Covista Inc. (CVSA) Earnings

Management highlights

### 2026 Strategic Outcomes - The three-year 'Growth with Purpose' strategy was completed successfully, exceeding all annual and long-term targets. The company reached 100,000 total enrolled students (up from 76,000 at launch), with 400,000 total alumni delivering care across most U.S. communities. - Over the three-year strategy, revenue grew from <$1.5 billion to $1.95 billion, EBITDA margins expanded by 300 basis points, adjusted EPS nearly doubled, and free cash flow more than doubled, allowing simultaneous investment in growth and capital returns to shareholders. ### New Three-Year 'Purpose at Scale' Strategy - Carries forward prior operating discipline, built on three core pillars: platform extension, employer integration, and technology investment, across the company's five institutions. - Platform extension: Expands program access via new formats, extended campus offerings, and new campus development. Six Chamberlain campuses are in active development (three with full regulatory approval); Cincinnati and Salt Lake City campuses opened in H1 FY2027, with $9-$12 million capital per campus, 24-month EBITDA break-even, and accretive steady-state margins. Walden achieved broad-based growth across all degree levels (undergraduate up 20% year-over-year), launched 1,700 new program students in FY2026, with four additional programs launched post-year-end and two behavioral science programs in regulatory review. MedVet delivered its strongest full year performance in several years, driven by upgraded on-the-ground recruitment and tech-enabled admissions. - Employer integration: Expands partnership with large health systems to build dedicated workforce pipelines. Early results from the SSM Health partnership were strong enough to raise enrollment targets, and a new collaboration with Advocate Health (third largest U.S. nonprofit integrated health system) was announced. The Chamberlain-delivered Advocate program funds tuition, integrates clinical training, and creates a supported pathway to nursing, with the first cohort starting in September 2027 expected to serve hundreds of students annually. Employer partnerships improve student persistence and completion rates, lower student acquisition cost for CoVista, and deliver a dedicated talent pipeline for health systems, with large untapped market opportunity (only 22% of healthcare executives currently invest in these partnerships, per the company's Care Capacity Monitor). - Technology and AI investment: Launched AI credentials with Google Cloud in Q3 FY2026, adding 9 more certifications in Q4, with over 9,000 learners enrolled. AI-powered classroom prototypes are currently being tested, with first full deployments planned for H2 FY2027. The company is adapting its marketing strategy to the shift from traditional search to AI-powered answer optimization, with early positioning as a trusted brand with authoritative content supporting continued lead generation. - Leadership updates: Added two new experienced board members (Emily Chu and Leslie Storm), hired Rick Sinkfield as Vice President of Expansion overseeing enterprise growth, and promoted Scott Lyles to Chief Strategy and Performance Officer. - Financial and Balance Sheet Highlights: Full year FY2026 operating cash flow was $471 million (up 41% year-over-year), free cash flow was $393 million (up 39% year-over-year). Net leverage improved to 0.5x from 0.8x at FY2025 end. Debt was refinanced at lower rates with extended maturities. $238 million was returned to shareholders via share repurchases in FY2026, with $662 million remaining under the authorized $750 million repurchase program. Shares outstanding were reduced by 20% over the 'Growth with Purpose' strategy period.

Guidance

- Fiscal 2027 full year revenue guidance is set at $2.05 billion to $2.09 billion, representing 5% to 7% year-over-year growth, as the first year of the new Purpose at Scale strategy. - Fiscal 2027 adjusted earnings per share guidance is $8.90 to $9.15, representing 8% to 11% year-over-year growth. - The company expects 0 to 50 basis points of adjusted EBITDA margin expansion for full year FY2027, with most expansion expected in the back half of the year due to the Walden academic calendar shift and higher planned investment in H1. - Chamberlain total enrollment growth is expected to accelerate again in Q1 FY2027 (continuing the sequential improvement from Q3 to Q4 FY2026), with additional growth expected through the rest of the year. - Capital expenditure is expected to run slightly above the Q4 FY2026 annualized run rate, to support new campus capacity development and ongoing technology investments. The effective tax rate for FY2027 is expected to be higher than FY2026. - The FY2027 guidance already accounts for stronger year-over-year comparables for Walden and MedVet, which was embedded in the company's long-term targets. A Walden academic calendar shift will move one week of revenue from Q2 to Q3 FY2027, with no net impact on full year results.

Segment performance

Chamberlain: Fourth quarter revenue was $190.2 million, up 3.2% year-over-year. It contributed 37.9% of total Q4 2026 revenue. Total enrollment grew 1.6% year-over-year (16th consecutive quarter of positive pre-licensure BSN growth). Fourth quarter adjusted EBITDA was $46.8 million, up 3.8% year-over-year, with an adjusted EBITDA margin of 24.6%, up 20 basis points. Walden: Fourth quarter revenue was $210.8 million, up 15.7% year-over-year. It contributed 42% of total Q4 2026 revenue. Total student enrollment grew 14% year-over-year to nearly 55,000 (12th consecutive quarter of growth, 9th straight quarter of double-digit growth, highest enrollment in Walden's history). Fourth quarter adjusted EBITDA was $69.7 million, up 32.3% year-over-year, with an adjusted EBITDA margin of 33%, up 410 basis points. MedVet: Fourth quarter revenue was $100.3 million, up 10.7% year-over-year. It contributed 20% of total Q4 2026 revenue. Total student enrollment grew 7.3% year-over-year to over 5,100, with accelerating new enrollment across medical and veterinary programs. Fourth quarter adjusted EBITDA was $22.5 million, up 12.3% year-over-year, with an adjusted EBITDA margin of 22.4%, up 30 basis points. Full year 2026 total company revenue was $1.954 billion, up 9.3% year-over-year; full year adjusted EBITDA was $521.7 million, up 13.5%, with a 26.7% margin, up 100 basis points.

Risks & headwinds

No new material risks or operational failures were explicitly discussed in the earnings call. Forward-looking statements are noted to be subject to general market, competitive, and regulatory uncertainties that could cause actual results to differ materially from projections, with standard risk factor disclosures referenced to the company's most recent Form 10-K filing.

Analyst Q&A

• Q: After the OB3/Grad+ loan changes deadine, what enrollment trends did you see before and after the date, and what is the expected impact going forward? /

  A: The company does not expect any long-term headwinds from the OB3 loan changes for its programs or students. Some MedVet students pulled forward enrollments into Q4 FY2026 to front-run the changes, which is a consumer behavior shift rather than a change in underlying demand. This shifts some growth between enrollment cycles, but full year 2027 total enrollment is still expected to meet the company's forecast, and the early intake leaves more capacity for expected fall 2027 demand, making the dynamic a net positive. (312 characters)

• Q: What leading indicators do you see for Chamberlain's September 2027 enrollment cycle, after past misexecution on post-licensure programs? /

  A: Management remains very encouraged by Chamberlain's enrollment trajectory, with acceleration continuing beyond Q3 FY2026 levels. Momentum is broad-based, with strong growth in pre-licensure BSN and stabilized performance in post-licensure and other graduate programs. All leading indicators (search volume, application growth) remain favorable entering the fall intake cycle, and management is bullish on Chamberlain's FY2027 performance. (311 characters)

• Q: How do you expect the new Advocate Health partnership to scale, and what P&L impact will it have for Chamberlain? /

  A: The partnership launches with a small, tailored initial cohort focused on North Carolina, starting in September 2027. Management expects the partnership to expand over time after initial proof of concept, following the same trajectory as the SSM Health partnership, where strong initial results led to increased enrollment targets. The partnership is an important validation of CoVista's employer partnership model, which management expects to roll out to additional Advocate markets if initial performance is strong. (329 characters)

• Q: What impact has the rise of agentic AI search had on your lead volume, lead quality, and conversion rates? /

  A: Management is closely monitoring the shift to agentic AI search but has not seen any negative headwind impact on top-of-funnel activity to date. The company got an early start adapting its content for AI platforms during its recent rebranding, and now actively tracks its brand positioning across all major AI engines. Management notes the shift is ongoing, but currently feels well-positioned to maintain robust lead flow despite the changing search landscape. (306 characters)