State Board of Education was considering granting K12 a charter, would it have made a difference? Would knowledge of K12’s poor performance and shaky finances have affected the decision? Probably not.

Due to last-minute lobbying, a legislative lapse or dumb luck, K12 had the charter locked down. Ellinwood writes: “A provision slipped into the General Assembly’s budget this past summer directed the State Board of Education to open two virtual charter school pilot programs and at present there are only two applicants.”

Two openings, two applicants. This is how the game is played.

The post K12 Inc. Gets NC Charter Despite Headwinds appeared first on Cashing in on Kids.

Quicklink: Bad News: K12 Inc Enters the Preschool Market; by Diane Ravitch | OpEdNews

Quicklink: Bad News: K12 Inc Enters the Preschool Market; by Diane Ravitch

Ravitch says : 'Here is the latest bad news for American children: Having created a string of low-performing but profitable virtual charter schools, K12 Inc. has announced that it is entering the lucrative preschool market. Equity investor Whitney Tilson warned other investors last year against K12, which he compared to the subprime mortgage industry, but the company keeps coming up with new ideas to put children in front of computers and absorb public dollars'…. 'According to the U.S. Department of Education, there is a robust body of evidence and research demonstrating that high-quality, early learning programs help children arrive at kindergarten ready to succeed in school and in life' but as this post shows, there are many charlatans and privateers are seeing dollar signs.

K12 (LRN): Moving Average Crossover Alert – Tale of the Tape – NASDAQ.com

K12 (LRN): Moving Average Crossover Alert – Tale of the Tape

K12 Inc. (LRN)could be a stock to avoid from a technical perspective, as the firmis seeing unfavorable trends on the moving average crossover front.Recently, the 50 Day Moving Average for LRN broke out below the 200Day Simple Moving Average, suggesting short-term bearishness.

This has already started to take place, as the stock has movedlower by 18.6% in the past four weeks. And with the recent movingaverage crossover, investors have to think that more unfavorabletrading is ahead for LRN stock.

If that wasn't enough, K12 isn't looking too great from an earningsestimate revision perspective either. It appears as though manyanalysts have been reducing their earnings expectations for thestock lately, which is usually not a good sign of things to come.

Consider that in the last 30 days, 6 estimates have been reduced,while none have moved higher. Add this in to a similar move lowerin the consensus estimate, and there is plenty of reason to bebearish here.

That is why we currently have a Zacks Rank #4 (Sell) on this stockand are looking for it to underperform in the weeks ahead. Soeither avoid this stock or consider jumping ship until theestimates and technical factors turn around for LRN.

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An Open Letter To The Board And Management Of K12


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To the board and management of K12 (LRN ):

Since I went public with my presentation and article detailing the many reasons for my short position in K12’s stock, I’ve had the pleasure of both meeting and speaking extensively with CEO Ron Packard and also having a call with Executive Chairman Nate Davis. It’s very unusual for senior management of a company to speak with a short seller (full disclosure: I continue to have a short position in the stock, as I discuss in this article ), so the fact that they were willing to do so is a credit to K12.

I found Packard and Davis to be refreshingly candid about K12’s challenges and what the company is doing to address them, and believe that both of them are genuinely sincere in wanting to do right by the students who enroll at the company’s schools. As I discuss below, however, I think their words are inconsistent with many things K12 is doing. In particular, I don’t think they fully appreciate the tension and trade-offs between their desire to maximize growth, profitability, and the share price vs. doing their best to ensure that every one of K12’s nearly 130,000 students is engaged and learning.

But before I discuss our areas of disagreement, I’d like to highlight the many things we agree on:

  • K12 is an innovative, pioneering company with a well-regarded curriculum.
  • A 100% online school is an excellent option for some students – but a terrible option for others.
  • In its early days, K12 served mostly middle- and upper-class kids with strong parent coaches.
  • In recent years K12 has seen a large influx of at-risk students – typically poor and minority youth who are behind academically and often lack a strong parent coach at home.
  • Such at-risk students are often stuck in failing bricks-and-mortar schools and thus have a great need for an alternative educational option – and even a mediocre alternative might be better than what they have now.
  • These students have distinct, very challenging needs, which K12 is endeavoring to meet.
  • However, K12 faces the problem that these students are less likely to have the motivation, self-discipline and parental support to consistently engage and succeed in an online school.
  • Students who don’t engage aren’t likely to learn much and fall behind academically, so they would probably be better off if they quickly returned to a traditional school.
  • Nevertheless, any student, regardless of background, can succeed in an online school if they engage – and it is impossible to predict with 100% accuracy up front which students will engage.
  • K12 only wants students who will engage and succeed at its schools, so it seeks to fully inform parents and students what is required for success at an online school.
  • Even though students who don’t engage might be profitable for the company because they require little teacher time and attention, K12 does not want such students to enroll and, if they do, would prefer that, once it’s clear that they are not engaging, leave K12 and re-enroll at a regular school.
  • However, if a student is determined to enroll/stay enrolled, K12’s hands are tied because, according to most states’ charter laws, the company cannot be selective in enrollment, nor can it kick any student out.

City school system wants public feedback


City Schools Superintendent Paul McKendrick is seen at the Tuscaloosa City Board of Education building. The Tuscaloosa City Schools system emailed a survey to its employees and parents of children in the system seeking their opinions about such things as academic preparation, student support, parental engagement, diversity, school operations and the accessibility of school leaders.

File photo | The Tuscaloosa News

By Jamon Smith
Staff Writer

Published: Wednesday, May 29, 2013 at 3:30 a.m.
Last Modified: Tuesday, May 28, 2013 at 8:40 p.m.

TUSCALOOSA | The Tuscaloosa City Schools system wants public feedback on the performance of its schools.

Last week, the system emailed a survey to its employees and parents of children in the system seeking their opinions about such things as academic preparation, student support, parental engagement, diversity, school operations and the accessibility of school leaders.

The 15-to-20 minute survey is being conducted by K12 Insight, an independent research and communication firm.

“Partnering with K12 Insight furthers our strategic plan goal of improving communications within the school system and with all stakeholders,” said Superintendent Paul McKendrick. “Engaging and collaborating with each other allows us to foster a culture of innovation that is necessary to improve our schools.

The identity of those who take the survey will remain confidential. But once the survey closes on June 17, the system will release the collective results along with an explanation about how the information will be used to improve the schools.

The survey can be found on the front page of the system’s website at www.tuscaloosacityschools.com or can be accessed directly at http://research.zarca.com/survey.aspx?k=RQ.QQSWsVsPsPsP&lang=0&data= .

“The success of our strategic plan requires everyone to be informed about district activities and engaged in district decisions,” McKendrick said. “Only by building trust and working together can we provide our students with the education they need to ensure their future success.

Reach Jamon Smith at jamon.smith@tuscaloosanews.com or 205-722-0204.

Virtual charter school off of legislative radar … for the moment

Post on May 14, 2013 by Sarah Ovaska 1 Comment »

K12, Inc. bumped into another stumbling block in its attempt to break into North Carolina’s public education market, with a state legislator saying he will forgo legislation to put an online charter school’s application back in front of the State Board of Education.

State Rep. Jon Hardister, R-Greensboro, said he will pull language in a proposed committee substitute for House Bill 273 that references a virtual charter school application put forth by N.C. Learns, a non-profit organization that hoped to open up a charter school run by K12, Inc..

K12, Inc. is a Virginia-based company that runs online schools in 32 states, and attributes nearly 85 percent of its revenue to public dollars. Online, or virtual schools, allow students to take their classes through their home computers, instead of attending school through traditional classrooms. http://thetruthaboutk12.com//wp-content/uploads/2015/09/

The K12, Inc.-focused language was expected to be introduced at today’s House Education Committee.

At last week’s meeting, a proposed committee substitute that would have granted an automatic opening to the school was passed out before the committee meeting. Hardister took the issue off the day’s agenda after lobbyists for public education and a charter school group raised concerns with him about the proposed school.

“There are some questions that we need to answer about virtual charter schools before we move forward,” Hardister wrote in an email Monday about holding off on K12 legislation.

Among Hardister’s questions are whether state laws need to specifically state virtual charter schools can operate and what type of funding the schools should get, given that they don’t have the same type of overheard that schools with physical locations have.

“Clearly, virtual charter schools will not require the same level of funding as brick-and-mortar charter schools,” Hardister said.

Questions have been raised by critics about whether the company is more focused on finding profits for its Wall Street investors than delivering a quality education to schoolchildren. (The New York Times ran this lengthy piece in December 2011 about the issue.)

The company has had mixed results in other states, including Tennessee where the school performed well below the state average and in Colorado where graduation rates were in the teens. (North Carolina’s four-year graduation rate, to offer some comparison, is at 80 percent.)