Covista Inc. 2026 Q4 Earnings Call

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 Robert 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 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 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. 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 Steve.

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 2026, 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. Over the last three years, we grew revenue from less than $1.5 billion to $1.95 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 across our five institutions: 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 & Veterinary each delivered their strongest total enrollment growth of the year in the fourth quarter, and Chamberlain accelerated again. We exceeded our annual financial guidance, delivering revenue growth of 9.3% to $1.95 billion and adjusted earnings per share growth of 23.7% to $8.25 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 open in the first half of fiscal 2027, and the attractive economics are why we are moving at this pace. Roughly $9 million-$12 million of capital per campus, EBITDA breakeven 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 2026. 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. 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. 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 & Veterinary, this segment delivered strong top-line performance with disciplined execution. 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. 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. 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. 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. 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. 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, 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 Chiu and Leslie Storms, who bring operating experience and judgment in sectors central to our next phase of growth. 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. Scott Liles becomes Chief Strategy and Performance Officer, adding corporate strategy and a new performance acceleration office to his leadership of the Medical & Veterinary segment.

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.