Covista (CVSA) Q1 2027 Earnings Call Transcript

DATE

Oct. 29, 2026

CALL PARTICIPANTS

• Vice President of Investor Relations - Jeremy Cohen
• Chairman and Chief Executive Officer - Stephen W. Beard
• Chief Financial Officer - Robert J. Phelan

TAKEAWAYS

• Revenue -- $511.5 million, representing 10.7% growth driven by strong performance across all three operating segments.
• Adjusted EBITDA -- $131.2 million, growing 17.1% year over year as revenue growth and platform efficiencies generated operating leverage.
• Adjusted EPS -- $2.19, a 25.1% increase reflecting lower interest expense and a reduced share count from repurchase activity.
• Total Enrollment -- 104,713 students, up 7.6% from the prior year and marking the 13th consecutive quarter of growth.
• Fiscal 2027 Revenue Guidance -- $2.06 billion to $2.095 billion, raised from the previous range of $2.05 billion to $2.09 billion based on first-quarter outperformance.
• Fiscal 2027 Adjusted EPS Guidance -- $9.00 to $9.20, an increase from the prior $8.90 to $9.15 range.
• Chamberlain Revenue -- $192.4 million, increasing 7.4% due to higher credit hours per student and pricing optimization.
• Walden Revenue -- $216.7 million, rising 14.1% on the strength of record student enrollment.
• Medical and Veterinary Revenue -- $102.5 million, up 10.0% as disciplined operations converted enrollment growth into profit.
• Walden Enrollment -- 58,881 students, representing 12.8% growth and the highest total in the university's history.
• Share Repurchases -- $84 million, involving approximately 660,000 shares at an average price of $127.63.
• Net Leverage -- 0.5x, reflecting a strong balance sheet with $222.2 million in cash and equivalents.
• Term Loan B Repricing -- 25 basis points reduction in interest rate spread to SOFR plus 2.00%, lowering borrowing costs.
• Chamberlain Pre-licensure BSN Enrollment -- 13.2% growth, marking the 17th consecutive quarter of growth for this specific program.
• Walden Undergraduate Enrollment -- 20% growth, aligning with strategic priorities identified during the company's Investor Day.
• Interest Expense -- $9.9 million, down from $11.1 million in the prior year due to debt reduction efforts.
• Free Cash Flow -- $355 million over the trailing 12 months, an 11.4% increase reflecting high cash conversion.
• Capital Expenditures -- $99 million on a trailing 12-month basis, up from $56 million as the company invests in campus capacity.
• Chamberlain Startup Costs -- $3 million, attributed to investments in new campus locations ahead of significant enrollment.

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RISKS

• Beard noted that "lack of faculty, clinical site availability, and lack of space from caps written into state and accreditor policy" resulted in nursing schools turning away 93 thousand qualified applicants last year.
• Phelan warned that second-quarter growth will be "well below our full year rate" due to the Walden academic calendar shifting $18 million of revenue into the third quarter.
• Phelan cautioned that the company expects "a higher effective tax rate in fiscal 27 than in fiscal 26."
• Beard acknowledged that "LLM search is a real dynamic for any company that serves consumers," potentially impacting brand visibility and student acquisition patterns.

SUMMARY

Covista Inc. (NYSE:CVSA) reported first-quarter results that exceeded internal projections, leading to an increase in full-year guidance for both revenue and adjusted earnings per share. Management reported that total student enrollment grew for the 13th consecutive quarter, supported by demand in healthcare education. The company launched its Purpose at Scale strategy, focusing on expanding campus capacity, deepening employer partnerships, and integrating artificial intelligence into the classroom experience. Management noted that capital allocation remains focused on reinvestment in campus facilities and technology while continuing share repurchases under a $750 million authorization.

• CEO Beard reported that the Cincinnati campus opened in August, Salt Lake City began classes in October 2026, and a Nashville location is expected to open in January 2027.
• The company expanded its partnership with Advocate Health to three Chicago-area campuses following a successful launch in Wisconsin.
• Management stated that its new physician assistant program in Phoenix opened at full capacity, with a third location currently in development.
• CFO Phelan indicated that Walden University will return to a normalized academic calendar, shifting $18 million in revenue and adjusted EBITDA between the second and third quarters.
• The company is testing AI-powered classroom tools designed to personalize learning journeys from inquiry through licensure.
• Beard noted that approximately 90% of students study healthcare, where demand is driven by licensure requirements and patient needs.
• Chief Financial Officer Robert J. Phelan announced his planned retirement and will continue to serve until a successor is named.

INDUSTRY GLOSSARY

• BSN: Bachelor of Science in Nursing.
• LLM Search: Large Language Model search, referring to AI-driven search engines that provide conversational answers to queries.
• Purpose at Scale: The company's three-year strategic plan focused on operational excellence, platform extension, employer integration, and technology.
• SOFR: Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated loans that replaced LIBOR.
• Term Loan B: A type of long-term debt typically issued by institutional investors, often with a longer maturity and fewer restrictive covenants than traditional bank loans.
• USMLE Step 1: The first part of the three-step United States Medical Licensing Examination required for medical licensure in the U.S.

Full Conference Call Transcript

Operator: Greetings. Welcome to the CoVista Fiscal First Quarter 27 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeremy Cohen, Vice President of Investor Relations.

Jeremy Cohen: Afternoon, and welcome to Covista's earnings call for the first quarter of Fiscal Year 27. On the call with me today are Stephen W. Beard, chairman and chief executive officer of Covista and Robert J. Phelan, Chief Financial Officer. Before I hand you over to Steven, I will take you through the legal safe harbor and cautionary declarations. Certain statements and projections of future results made in this presentation constitute forward looking statements that are based on our current market, competitive, and regulatory expectations and are subject to risks and uncertainties that cause actual results to vary materially.

We undertake no obligation to update publicly any forward statement after this presentation, whether because of new information, future events, changes in assumptions, or otherwise. Please see our latest form 10 k for a discussion of risk factors as they relate to forward looking statements. In today's presentation, we will use certain non GAAP financial measures. We refer you to the appendix in the presentation materials available on our Investor Relations website for reconciliations to the most directly comparable GAAP financial measures and related information. You will find a link to the webcast on our investor relations website at investors.covista.com. After this call, the presentation and webcast will be archived on the website for 30 days.

I will now hand you over to Stephen W. Beard.

Stephen W. Beard: Thanks, Jeremy. Afternoon, everyone, and thank you for joining us. 4 weeks ago, in my letter to shareholders, I said we would explain our economics plainly. So I will start there. We are running ahead of the fiscal 27 guidance we set. And that bodes well for our purpose at scale growth strategy. Today, we serve nearly 105 thousand students, up 7.6% from a year ago. It was our 13th consecutive quarter of total enrollment growth. In the first quarter, revenue grew 10.7% to $512 million, Adjusted EBITDA grew 17.1% to $131 million and adjusted earnings per share grew 25.1% to $2.19 per share. Our rule for capital is simple.

A dollar stays in the business only if it earns more there than it would in your hands. This quarter, we repurchased $84 million of stock, and funded new campuses, programs, and technology from operating cash. That performance ran ahead of our plan, and we are raising our fiscal 27 guidance for both revenue and adjusted earnings per share. We are taking a prudent view of the remaining quarters, and we will update you as the year progresses. The demand backdrop underpinning purpose at scale is durable. We see no reduction in demand for health care workers, from employers, or from the talent who wants to choose these purposeful careers.

Recent analysis shows that health care accounted for about 3 out of every 4 US jobs created over the past year. That dynamic is highly encouraging for our business model, but what deserves more attention is the human toll of health care jobs going unfilled. Recently, we published the Covista Health Care Workforce Index. The analysis projects that without action, health care workforce shortage is on track to nearly double by 2040. Yet the data also shows that investment in a developing and retaining talent could close over half of that gap by 2040. In our view, talent is not scarce. American nursing schools turned away roughly 93 thousand qualified applicants last year.

And about 30 thousand more qualified applicants were turned away from US medical schools. They were not turned away for a lack of ability, but for a lack of faculty, clinical site availability, and lack of space from caps written into state and accreditor policy. The binding constraint here is capacity, not interest. Through purpose at scale, we are attracting and developing more future clinicians and partnering with leading health systems to keep them. 3 things make this franchise durable. About 90% of our students study health care, where the demand is driven by licensure and patient need, The constraint in our market is capacity, and we fund our growth from operating cash at 0.5x net leverage.

And a significant portion of our students now arrive through employers who help pay for their education. Now let me turn to the segments starting with Chamberlain. Total enrollment grew 1.3%. Our third straight quarter of growth. And revenue grew 7.4%. The difference between the 2 is threefold. Better mix, more credit hours per student, and pricing. Total enrollment growth was led by prelicensure BSN, and application growth remained strong heading into our November session. As you know, no university confers more nursing degrees in Chamberlain, and we are building on that. That means adding seats, partnerships, and investing in the support that helps students get from enrollment all the way through to graduation.

Chamberlain is also expanding into new markets with new programs. Delivering on its platform extension strategy. The Cincinnati campus opened in August, Salt Lake City started classes this week, and Nashville is expected to open in January. We also opened our second physician assistant program in Phoenix at full capacity, with a third location already in the works. Chamberlain entered fiscal 27 on an improved foundation. And while its path is not perfectly linear, we are executing on several growth levers at once, and each of them is gaining traction. We are adding seats, deepening our health system partnerships, and we are investing more in student success. All of which puts Chamberlain on a sustainable growth trajectory.

Turning to Walden, we achieved double digit total enrollment growth for the 10th straight quarter, and set another enrollment record. Sustaining that over multiple years takes execution across every part of the portfolio, and the team keeps delivering. It also means stronger comparables ahead, which we have already contemplated into our long range planning. The strength remains broad based at Walden across all degree levels with doctoral and undergraduate programs leading the way. And strong persistence continues to compound that new enrollment growth. Our new marketing campaign at Walden is Your Career, Our Job, and it is working.

It shows undergraduates that Walden delivers on its promise, with support from choosing a career through coaching and personalized tools, that map coursework to specific jobs. Undergraduate enrollment, a priority we called out at Investor Day, grew by over 20% in the first quarter. Turning to our medical and veterinary segment. It had another strong quarter. Total enrollment grew 3.5% with both medical and veterinary contributing. Disciplined operations continue to turn enrollment growth into healthy revenue and profit. As we flagged last quarter, some students used our multiple intake cycles to start a term early ahead of changes to federal loan programs.

That shift lifted the May cycle, and made the September class a bit smaller, so the right way to read the business is May and September combined. On that blended basis, we delivered very strong results. Interest medicine and veterinary medicine remain durable, and we do not expect the loan changes to affect long term demand. There are more than 2 applicants for every USMD seat, While first year US class sizes have grown less than 2% annually, for 2 decades. In that pool of prospective students, US medical schools overlook a group who have proven they can succeed with us.

We are leveraging the evolving landscape as an opportunity to enhance our perspective student journey, reducing friction, and driving engagement throughout the process. Students are enrolling and performing, and our class mix has improved as a result, in line with our core customer strategy. Let's bring this concept to life. Among students who sat for USMLE step 1, Recent data shows that Ross Med and AUC students passed on their first attempt at rates comparable to or higher than USMB students with similar MCAT scores in most score ranges. On the vet side, we continue to operate near capacity.

Leading indicators for the veterinary licensing exam continue to strengthen, underscoring that we are serving our students well and driving student success. Turning to employer integration. Our collaboration with Advocate Health. the 3rd largest nonprofit integrated health system in the country, started in Wisconsin last month. We will expand that relationship to all 3 of our Chicago land campuses. Chicago is 1 of the largest markets for both Advocate and Chamberlain. And the plan has always been to expand over our overlapping geographies. In addition, our partnership with SSM Health, has outperformed, and we have raised enrollment targets with them. The model we continue to advance makes sense for health systems, for Covista, and for our students.

Health systems get a differentiated and proprietary pipeline, We get more durable enrollment at a lower cost of acquisition, and students get financial support on their way into the profession. Turning to technology. Our enterprise technology investments continue to advance. The AI powered classroom has moved beyond the prototype stage and is now in full development and testing. Bringing together all of our capabilities along with those of our leading technology partners. We are designing it specifically around the needs of our students and faculty, At our scale, we believe this creates an opportunity to deliver a more personalized learning journey and a differentiated student experience from first inquiry all the way through to licensure.

On the shift to LLM search, as we said, this is a real dynamic for any company that serves consumers. Fortunately, our institutions start from a position of strength. We have strong brands, great student outcomes, and prepare students for careers in health care fields where there are real shortages of workers. As a result, our institutions continue to compete strong in visibility, share of voice, and sentiment and our data shows continued improvement in leadership where it matters. We are building on this foundation by further improving discoverability and positive sentiment of our institutions, We analyzed tens of thousands of answers to measure how our institutions appear.

And how they are described and whether they are recommended all the way down to the program level. From there, we developed new content to ensure that the LLMs have the latest and greatest information about the quality and value of our programs. So to summarize, purpose at scale starts from a position of strength. Over the next 3 years, we will continuously layer in the 4 priorities we presented at Investor Day, that enhance our trajectory and widen our competitive moat. That means operational excellence in everything we do, platform extension through new campuses and programs, employer integration through more and deeper health system partnerships, and a technology focus that brings education powered by AI.

Just as importantly, we generate the cash to fund these priorities and still return capital to shareholders at the same time. We are America's largest health care educator, and that scale is a real advantage. But scale is not the point. What you should leave with from this call is that we are deploying capital to extend our lead and build the best company in our sector in a way that compounds intrinsic value per share the longest and most attractively. I want to thank you all for your continued support, And with that, I will turn it over to Robert J. Phelan to walk through the financials in more detail.

Robert J. Phelan: Thank you, Steven, and hello, everyone. We began our next strategic chapter, purpose at scale, with strong results that demonstrate the durability of our operating model. I will now review our first quarter results and key drivers. Later in my remarks, I will discuss our updated expectations for fiscal 27. Starting with the top line, first quarter revenue increased 10.7% to $511.5 million with strong growth from all 3 segments. Total company enrollment was up 7.6%, with all 3 segments contributing. And that growth carried through to the bottom line. Adjusted EBITDA was $131.2 million up 17.1% compared with the prior year. Growth was led by Walden and MedVet with Chamberlain contributing, even as that segment invests in new campuses.

Adjusted EBITDA margin of 25.6%, up 1.4 percentage points from the prior year as revenue growth and efficiencies across our platform generated operating leverage, partially offset by investments in our strategic growth initiatives. Adjusted net income increased 16.8% to $75.8 million and adjusted earnings per share was $2.19 up 25.1% compared with the prior year. Our earnings per share growth continues to benefit from a lower share count and lower interest expense. Diluted shares outstanding averaged 34.6 million in the quarter, about 2.5 million lower than the prior year reflecting our share repurchase activity. Interest expense declined to $9.9 million from $11.1 million reflecting our actions to reduce debt and lower our borrowing costs.

Next, I will discuss the first quarter financial highlights by segment. Chamberlain reported first quarter revenue of $192.4 million an increase of 7.4% compared with the prior year, driven by enrollment growth in pre licensure nursing, along with higher credit hours per student and pricing optimization. Total student enrollment increased 1.3% to more than 40 thousand students. Chamberlain's third consecutive quarter of growth and pre licensure BSN total enrollment grew for the 17th consecutive quarter. Chamberlain adjusted EBITDA increased 7.1% to $37.6 million, and adjusted EBITDA margin of 19.5% was essentially in line with the prior year. Chamberlain's first quarter results include approximately $3 million of cost related to new campuses. As we invest ahead of any significant enrollment.

Excluding these additional costs, Chamberlain adjusted EBITDA would have increased nearly 16% to $40.6 million. Turning to Walden. First quarter revenue increased 14.1% to $216.7 million driven by strong enrollment growth. Total student enrollment grew 12.8% to almost 59 thousand students, the highest total enrollment in university history. Walden has now grown enrollment for 13 consecutive quarters including 10 straight quarters of double digit growth. The strength remains broad based across health care and nonhealth care programs. Adjusted EBITDA increased 16.1% to $71.9 million. And adjusted EBITDA margin expanded 60 basis points to 33.2%. As operating leverage from the enrollment growth more than offset continued investments in marketing.

For the medical and veterinary segment, first quarter revenue increased 10% to $102.5 million. Total student enrollment increased 30.5% with growth at both our medical and veterinary schools. Adjusted EBITDA increased 27.9% to $27.4 million and adjusted EBITDA margin expanded 3.7 percentage points to 26.7% which reflects the high operating leverage inherent to this segment as we grow enrollments. Shifting to cash flow and the balance sheet, Free cash flow over the trailing 12 months was $355 million, up 11.4% from the comparable prior year period reflecting strong operating performance and high cash conversion.

That growth came even as capital expenditures over the same period rose to $99 million from $56 million as we invest in new campus capacity and technology. We ended the quarter with $222 million in cash and cash equivalents and net leverage of 0.5x. During the quarter, we repriced our $510 million term loan B, reducing the interest rate spread by 25 basis points to SOFR plus 2%. We also returned $84 million to shareholders through share repurchases in the quarter, buying back approximately 660 thousand shares at an average price of $127.63. We have $578 million remaining under our $750 million repurchase authorization.

We will continue to take a disciplined, returns focused approach to capital allocation prioritizing reinvestment in our institutions, and being opportunistic about returning excess cash to shareholders. Turning to our outlook. Based on the strength of our first quarter performance and our expectations for the balance of the year, we are raising both our revenue and adjusted earnings per share guidance for fiscal 27. The increase reflects first quarter results ahead of our plan. We are taking a prudent view of the remaining 3 quarters. We now expect revenue in the range of $2.06 billion to $2.095 billion or approximately 5.5% to 7% growth year over year, up from our prior range of $2.05 billion to $2.09 billion.

At the midpoint, that is an increase of $7.5 million. We now expect adjusted earnings per share in the range of $9.00 to $9.20 or approximately 9% to 11.5% growth year over year up from our prior range of $8.90 to $9.15. At the midpoint, that is an increase of $0.07. A few assumptions frame the updated guidance. First, we continue to invest in new campuses ahead of enrollment. We will continue to keep you apprised of the expenses until those campuses carry meaningful enrollment. Second, on a quarterly phasing, as a reminder, Walden returns this fiscal year to a normalized academic calendar.

That means this year for Walden, we will have 1 less week in the second quarter and 1 additional week in the third quarter compared with fiscal 2026. Last year, that shifted $18 million of revenue and adjusted EBITDA from the third quarter into the second quarter. As a result of that changing back, it will have a pronounced impact for the year over year comparison in the second quarter and benefit the third quarter, with no net impact on the full year. That means second quarter growth will be well below our full year rate and third quarter growth well above it.

We continue to expect 0 to 0.5 percentage points of EBITDA margin expansion for the full year, and that includes our continued investment in new campus capacity. That compares with a 1.4 percentage points in the first quarter. We continue to expect capital expenditures to be above fiscal 26 levels as we bring new capacity to market and invest in technology with higher spending weighted towards the first half of the year. We also continue to expect a higher effective tax rate in fiscal 27 than in fiscal 26. Overall, the first quarter demonstrated our operating model working at scale.

Enrollment growth is flowing through to profit, converting to cash, and that cash is funding the new campuses and technology behind purpose at scale. While we continue to return capital to shareholders. And before I turn the call back to Steven, I want to share a personal update, something I do not normally include in our earnings calls. After almost 7 years at Covista, and 5 as our CFO, I have decided to retire from Covista. Serving this company and leading this team has been 1 of the great honors of my career.

Together, we navigated 1 of the most consequential periods in Covista's transformation, completed growth with purpose ahead of our fiscal 26 and long term targets, and now enter purpose at scale from a position of strength. We have accomplished a lot in the last 5 years, but at this inflection point, the timing is right for a transition and I am ready for my next challenge. I will remain in my role until a successor has been named and I am fully committed to a smooth transition To our board, investors, and analysts, thank you for your trust, your thoughtful questions, and your partnership over the years. With that, I will turn it back to Steven.

Stephen W. Beard: Thanks, Robert J. Phelan. Before we open the call to Q&A, I just wanna take a moment to thank Bob for his service at Covista. Bob's been an exceptional and trusted partner to me, the company, and the board of directors. And he is done so through 1 of the most important periods in the history of the company. Covista finished growth with purpose ahead of both our fiscal 26 long term targets and enters purpose at scale with a robust balance sheet and real financial strength. More importantly, Bob built a finance organization with the depth to carry us forward, we are deeply grateful for his leadership and the excellence he brought to the team and to the function.

As Bob mentioned, he will continue in his role until a successor has been named. We have an active search underway. I am confident in the continuity of our financial operations and reporting through this transition. And with that, we will open the call to Q&A.

Operator: Thank you. And our first question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed.

Jeff Silber: Thank you so much. First of all, Bob, I just wanted to thank you for all your help over the years and wish you best of luck. Thank you. Appreciate it. Yeah of course. Moving back to, I guess, the quarterly results. I know in your prepared remarks, you addressed the loan caps You did not think there was an issue in the med vet business. But I know there was some confusion early on nursing, whether it was going to be considered graduate or professional. And I know it ended up being in the professional bucket. But do you think there was any impact on enrollment because of that confusion?

Stephen W. Beard: No. I do not think so, Jeff. What we have referred to previously was primarily related to the medical and veterinary segment, where we did see 2 dynamics play out at once. First, we saw some pull forward in enrollments where students sought to get ahead of the loan changes, but we talked about that a couple quarters ago. And what that meant for enrollment. The other thing that we have cited is a bit of hesitancy on the part of students and families, to make the leap until they fully understand all of their options. To finance the entirety of the 4-year student journey in medical school.

And so we believe there is still an opportunity on the consumer education side of things to ensure that students and their families are as well versed in all of the options they have for financing their journey and we hope to overcome any remaining hesitancy through that consumer education over the next few enrollment cycles.

Jeff Silber: Okay. Great. that is very helpful. And then just moving back to the quarterly results. I know you do not give specific quarter to quarter guidance, but adjusted EPS beat was pretty sizable versus consensus. Were there any expenses that might have been shifted into the second quarter or future quarters? And if so, which of these 3 segments did that occur?

Robert J. Phelan: Sure. I can take that. And I would say no. There were not any expenses shifted. If anything, we have made some additional investments, in the first quarter. So really the outperformance, largely driven by the revenue over performance that we had.

Jeff Silber: Okay. Fantastic. Thanks so much.

Operator: Thank you. The next question comes from the line of Alex Paris with Barrington Research. Please proceed.

Alex Paris: Hi, guys. Thanks for taking my question. Congrats on the beat and raise. And Bob, I will echo Jeff's thoughts. Appreciate all your help and, wish you nothing but luck going forward. Thank you. So my questions are likely related. I think, first off, I wanted to talk about Chamberlain enrollment at 1.3%. I was expecting a little bit more of a step function from Q4 to Q1. I guess the first question if we get a little additional color there? And what drove that, what drove enrollment in Q1?

Stephen W. Beard: Yeah. So Chamberlain grew total enrollment by 1.3%, and I think that was incrementally short of what we expected. it is important to note, that new student enrollment grew at a very healthy rate. Led by pre licensure BSN, which we believe is the critical growth area of the program mix at Chamberlain. The shortfall was really twofold. A bit of it was in continuing students. We had fewer of them return in September than we forecast. And then we had some lingering softness in post licensure RN to BSN. On the first count, we expect that is easily corrected with some additional persistence efforts across certain of our students.

And then on RN to BSN, we have got strategies and tactics in place to position that product more competitively from a pricing perspective. So as we go through the balance of the fiscal year, we expect it to pick up incremental additional lift for the total enrollment story from those 2 areas. And we remain confident in the total enrollment story for Chamberlain over the course of the fiscal year.

Alex Paris: Okay. Great. I was going to ask, expected the step function, but I also expected continued accelerating growth, maybe not as much of a step function in Q1, but the balance of the year. So we are starting off at up 1.3% We would expect that to improve in terms of year over year growth rate in the subsequent quarters? Is that accurate?

Stephen W. Beard: that is correct. And we still expect, you know, our most significant products to lead the way. Prelicensure BSN total enrollment was up 13.2%, which was the 17th straight quarter of growth in that category. That will continue to be the growth engine for us, but we do expect improvement in post licensure programs, RN to BSN in particular. And we do expect to address any issues around persistence and continuing students. So we are very, very confident about Chamberlain's trajectory over the next several quarters.

Alex Paris: Okay. And then the related question is guidance. You beat on revenue versus consensus by $20 million in the quarter. The revenue guidance midpoint to midpoint is $8 million Likewise, on adjusted EPS, you beat by $0.36 versus consensus. But the increase is $0.07, midpoint to midpoint I think Bob said that you are taking a prudent view on the balance of the quarters. What does that mean and what is leading to your prudence on the subsequent 3 quarters.

Stephen W. Beard: Yeah. So, by way of a headline, we guide to the full year. Not to the quarters. We set a range that we had a high degree of and we raised it after 1 quarter. And, obviously, as we have done, you know, every year, that this team has been in place, we will continue to revisit that, as we get better visibility. Into the year. We come in with, 7.5 thousand more students than we had a year ago. That base, drives revenue. And so as we progress through the year, as we look at what the art of the possible is, we will adjust the guide accordingly.

As for how we think about it, in this particular instance, while we had a really strong beat and we are proud of that, as you know, we are monitoring a couple of dynamics that are puts and takes across the reported financials. You know about the Walden calendar shift. No full year impact, but there is a quarter over quarter impact with that $18 million of revenue and EBITDA that moves from Q2 to Q3. You know, we are investing, ahead of revenue at Chamberlain with our campus expansion, and we expect those startup costs to rise over the course of the year. Nashville opens in January, and we have got more sites that we are working on.

So we are monitoring that and the implications for the full year as well. Bob has talked about this. We have got a slightly higher tax rate for FY27 that we are navigating as we think about full year results. And Q1 carried more of the year's earning in our plan anyway. So, again, we are we are we are pleased with the additional momentum in Q1. We are pleased to be able to raise the full year guide in Q1, bodes well for the rest of the year. And again, if we think the opportunity is north of where we have got it now, we will adjust accordingly next quarter.

Alex Paris: It all sounds very reasonable. Thank you very much for I will get back in the queue.

Operator: The next question comes from the line of Jack Garner Slevin with Jefferies. Please proceed.

Jack Slevin: Hey, Thanks for taking the question and congrats on the really strong quarter. And I will echo everyone's thank you to Bob. I appreciate all of the work over the time covering. If I just want to jump back in and maybe I will take it a little more broadly on the margin front. I guess, about how that paces in the guidance and if you think about investments in the business, I guess I would love to just dig in on, you know, is there a cadence that we should be thinking about acceleration in some of those chamber investments that might weigh down on margin a little later.

Or is the trajectory from Q1 pretty decent way to think about that? Or any other specific callouts around how you will be managing the cost base and investments over the next couple quarters would be great.

Stephen W. Beard: Yeah. I am going to let Bob answer that question. But before he does, just point out that, you know, 1 of the things we really like about our model is the inherent operating leverage and the really robust free cash flow that allows us lots of optionality around how to deploy that cash, including making investments, in new campus expansion. But, Bob, you want to talk about how that investment flows over the course of the year?

Robert J. Phelan: Yeah. So 1 of the things that you mentioned is, you know, should you be taking the first quarter and kind of extrapolating that? I would say, no. The way I would look at it is more of a. We are sticking with the, up to 50 basis points of improvement for the full year. And as we have said before, there is always going to be some fluctuations quarter to quarter. In particular, what I would just point out is that for Walden, given the shift that we have talked about, that you would expect to have some lower margin rates year over year in the second quarter because of the shift.

Third quarter, you would then recover that, and you would expect to have higher margin rates But for the full year, we do expect to still be within that range of up to 50 basis points of improvement.

Jack Slevin: Okay. Understood. that is helpful. And then if I look, you know, not a perfect metric, but revenue per student was quite strong in both Chamberlain and in Med and Vet in the quarter. Is there anything you can speak to on sort of what is driving that? I am not sure if it is mix or core price or across the business, maybe how you are approaching price through this year would be helpful. Thanks.

Stephen W. Beard: Yeah. it is a combination of things. I will start and Bob will keep me honest. We have got mix that is driving some of that revenue delta. We have got pricing driving some of it, and we have got credit loads, which were up in the quarter which drives some of that revenue spread as well.

Robert J. Phelan: No. that is exactly it. Nothing else to add on that.

Jack Slevin: Awesome. Appreciate the color, guys. Congrats again.

Operator: Thank you. The next question comes from the line of Jasper Bibb with Truist Securities. Please proceed.

Jasper Bibb: Good afternoon, everyone. First, I will add my congrats for the retirement, Bob. Been a pleasure working with you. Thank you. And then just for my first question, I know we kind of talked about this a little bit in the prepared remarks. But this week, kind of the big topic around a lot of consumer businesses has been this search-versus-AI kind of debate. Can you just provide like a little bit more detail on what you are seeing in student acquisition costs and kind of how you are adapting in the current environment.

Stephen W. Beard: Yeah. So as we have said before, the shift to AI search is real, and we believe it changes the way in which students find every school, including ours, We had, for a variety of reasons, an opportunity to get out ahead of this particularly as a result of some of the rebranding work we did in moving from Adtalem to Covista. And while there is lots more work to be done, we feel pretty good about how we have navigated it thus far. It has not really resulted in any real headwinds from an inquiry, application, or new enrollment perspective.

We have read obviously the commentary from other peers who have had to make increased investments in paid search to offset, what they think they may have lost from the LLMs. But, you know, as we sit here today, we feel pretty good about, the work we have done to navigate this dynamic. We have invested heavily in monitoring systems that allow us to test where our brands and programs show up in LLM search. And also to be able to test whether they show up in a positive light.

So, where our brands are most authoritative, and we have obviously the most brand equity at Chamberlain, you know, descriptions are about 90% positive for that institution in most LLM search. So Slightly below that for Walden is more of a fighter brand, but we view that as an incredible opportunity for upside at Walden. Given how well that institution performs on its own. So no implications for total enrollment for us. We continue to monitor, the behavior of the LLMs, and we continue to work hard to get the right kind of content into the marketplace that is tailor made for those LLMs go to search for their data and ultimately make their recommendations.

Jasper Bibb: Thanks for that. that is super helpful. Another really nice quarter for Walden, you have had a great run there. I know you do not give segment guidance, but just any color on how you are thinking about the next 3 quarters of Walden in the context of kind of your updated guidance would be helpful.

Stephen W. Beard: Yeah. So we remain pleased with the performance of Walden. The team continues to do an excellent job. Record enrollment this quarter, up almost 13%. We feel really good about that. We also feel really good about the strength they are seeing in the relatively small portion of the portfolio that is not health care. Education in particular, doing really quite well, which we think is a important dynamic because Chamberlain's status as a comprehensive university, we believe, is a real source of strength for it. Walden also continues to enjoy really, really strong persistence, which creates a flywheel effect for the strong new enrollment.

And so even though that institution faces ever increasingly challenging comps cycle over cycle, we remain impressed with their ability, you know, to meet that challenge and to lap them in a very impressive way. So we cannot do anything but be highly complementary about the work at Walden.

Jasper Bibb: Got it. Just last 1 for me. I just had a working capital question. Receivables balance picked up a little bit. Sequentially. Is there anything that kind of specific that drove that, or is it more of a timing thing?

Robert J. Phelan: Yeah. I think if you are referring to what is in the queue and sequentially, I mean, when you look from June 30 to September 30, it is not really comparable. What you really should take a look at is last year's number, and you will still see an increase. But if you look at last year compared to this year, September 30, what you will see is a smaller increase. So, again, sequentially, it is different because of the, the timing of when the sessions the academic sessions are. But we did have an increase in the receivables largely speaking, commensurate with the revenue increase we had. But a little bit higher than that percentage.

Jasper Bibb: Makes sense. Thanks for that.

Operator: Thank you. This concludes the question and answer session. And I would like to turn the call back over to Steven Beard for closing remarks.

Stephen W. Beard: I would just like to thank everyone for participating in the call and listening in. 1 thing I want to highlight: Monday, our first student started classes at Salt Lake City. And shortly afterwards, the first advocate students in Chicago began their journey with us. it is really gratifying to see the purpose of scale strategy in action. None of it happens without the incredible work of our advisers, and staff who show up for our students every day. I want to close out by again expressing my appreciation for Robert J. Phelan, his partnership his steady stewardship of the financial operation and the company. And being incredible thought partner for me over the course of the last 5 years.

And with that, we will close, for the evening, and we look forward to talking to you next quarter.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Erin, we thank you for your participation.

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