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 Climate & Safety K-12 Essentials Forum Strengthen Students’ Connections to School
Join this free event to learn how schools are creating the space for students to form strong bonds with each other and trusted adults.
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
Reading & Literacy Webinar
Creating Confident Readers: Why Differentiated Instruction is Equitable Instruction
Join us as we break down how differentiated instruction can advance your school’s literacy and equity goals.
Content provided by Lexia Learning
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
IT Infrastructure & Management Webinar
Future-Proofing Your School's Tech Ecosystem: Strategies for Asset Tracking, Sustainability, and Budget Optimization
Gain actionable insights into effective asset management, budget optimization, and sustainable IT practices.
Content provided by Follett Learning

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 Miguel Cardona in the Hot Seat: 4 Takeaways From a Contentious House Hearing
FAFSA, rising antisemitism, and Title IX dominated questioning at a U.S. House hearing with Education Secretary Miguel Cardona.
6 min read
Secretary of Education Miguel Cardona testifies during a House Committee on Education and Workforce hearing on Capitol Hill, Tuesday, May 7, 2024, in Washington.
U.S. Secretary of Education Miguel Cardona testifies during a House Committee on Education and Workforce hearing on Capitol Hill on May 7 in Washington.
Mariam Zuhaib/AP
Federal Arming Teachers Could Cause 'Accidents and More Tragedy,' Miguel Cardona Says
"This is not in my opinion a smart option,” the education secretary said at an EdWeek event.
4 min read
U.S. Secretary of Education Miguel Cardona speaks during Education Week’s 2024 Leadership Symposium at the Hyatt Regency Crystal City in Arlington, Va., on May 2, 2024.
U.S. Secretary of Education Miguel Cardona speaks during Education Week’s 2024 Leadership Symposium at the Hyatt Regency Crystal City in Arlington, Va., on May 2, 2024.
Sam Mallon/Education Week
Federal Opinion Should Migrant Families Pay Tuition for Public School?
The answer must reflect an outlook that is pro-immigration, pro-compassion, and pro-law and order, writes Michael J. Petrilli.
Michael J. Petrilli
4 min read
Image of a pencil holder filled with a variety of colored pencils that match the background with international flags.
Laura Baker/Education Week via Canva
Federal New Title IX Rule Could Actually Simplify Some Things for Districts, Lawyers Say
School districts could field more harassment complaints, but they can streamline how they handle them, according to legal experts.
7 min read
Illustration of checklist.
F. Sheehan for Education Week + iStock / Getty Images Plus