Covista Reports Fiscal 2026 Results, Issues Fiscal 2027 Outlook

Covista (NYSE: CVSA ) released fourth-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This content is powered APIs. 25.

The company completed its 'Growth with Purpose' strategy, achieving 12 consecutive quarters of enrollment growth and expanding EBITDA margins by 300 basis points. 'Purpose at Scale,' the next three-year strategy, focuses on platform extension, employer integration, and technology, with expectations for continued enrollment growth and structural demand in the healthcare sector. Chamberlain experienced positive enrollment growth, with plans to expand campuses and increase enrollment through initiatives such as new campaigns and course offerings.

Walden showed strong growth across all degree levels, supported by new programs and campaigns, contributing to a 20% increase in undergraduate enrollment. The Medical and Veterinary segment saw strong top-line performance, aided by on-the-ground recruitment and tech-enabled admissions. Covista announced a partnership with Advocate Health to enhance nursing workforce development and saw initial success with employer partnerships like SSM. Enterprise technology investments include AI credentials with Google Cloud and the development of an AI-powered classroom, with live deployments expected in fiscal 2027.

5 times. The company expects fiscal 2027 revenue growth of 5% to 7% and adjusted earnings per share growth of 8% to 11%, supported by favorable enrollment trends and strategic investments. Full Transcript OPERATOR Greetings and welcome to the Covista fourth quarter 2026 earnings. At this time all participants are in a listen-only mode.

A question-and-answer session will follow the presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeremy Cohen, Vice President, Investor Relations.

Thank you. You may begin. Jeremy Cohen, Vice President, Investor Relations Good afternoon and welcome to Covista's earnings call for the fiscal year 2026 fourth quarter and full year. On the call with me today are Steve Beard, Chairman and Chief Executive Officer of Covista, and Bob Phelan, Chief Financial Officer.

Before I hand you over to Steve, I will take you through the legal safe harbor and cautionary declarations. Certain statements and projections of future results may be made in this presentation and constitute forward-looking statements that are based on our current market, competitive, and regulatory expectations and are subject to risks and uncertainties that could cause actual results to vary materially. We undertake no obligation to update publicly any forward-looking statement after this presentation, whether as a result 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, and 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. com after this call. The presentation and webcast will be archived on the website for 30 days.

I will now hand you over to Steve. Steve Beard, Chairman and Chief Executive Officer Thanks, Jeremy. Good afternoon everyone, and thank you for joining us. Fiscal 2026 closed out Growth with Purpose.

Three years ago we set out to prove that closing the healthcare workforce gap and delivering for shareholders could be the same thing. We were right, and we exceeded not just this year's guidance but the long-term targets we set at the outset of the strategy. This strategy changed how we operate and where we stand in the market. It built the infrastructure for durable, profitable growth while holding our focus on student outcomes.

The results are worth stating plainly. On the operational side, we delivered 12 consecutive quarters of total enrollment growth across the company. Record enrollments at Walden and Chamberlain during fiscal '26, 100,000 enrolled students, up from 76,000, joining a community of 400,000 alumni delivering care in nearly every community in the country. Those gains converted into revenue, margin, and free cash flow.

95 billion, expanded EBITDA margins by 300 basis points, nearly doubled adjusted earnings per share, and more than doubled free cash flow, which let us invest in high-return opportunities and return capital to shareholders at the same time. Now we begin Purpose at Scale, our next three-year strategy. It carries forward the operating discipline that produced those results and adds three pillars: platform extension, employer integration, and technology. I want to spend my time on those three pillars and how they show up in our fiscal 2027 outlook.

From a macro perspective, behind our strategy and our guidance sits a demand backdrop that has not changed. The population is aging, care demand is rising, and the existing workforce is under real strain. This is a secular story, not a cyclical one. In our Covista Care Capacity Monitor, more than 70% of clinicians and healthcare executives told us that staffing shortages are affecting their ability to deliver quality care.

Staffing is the constraint. Patient care pays the cost, and that's the problem we were built to solve. Turning to 2026 results, all three segments finished fiscal 2026 strong. Walden and Medical and Veterinary each delivered their strongest total enrollment growth of the year in the fourth quarter and Chamberlain accelerated again.

25 per share. Both finished above the high end of our raised ranges. We're also initiating fiscal 2027 guidance today. We're pacing ahead of the long-term targets we set at the start of Investor Day and we continue to build momentum towards them.

Bob will take you through those details in a few minutes. Turning to platform extension, let me start with Chamberlain. Platform extension means putting our programs in more places, more formats, and more markets. At Chamberlain, the team continues to execute the marketing and conversion initiatives.

We committed to taking friction out of the funnel and improving marketing efficiencies. That includes a new campaign built on the compassion, camaraderie, and calling that define nursing as a profession. We're also extending existing campuses with broader course offerings and evening and weekend access in large urban markets. That supports persistence.

It expands the addressable student population in markets where we already carry fixed costs on new capacity. Six campuses are in active development and three have full regulatory approval. Cincinnati and Salt Lake opened in the first half of fiscal '27, and the attractive economics are why we are moving at this pace: roughly $9 to $12 million of capital per campus, EBITDA break-even in 24 months, and steady-state margins accretive to our existing campus base. Underneath it all sits the structural demand tied to a national nursing shortage.

Together, these initiatives should drive growth in both new and total enrollment, and we expect Chamberlain's total enrollment growth rate to accelerate again in the first quarter, consistent with the sequential improvement we saw from the third to the fourth quarter in fiscal '26. Turning to Walden, that institution delivered its strongest quarter of the year and Bob will give you the enrollment and revenue detail in a moment. What matters strategically is the breadth of that growth. It was broad-based, with every degree level contributing.

Doctoral accelerated on better program alignment to professional needs. Master's added the most students in absolute terms. And undergraduate grew fastest, up more than 20%, which we're supporting by our new "Your Career is Our Job" campaign, which positions Walden as a career outcome partner and not just an education provider. Investment in student persistence continues to pay off.

Increasingly sophisticated analytics let us support at-risk students before they fall behind. And as you know, persistence is one of the critical drivers of both financial and operational performance. And Walden compounds that year after year. New programs launched into the 2026 academic year added roughly 1,700 students, four more launched last month, and two behavioral sciences programs are in regulatory review.

Our ability to launch quickly in high-demand fields is a durable competitive advantage. Turning to Medical and Veterinary, the segment delivered strong top-line performance with disciplined execution, and fiscal 2026 was its strongest year in several years. Two important drivers: first, we built an on-the-ground recruitment team that lifted our high-yield prospective student pipeline, and we've upgraded tech-enabled admissions to support that yield. Some of this quarter's enrollments reflect students moving ahead of the OB3 loan changes.

That's a consumer behavior dynamic rather than a shift in underlying demand, and it doesn't change how we see the segment's full-year trajectory, which is embedded in our fiscal 2027 guide. We have also been more methodical about the core student profile that fits our class mix. That leads me to expanding our employer partnerships. First, early results with SSM are strong enough that we're expanding our target enrollment there.

Second, we announced a new collaboration with Advocate Health, the third-largest nonprofit integrated health system in the country. In Covista, they found a partner with the scale and the infrastructure to support them in building a sustainable nursing workforce. Delivered through Chamberlain, the program funds nursing education, builds clinical readiness inside Advocate's care setting, and creates a financially supported pathway into the profession. The first cohort starts in September, and given the geographic overlap between us, we expect it to serve hundreds of students a year.

Employer participation changes the economics for everyone at the table. When an employer commits, whether through tuition support, hiring commitments, or clinical integration, we expect students to enroll at higher rates, persist longer, and be more likely to complete their education. Health systems get a differentiated pipeline and we get a more durable enrollment model at a lower cost of acquisition. Our Care Capacity Monitor shows why the runway is long.

Nearly 70% of healthcare executives say talent partnerships work, but only 22% are meaningfully investing in them. That gap is the opportunity we're stepping into. Let me now touch on our enterprise technology investments. We launched AI credentials with Google Cloud in the third quarter and added nine more certifications in the fourth quarter.

More than 9,000 learners have enrolled. We're also testing prototypes of an AI-powered classroom with students now. The first live deployments are expected in the second half of fiscal 2027. The shift from search optimization to AI answer optimization is changing how prospects find their options.

Three things position us well: trusted brands in a category with durable demand, strong student outcomes, and marketing teams that moved early and are optimizing for both AI and traditional search. We expect that institutions with trusted brands, authoritative content, relevant programs, and strong conversions will be the ones prospects find and trust. We're watching this shift closely and we'll keep you updated on what we see. I also want to take a moment on recent leadership additions.

We announced two new board members, Emily Chu and Leslie Storms, who bring operating experience and judgment in sectors central to our next phase of growth. In addition, Rick Sinkfield joins as Vice President of Expansion, overseeing the enterprise-wide expansion including Chamberlain's campus growth. He brings two decades of experience in complex regulated markets from Laureate to ETS, plus his service on Chamberlain's Board of Trustees. In addition, Scott Lyles becomes Chief Strategy and Performance Officer, adding corporate strategy and a new Performance Acceleration office to his leadership of the Medical and Veterinary segment.

So in closing, let me attempt to bring this all together. We enter Purpose at Scale with the foundation to go after a much bigger opportunity, a proven operating model, a balance sheet that can fund the plan, and momentum already in place across all three segments. The demand opportunity is structural. The returns on the capital we are deploying are attractive.

We hold the leading position in healthcare workforce education and we intend to extend it. Our best work remains ahead of us. As always, thank you for your continued support, and now I'll turn it over to Bob for a deeper dive into our operational and financial outcomes. Bob Phelan, SVP, Chief Financial Officer Thank you, Steve, and hello everyone.

Fiscal year 2026 was a milestone year for Covista. We completed our three-year Growth with Purpose strategy, and we did so in a position of real financial strength, exceeding both our 2026 targets and the long-term financial targets that we set at the start of that journey. Our results demonstrate the durability of the operating model we have built: sustained enrollment growth, expanding margins, robust cash generation, and a balance sheet that gives us significant flexibility as we begin our next chapter, Purpose at Scale.

That cash generation and robust balance sheet allowed us to return meaningful capital to shareholders over the course of Growth with Purpose, reducing shares outstanding by 20%, all while continuing to invest in the business. We enter fiscal 2027 with momentum and with the financial capacity to further invest in significant and expanding opportunity ahead while continuing to deliver strong returns for shareholders. I will now review our fourth quarter and full year results and key drivers, and then I will discuss our expectations and assumptions for fiscal 2027, starting with the top line. 4 million, driven by all three segments and led by Walden and MedVet.

3%, which exceeded the high end of our raised guidance range. 2% compared to the prior year. Growth was led by Walden, with MedVet and Chamberlain contributing. 3% expanded 120 basis points from prior year.

5%. 7%, up 100 basis points versus prior year and in line with the approximately 100 basis points we committed to at the start of the year. This reflects the operational leverage and efficiencies embedded across our platform, partially offset by an elevated level of investment in our strategic growth initiatives. 8 million.

9% versus the prior year. 7%, which exceeded the high end of our raised guidance range. Our EPS growth continues to benefit from lower interest expense and a lower share count. 3 million, reflecting our actions to reduce and refinance debt and lower our borrowing costs.

7 million for the full year, reflecting our fiscal 2026 share repurchases. These benefits were partially offset by a higher effective tax rate consistent with what we communicated throughout the year. Next I'll discuss our fourth quarter financial highlights by segment. 2% compared with the prior year, driven by pre-licensure nursing and master's program enrollment growth along with pricing optimization.

6%, and its 16th consecutive quarter of pre-licensure BSN total enrollment growth. 6%, up 20 basis points versus the prior year. 8 million, driven by strong enrollment growth. Total student enrollment was up 14% to nearly 55,000 students, our 12th consecutive quarter of growth and the highest total enrollment in Walden's history, with strength across healthcare and non-healthcare programs.

This also represents the ninth straight quarter of double-digit enrollment growth. 7 million, and adjusted EBITDA margin expanded 410 basis points to 33% driven by our strong revenue growth and operational excellence. 7% versus the prior year.