Federal

Educate Inc. Puts Division Up for Sale

By Rhea R. Borja — December 06, 2005 2 min read
  • Save to favorites
  • Print

The tutoring company Educate Inc. wants to sell its main supplemental-services division after it posted lackluster sales in the third quarter.

The Baltimore-based company announced its aim in late October to sell Education Station. That subsidiary is one of the big players in the highly competitive field of providers offering publicly financed after-school tutoring for students from public schools that fail to make targets for adequate yearly progress under the federal No Child Left Behind Act. (” Supplemental Help Can Be Hard to Find for Rural Students,” this issue.)

Education Station operates in more than 70 school districts—most of them in urban areas—in 37 states. It served about 30,000 students last year, and has about 350 full-time employees. Educate Inc. hopes to sell the subsidiary in the next six months to a year.

The time and money needed to expand Education Station, is beyond what the parent company wants to invest, especially at a time when Educate Inc. is expanding its tutoring services for the consumer market, said Jeffrey Cohen, the president of Catapult Learning, Educate Inc.’s K-12 division, which oversees the NCLB-services division.

“It’s a labor-intensive business,” he said of Education Station. “It requires a lot of senior-management focus, financial resources, and hundreds if not thousands of employees.”

Education Station isn’t growing as robustly as other providers of NCLB tutoring services, said Trace Urdan, a senior analyst at Robert W. Baird & Co., an investment bank based in Milwaukee. That lagging performance hurts in a field in which all but the strongest players could soon be knocked out, he said.

“It’s a dogfight,” Mr. Urdan said of the competition in the supplemental-services market.

Some of the companies likely to bid on Education Station include New York City-based Platform Learning, whose supplemental-services division has grown rapidly, and Kaplan Inc., also based in New York City, Mr. Urdan said. He would not speculate on the dollar value of Education Station to a buyer.

While Education Station’s year-to-date revenues have risen 28 percent—to $28 million—compared with the same period in 2004, the division also posted a 4 percent revenue decrease in the third quarter, compared with the same period last year. Education Station’s year-to-date revenues constitute 10 percent of the overall company’s revenues.

“The truth is that it’s too competitive to make a lot of money in this marketplace,” Mr. Urdan said. “On the other hand, you’ve got a market right now that’s white-hot. If there is any time to sell, they’re in that window now.”

Events

School & District Management K-12 Essentials Forum Get a Strong Start to the New School Year
Get insights and actions from Education Week journalists and expert guests on how to start the new school year on strong footing.
Reading & Literacy Webinar A Roadmap to Multisensory Early Literacy Instruction: Accelerate Growth for All Students 
How can you develop key literacy skills with a diverse range of learners? Explore best practices and tips to meet the needs of all students. 
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
College & Workforce Readiness Webinar
Supporting 21st Century Skills with a Whole-Child Focus
What skills do students need to succeed in the 21st century? Explore the latest strategies to best prepare students for college, career, and life.
Content provided by Panorama Education

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Federal Use Your 'Teacher Voice,' Jill Biden Urges in a Push for Political Activism
Voting in the midterms is a critical step educators can take to bolster democracy, the first lady and other labor leaders told teachers.
5 min read
First Lady Jill Biden speaks during the American Federation of Teachers convention, Friday, July 15, 2022, in Boston.
First lady Jill Biden speaks during the American Federation of Teachers convention in Boston.
Michael Dwyer/AP
Federal Federal Initiative Leverages COVID Aid to Expand After-School, Summer Learning
The Education Department's Engage Every Student effort includes partnerships with civic organizations and professional groups.
3 min read
Education Secretary Miguel Cardona speaks at an event on June 2, 2022, at the Department of Education in Washington.
U.S. Secretary of Education Secretary Miguel Cardona speaks at an event at the Department of Education in Washington in June. The department has announced a push for expanded access to after-school and summer learning programs.
Jacquelyn Martin/AP
Federal Restraint and Seclusion, and Disability Rights: Ed. Department Has Work to Do, Audit Finds
The Government Accountability Office releases a checklist of how the U.S. Department of Education is performing on a list of priorities.
4 min read
Flags decorate a space outside the office of the Education Secretary at the Education Department in Washington on Aug. 9, 2017.
Flags decorate a space outside the office of the Education Secretary at the U.S. Department of Education. The Government Accountability Office has released recommended priorities for the Education Department that target special education rights.
Jacquelyn Martin/AP
Federal Biden Administration Boosts Grants for Community Schools, Sharpens Funding Priorities
The Education Department will award $68 million through its Full-Service Community Schools program.
2 min read
First-graders Rhiannon Hanson, left, and Holden Ashbrook make fruit skewers in class at Lincoln Elementary School in Dubuque, Iowa, on Jan. 20, 2022. Project Rooted has partnered with Dubuque Community Schools for a pilot program in which it provides monthly boxes containing local foods and a project to first-grade classrooms.
First-graders Rhiannon Hanson, left, and Holden Ashbrook make fruit skewers at Lincoln Elementary School in Dubuque, Iowa. The U.S. Department of Education is providing grants to high-quality community schools that provide wraparound services like the nutrition programs at Lincoln Elementary.
Jessica Reilly/Telegraph Herald via AP