In this YouTube interview, host Gary Stocker and analyst Matt Hendricks evaluate Bay Path University’s financial and operational health. They note a 25% drop in enrollment over recent years, yet the university maintains a balanced budget and a modest positive net income (about 1%). Net tuition revenue has fallen only 4% because tuition per student rose from roughly $14K in 2016 to $18K, suggesting a deliberate pricing strategy or a shift toward higher‑income students. Cash flow shows an anomaly: operating cash is negative despite profitability, likely due to large unpaid receivables. The analysts flag unusually high marketing spend, especially three Google advertising contracts totaling $2–4.5 million, which places Bay Path among the highest spenders per full‑time equivalent (FTE) nationally. Graduation rates hover around the 50% benchmark—average over eight years is about 50%—which is modest but not atypical for U.S. four‑year institutions. The university offers 290 majors, with a heavy concentration (30%+) in business administration, raising concerns about program concentration risk. Hendricks recommends auditing the marketing/vendor contracts, investigating the pricing decision that offset enrollment loss, and monitoring the reliance on a single major. Overall, despite enrollment challenges, Bay Path appears financially viable, but there are operational areas needing closer scrutiny.
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Well, let's go ahead and move on to the second, uh, second college in our review today. And for our second college, we're going to Massachusetts, Dr. Hendricks, and we're looking at Bay Path University. The floor is yours.
This is a good one. I like this. I like a lot of things about this school. I do have some advice, uh, data-driven advice for them, but I'll show you why I like them so much. Uh, first of all, clearly positive net income every single year. Um, every year, perfect. I mean, and not too high, right? Again, you don't want to be too high. This is a nonprofit. You're not like returning dividends to your shareholders or anything like that. But positive 1% is about perfect, right?
Just have a little right along that median line.
Yeah, little gap. Uh, so that looks great. Cash flow also looks great. Um, net cash from operating activities, although they had a, a negative one here. I double-checked this and you can By the way, double-check their audits down here just like I did. I was curious about the negative net cash because it seemed to come out of nowhere and it's an anomaly. It looks like they have a bunch of money owed to them that has not been paid yet. So that's the interesting— there, it's just the cash hasn't shown up. They have big receivables. So one of the reasons I really like this school, though, is that they're doing very well to keep their budget balanced even though they have a serious problem with enrollment being down. And that's exactly what their job is. And I love it. So here's, here's their enrollment. And that is most schools really struggle with this, right, Gary? We see—
oh yeah, absolutely.
That's down 25% in enrollment. They don't keep a balanced budget, but Bay Path has. And that's awesome. I mean, honestly, if you're looking to recruit administrators, you should probably find a school like this and find the administrators from that school because they're right. Alright, so they're down 25% on enrollment, but yet the budget is still balanced. That's excellent. Probably have a great board as well, and I really like that. Let's take a look at net tuition revenue. They have been blessed here in that even though, again, let's remember this number, down 25% on net, on enrollments, their net tuition revenue is not down that much. It's only down 4%. So how in the world do they do that? The only way you can do that is with price. Yeah, I'll show you net tuition.
Yeah, let's take a look at that.
That tuition revenue per student is a really good proxy for the price, the average price that the students are paying in terms of tuition and fees. And they're paying a lot more than they used to. Price in 2016 was about $14K, and now it's about $18K. So excellent. And, you know, it looks like They may have experimented with a lower price here. This would be really interesting to talk to them why this happened. It went down sharply and they're like, they must have, they must be looking at data like we are, right? Yeah. Hey, that was a bad idea. Exactly what the reason you use data and say, hey, let's not do that. Let's actually go the opposite way. And they did it and good for them that they've been able to maintain a balanced budget because they've really offset the loss in enrollment. By just charging a higher price. Or the other story could be that they're just getting more high-income students to pay to come, right, which pay a higher price just naturally. So it would be really interesting to talk to them. Don't forget about price, right? Completely offsetting the 25% loss pretty much in enrollment just by charging a higher price. And I bet there's folks that are willing to pay that higher price, which clearly they are.
I bet their strategic compass would be quite informative also.
Yeah, it would, it would. Um, and it'd be interesting to talk to them about how they decided on that pricing or how they got that average net price per student up. Um, yeah, yeah. And okay, so the enrollment's way down, their staffing and contractors look fine. I actually double-checked that, and it's not a shock. A school that's got a balanced budget probably has staffing that's in line, and contractor spend, that looks about right. Here's one thing that, uh, one piece that might be useful for them, though. I'll show you some of their vendor contracts here. So here's BayPath. And notice there's a— remember, again, what I'm looking for here is color. Yeah. Contracts that look high relative to their FTE enrollment and relative to their operating revenue. That's this last column. So in every year they have this Google payment that is quite high. And remember, this is looking at all the advertising spend. So they actually have 3 different advertising contracts. They're spending like $2.5 million just on these 3 contracts, or $4.5 million on 3 contracts. Okay, so, um, not sure these are working all that well, to be honest. Uh, again, enrollment's going down, and it's not clear that that has really Chain, although they're charging a higher price. Hard to argue though that, right, because the advertising, I would hope consumers would be buying, paying the higher prices because the quality of the school is high.
But maybe the advertising, maybe the advertising promotes the quality of the college more than just attending the college.
Yeah, the perception of value. It's a really interesting question. I can't answer it obviously here, but I will say that this one contract of $2 million spent on advertising is getting flagged as high and it's not even taken into account the double, uh, the 2 point or 1.2 million spent here. Yeah, on marketing. Uh, so we— yeah, this needs to be looked at. And, um, probably looking to spend— normal for a school like Bay Path would be probably spend less than 2 million total on marketing, not, uh, also adding these other contracts. But also just looking at Google contracts, I'll just show you We did all Google contracts for 2023. We'll spend and then sort by amount per FTE. Yeah, Bay Path is what, 5th? 1, 2, 3, 4, 5, 6th overall nationwide on the database that I have. So, uh, it's very high. You can see other schools that are quite a bit lower. Yeah, they might want to look into that contracts. It's not a contract, probably. It's just spending on clicks, right? I mean, look at that.
Look at the Southern New Hampshire number there. The total number, $66 million. This one tells us something about their business model.
They're huge. Yeah, this school is massive. They have 125,000 students. So yeah, that's a big business here. But notice, so that's, that's why it's key to break it out by FTE and break it out by revenue. Yeah, that's a really high spend relative to their revenue. But it's a, you you know, different model I think this school has. Fascinating compared to Bay Path. Um, but yeah, I think, um, it'd be worth a second look at all of those marketing contracts, consolidating them. Um, I don't think it's actually all that common that schools are paying for Google clicks, which is, I suppose, what this is.
Yeah, yeah.
Uh, usually get a vendor that does marketing and then the package concludes the Google stuff, cost per click stuff. So all of this looks a bit odd. I'd look really closely at the marketing spend. And if you're getting your return, it doesn't— I mean, if the goal is to get increased enrollment, you're not getting your return. And I don't know if I would attribute, give credit to the marketing team for being able to charge a higher price. That's probably just because you're a good school, right? Yeah.
Yeah.
I don't know for sure. I'm just guessing. I just say spend some time looking at those marketing contracts. I'll, I'll send it back to you, Gary.
Let's take a look then at graduation rates for Bay Path University. And okay, the threshold is 50%, and they're hovering around it. The average over the last 8 years is hovering right around that 50%. So if 100 students start at Bay Path 4 years ago, 50 of them graduate. Not great, but Matt, as you and I well know, most colleges, public and private, 4-year in all of the United States, most, more than half, do not graduate even 50% of their students in 4 years. So somebody like Bay Path, which is right at that number, is at the threshold that is good if you accept 50% as a graduation rate. We'll see a lot of colleges with higher rates than that, but 50% is nothing to write home about. Let's look at majors and let's look at Bay Path on the majors. Somebody stole Bay Path. There we go. So 290 majors, and you can— we can see where they're heavy, a little bit too heavy on business administration. Um, relying on one major for 30+% of your business is risky. Um, what happens if some faculty members leave or if somebody decides they want to take that business and start charging lower tuition for business management majors? There's some risk with that. And we look at the trends briefly. Down, yeah, down a little bit for some of those majors. So again, these are the top, a diverse set of 64 majors that I have in the list. So this is not every single major that's out there. Bay Path is in Massachusetts, so let's take a look at Massachusetts. We'll change the state and look at the great state of Massachusetts. I got that one right. And let's take a look at a major. We still have criminal justice, so a lot of players in Massachusetts with criminal justice. Let's take a look at different major just to be flexible. Here's accounting. And again, we're looking at market share. This is external market share. Where— who are the strong colleges with accounting and related services in the state of Massachusetts? Bentley, interestingly. Boston College. But look at the bit players. Look at the ones who have really, really small market shares. You have to— I have to wonder, Matt, what the quality of the program is by comparison to a college that has a handful or so of majors versus a college who has hundreds of majors in those areas. Again, that's the tool. We're just showing the capabilities today to show you what it looks like. So Bay Path University, you know, pretty common mix of majors. Matt, what kind of assessment do you have for Bay Path?
I like them. Yeah, as I mentioned, I like them. They're in good shape. They have a balanced budget, positive net income, uh, looks good. I just look closer at some of those vendor contracts and they can do some optimizations there. They tried to turn enrollment around. Obviously, it'd be easier if enrollment were growing, right? So, but it's pretty impressive that they're maintaining a sort of sustainable financial path, even though they've lost a lot of students on EdTech.
And so I guess Bay Path University in Massachusetts gets the Matt Hendricks seal of approval.
