Q4 2020 Adtalem Global Education Inc Earnings Call

[music].

Greetings and welcome to the I'd tell him global education fourth quarter fiscal year 2020, <unk> earnings Conference call.

This time all participants are in listen only mode. A question and answer session will follow the formal presentation.

I should require operator systems during the conference. Please press Star Zero honor telephone keypad.

Please note that this conference is being recorded.

I'll now turn the conference over to our House Marine Restock, Vice President Treasury and Investor Relations.

<unk> you may begin.

Thank you and good afternoon.

With me today from add talent leadership team, our lease I worked out chairman and Chief Executive Officer.

Mike Randolfi, senior Vice President and Chief Financial Officer.

I'd like to remind you that this conference call will contain forward looking statements within the meaning of the safe Harbor provision of the private Securities Litigation Reform Act of 1995 with respect to the future performance and financial condition that talent global education that involve risks and.

Uncertainty.

Actual results may differ materially from those projected or implied by these forward looking statements.

Potential risks uncertainties and other factors that could cause results to differ are described more fully and item one a risk factors of our most recent annual report on form 10-K filed with the FCC and our other filings with PC.

Any forward looking statements made by is based only on information currently available to us.

And speaks only as of the date on which it was made.

We undertake no obligation to publicly update any forward looking statement, whether written or oral that maybe made from time to time, whether as a result of new information future developments or otherwise except as required by law.

During today's call our commentary well refer to non-GAAP financial measures, which are intended to supplement so not substitute our most directly comparable GAAP measures.

Our press release, which contains the GAAP financial and other quantitative information to be discussed today as well as a reconciliation of GAAP to non-GAAP measures is available on our website.

Please note that all financial comparisons made during today's call are in comparison to the prior year period, unless otherwise stated.

It is also important to note that our fourth quarter and full year results reflect the application of discontinued operations for our former business and by segment as a result of the divestiture of I'd tell in Brazil, which made up the entire segment.

Telephone and webcast replay of today's call are available for 30 days.

To access the replays please refer to today's press release.

And with that I'll now turn the call over to Lisa.

Good afternoon, and thank you for joining us today on our call I will discuss the highlights from our fourth quarter and full fiscal year before turning to before and it's in our business segments and their strategic outlook. I will then turn the call over to Mike to discuss our financial results before we open the line up.

A question.

What do we began fiscal 2020, we were confident that we would continue to grow our enrollments and revenue based on one our workforce solutions provider and suppressed strategy and to the improvements we have made in the previous year in our power marketing and student services operations. We ended the fourth quarter fiscal 2020 on a strong.

Of note delivering healthy revenue and earnings results and demonstrating that we were on track prior to the cobot 19 pandemic to meet our financial plan.

Additionally, we have navigated through the unprecedented challenges brought on by the pandemic our businesses proved resilient as we pivoted quickly leveraging our prior experience in crisis management, our online learning tools and virtual format and our strong leadership team to continue driving results.

Our workforce solutions provider strategy, including the further streamlining of our portfolio through the completion of the divestiture I tell in Brazil, which narrowed our focus solely on both medical and healthcare financial services industry and served to fortify our balance sheet has allowed us to further focus on the health care supply and.

Demand imbalance is we have been highlighting the decades as they have now become a national dialogue and as upscaling and certification in financial services is now more than ever important to continued employment for current employees and new importantly, the go displaced from other industries as a result with a pandemic we remain on track towards a cheap.

They are long term growth targets.

While we were not immune to the challenge is brought on by this global health crisis.

It's bowman clinical weeks across medical and healthcare and the shift to virtual conferences and reduced spending by our financial services customers adversely impacted our results our ability to utilize or existing infrastructure <unk> underlying strength in online learning modalities to employing new and emerging technologies and may change.

Urea academic quality and enhance the overall student experience allowed us to drive positive result.

Demand for our earnings remain strong in particular on campus BSN program all of which is currently on my experience significant enrollment growth during the fourth quarter and we anticipate this trend to continue into fiscal 2021 as the demand for healthcare workers continues to increase also in the second half of the fiscal year two.

20, we increased new student enrollment within the RN to BSN program nearly 4% over the same period in the prior year.

Oh proactive approach provided critical throughout this difficult time, we pay close attention to the needs of our student and invested in providing the additional support they need it which included a focus on mental health and counselling resources and increased touch points between students as it was all students have taken notice and can be seen by an overall.

I appreciate our Chamberlain net promoter score results across all of our programs.

Other proactive changes we made during the fourth quarter included the large Oh, My Cam certification testing and our 24 hour virtual ADC camps conference, which both helped minimize disruption from members obtaining continuing credit toward ongoing certification and resulted in the largest number of paying petition the participant.

Any akins conference today.

Every indication we have seen equates to increased recognition amongst learners and consumers that these virtual education modalities effective delivery quality education. That's a result underlying demand for our programs continue to increase.

You know medical and healthcare segment, the biggest challenge, we faced with managing clinical weeks for students to keep their education on track.

Well system operating environment rapidly shut down early in the quarter Clinicals, what temporary temporarily halted across the country well healthcare institutions turned their full attention to combating the pandemic.

Avidly in person Clinicals remain a challenge that's all medical school currently phage, however, given the growing medical professional shortage in the U.S. These clinical cannot be postponed until the pandemic subsides.

Definitely healthcare systems are becoming more agile and the drive to return to in person critical is a top priority in particular, we're seeing increasing willingness clinical partners to conduct in person critical safely in a cold and nice feed environment as a general understanding is that treating cold and I've seen patient is an important experience for pushed back.

The doctors and nurses education.

As the largest provider health care professionals in the U.S. geographic diversity of a critical part of that's proven to be a significant differentiator for Chamberlain.

Our medical and veterinary school, allowing us to leverage the of the availability of partners in areas that are not overnight see hot spots, where practical we have also increasingly sub supplemented in clinical with virtual trading including utilizing capabilities within tele health to address these challenges.

Medical and healthcare demonstrated strong results and drugs superior academic outcomes for our students in Q4, new like <unk> and total student enrollment increased 5.9% and 6.9% across the verticals respectively demand for offerings within Chamberlain remains robust as new student enrollments in the makes session.

All time May enrollment alright, well, then Chamberlain students have achieved a first time and Clecs pass rate of 92% on par with the National average, we continue to add quality curriculum to our programs recently, adding training on how to provide sexual health care telehealth.

This program. We've also increased our touched once with students moved our student academic support online it started to work with them in a simulated scare in buying that bottom, it's a jewel in person clinicals conversion.

To accommodate the added demands of the cold in 19 environment has to be responsive to our students many of whom we're working we've instituted the care to pod program within Chamberlain, allowing students the ability to temporarily called their participation in a program and then seamlessly yet so once they are ready without academic or financial penalty.

We believe that providing this flexibility is critical and will support the long term enrollment of our student. It will also continues to build the bread is a partner to our students and employers.

It's added flexibility aircraft programs has been both feet and we see strong total enrollment, but then our post licensure program.

Finally to further support our students we deployed approximately 8 million of cares funds almost nearly 8000 students. Although we were only required to deploy half of the cures Act function students, which opens up like all of the funds. We received directly to students in the form of emergency financial support and that type of me.

The same time, we have developed opportunities that encourage new format and prospective students to experience Chamberlain, which further supports brand awareness our acute care readiness program has registered over 3000 applicants to date. In addition, we have developed an end Clecs readiness course with 7000 registered its really wide variety of nursing school.

Across the country and a contact tracing course with over 2000 registered in just three weeks ago availability.

Vision care for Karen <unk> effort wants to support celebrate frontline healthcare workers has had tremendous success to date, we've had over 40 million views of the associated videos and 300000 plus visits to the website. This type of cross segment brand building and Lynn links to discounts or offers for brands such as crocs aerosol.

Of course counseling and eat amongst others as a demonstration of our values thought leadership and positioning in the markets.

And you see in the last met residency match rates have increased we drop that now exceeding 95% in H.C., reaching 92%.

Ross Vet had a very strong quarter with all time high may walnuts bolstered by strong demand throughout the course, which is currently being offered online the long term effectiveness of our brand awareness efforts within lost that has delivered with Apple comes for the September 2020 session continuing to show strong increases.

Additionally, last that's most recent first time madly pass grade was 88% we continue to focus on investing and superior online instruction and advancing partnerships across the medical and healthcare institutions by developing their content online and virtual instruction in lockstep with that critical partners a refund organizational restructuring.

That facilitates our medical schools sharing in developing best practices breast practices is enabling our two medical schools to collectively work together to obtain clinical partners, creating additional opportunities for students to get access to required clinical training.

[noise] addressing the health care short shortage, while at the same time, maintaining our commitment to creating equitable access to education has long been a cornerstone of that towns mission to partnerships with five H.B.C. use and for H.I. size as well those are already diverse student population, we are supporting them more diverse workforce within the u.

Let's hope care system, and we will continue to strive to provide high quality education to help underserved communities and tackle those health care disparity highlighted by the current but then it.

Near term demand remained strong for nurses doctors and veterinarians, which is evident in the positive employment trends. In addition, we're working with our hospital partners to help solve issues arising out of the pandemic, including managing staff burn out as a significant supply and demand a balance continues our programs are uniquely positioned to address these channels.

Just and assist our employer partners in high quality patient care.

Turning to financial services.

During the fourth quarter, our financial services vertical made substantial progress mitigating downside risk and capturing demand increase by the pandemic akins widely expand its certifications in training offering a greater range of value to baking a compliance customers by providing enhanced tools and training to frontline workers to better combat fraud.

In an increasingly virtual environment, Becker, which faced disruption from the closure of SCPA testing centers continues to work closely with testing organization. The managed to their backlog and launched a first of its kinda webinars the incoming students to introduce walking through the examination preparation process.

It seems global conferences have been significantly affected by the cobot 19 pandemic and mitigating this exact remains a focus area for our team with in person conferences being an important component of a camps to replace those experiences we launched our 24 hour virtual said it to connect the global compliance community an increase accessibility.

Oh sure conferences in an online format.

We are encouraged by the results so far as this completely digital conference brought in 2600 paid attendees, 65% of who had never previously attended and Akins contract.

Attendees join from over 100 countries drawn increased attendance did the elimination of travel logistics an expensive participant also have the opportunity to earn Tam certification continuing education credits, serving as an additional efforts is to drive conference attendance.

Feedback from attendees has been positive underscored by strong conference net promoter score with many attendees applauding the life feeling a bit setting and drawn favorable comparisons to the environment of our personally conferences well the price points. At this conference was lowered that are in person setting we're confident that virtual comp just can deliver ace.

Similar margin profile in person outside of it.

Further the increased accessibility in attendance of the virtual conferences illustrates the potential for incremental operating income growth.

We anticipate that all conferences in the first half of fiscal year 2021 will be held virtually including our Las Vegas conference at the end of September.

In addition to conferences a campus pivoted to meet the heightened need cyber security and fraud offerings, driven by the shift to women, Charlie virtual environment expanding into areas with the strongest demand for enterprise customers. We developed the know your customer and transactions monitoring short course offerings launched for frontline and operational teams in the financial served.

It's it's sector.

These courses equipped professionals with the core competencies required to perform due diligence for their customers in this high risk environment tools, such as these are invaluable to the compliance community and operational teams in the financial sector that serve as the first like to defend against fraud.

We're also investing in other areas, where fraud has increased particularly in cryptocurrency fraud as the trends towards digital banking accelerates.

Sanctions training and other certifications to meet regulatory requirements were made a significant opportunity.

Our global sanction certification Cgss sold in 93 countries has gained momentum since its launch in January with more than 580 professional certified in June to provide an introduction to the necessary steps of the financial sector to meet growing requirements around bottom slavery in human tracking trafficking risks we launched.

Our first new modest slavery and human trafficking certificate.

Although backer has experienced improved 19 headwinds, including delayed SCPA testing and budget constraints at our B to B partners. We're now seeing testing centers, we open and we continue to leverage alternative modalities to test prep.

Becker has developed an increased focus on b to B sale and is making progress with product bundles developed for C.P.A.C.P. offerings.

We are investing heavily into C.P. market, which represents a significant opportunity for us to leverage back a strong brand recognition to grow market share. For example, we had hosted CP webinars to help the financial sector better understand the evolving tax environment.

Oh of course learning has shown strong performance improvement as it has ramped up particularly driven by tailwind in the current mortgage and burden. We continue to see high demand for mortgage loan officer training and have continued to strengthen our virtual delivery format. We are driving persistent growth was strong enterprise relationships such as our.

Partnership with Quicken loans, we have successfully trained over 8000 quicken loans mortgage opportunities over the past decade as they continue to expand the number of mortgage loan officers and use on course learnings products to meet state licensing requirements.

Add talent continues to maintain its leading position across both vertical meeting demand in attractive in growing markets. Our newly streamlined portfolio, that's kept us agile, allowing us to adapt and enhance our offering to address the changing needs of members customers an employer partners.

The pandemic continues to result in disruption keeping us aligns with our mission.

Our experienced leadership team has a history of resiliency in crisis response and has mitigated challenges to successfully manage through the current operating environment supported by our solid financial program.

Profile.

We have a strong balance sheet with ample liquidity and flexibility supported by additional cash on hand, following the completion of the sale of our Brazil assets in the fourth quarter. As we are focused on leveraging the strengths to drive growth across both verticals as we turn our attention to fiscal year 2021, we're confident that we are well positioned to.

<unk> increased demand and the industry's be sir.

Given the uncertainty presented by the Cobot 19, Pandemics, we will not be providing guidance for fiscal year 2021 at the time. However, as I noted earlier the current trends, we're seeing coupled with the strength of our team and offerings gives us confidence in our long term revenue and earnings growth trajectory.

In conclusion, we remain focused on our workforce solutions provider strategy, allowing I town to accelerate growth enhance our operational effectiveness and if that's an academic quality and superior student outcome I'm. So proud of the entire I'd add talent team not only for their steadfast commitment to our education mission for <unk>.

Guilty of nimbleness to adjust during these kinds of uncertainty as well if their continued just demonstration of our values.

With that I will now turn the call over to Mike will discuss our financial highlights.

Thank you Lisa and good afternoon, everyone for fiscal year, 2020 revenue increased 3.8% $1.1 billion, which was driven by growth in both medical and healthcare and financial services.

Diluted earnings per share from continuing operations, excluding special items for the fiscal year 2020 was $2.28 per share in line with the prior year.

As Lisa mentioned, the Cobot 19 pandemic brought challenges for our business. The most significant variables to our performance or the ability for medical students to fully complete their clinical rotation and for financial services to host in person conferences as well as b to b customers prioritize.

Using neither training in the face of budgetary constraints.

For the fiscal year 2020, the estimated impact from these variables to revenue and earnings per share was approximately $29 million and in the range of 27 cents 29 cents per share.

As you may recall from or last quarter earnings call. We recognize that curve at night that to covert 19 pandemic brought a range of potential outcome as we entered the fourth quarter and we chose not to provide guidance. It is important to note that excluding the impact of covert 19, we estimate.

That we would have met or exceeded our previously issued full year guidance for revenue growth of between five and 7% and earnings per share excluding special items growth of between seven and 9%.

[noise]. Despite these challenges during fiscal 2020, we continue to successfully execute our workforce solutions provider strategy.

The resiliency of our team coupled with our continued execution and ability to react quickly gives us confidence that we remain on track to achieve our longer term goals.

Turning to the fourth quarter 2020, more specifically, we delivered solid result, we pivoted quickly to evolve our offerings to meet the needs of our learners are customers highlighted by our successful transition to our online plot, yeah for classes as well as virtual conferences and clinical.

In addition, we worked diligently to enhance efficiencies through broad based cost containment initiatives further mitigating the adverse impact on our profitability positioning at home for long term margin expansion.

During the fourth quarter revenue decreased 1.7% to $259.7 million.

Temporary cobot 19 disruptions across the business drove the year over year revenue decline.

The revenue decline was due to reduced clinical weeks for medical school the impact of canceling in person conferences with a camps and constrain either be customer spending across financial services.

[noise] the estimated impact of coven 19 on revenue in the fourth quarter of this year was approximately $28 million and we deployed mitigation steps, which significantly reduced the impact cobot 19 had on our business, although we already had strong online and virtual capabilities.

We have continued to invest in enhancements to our offerings in light of the change in learning modalities driven by this pandemic.

Cost of educational services was $116.1 million in the fourth quarter compared with $122 million in the prior year period, a 4.9% decrease year over year.

An increase related to the addition of off course learning was more than offset by increased cost efficiencies across the organization.

Some reductions of expense were temporary and driven by variable cost associated with our reduction in revenue.

However, we also experienced sustainable cost reduction due to leveraging of technology throughout our business and improved process.

Student services and administrative expenses were $103.7 million in the fourth quarter compared with $90.2 million in the prior year period.

Which included $5 million of inorganic cost increase due to the OCC worst learning acquisition.

We also increased our investments in marketing and advertising while at the same time supporting projects aimed at identifying areas to both drive revenue and generate greater cost efficiencies, which we believe will allow us to deliver profitable growth as we navigate the current environment.

Operating income, excluding special items was $40 million compared with $52.1 million in the prior year.

The estimated impact of the code at 19 pandemic operating income was approximately $16 million for the quarter.

Net income from continuing operations, excluding special items was $30.5 million compared with $37.8 million in the prior year period.

Diluted earnings per share from continuing operations, excluding special items was 58 cents compared to 66 cents in the prior year period.

Now turning to our segment results for the quarter.

Starting with medical and healthcare revenue for the fourth quarter was $211.4 million, which was flat year over year.

Revenue growth at Chamberlain was offset by declines at our medical school due to lower clinical and housing revenue as a result of coven 19.

Chamberlain revenue increased 9.1% year over year, as new and total student enrollment increased 5.4% and 8.2% respectively.

Our may new student enrollment is the highest may enrollment in our history.

Demonstrating the return on marketing investments, we've made over the past several quarters.

Revenue in the fourth quarter for the medical and Veterinary school declined 12.9% year over year, driven largely by the impact of covert 19 on reduced clinical weeks at the medical schools and last but housing revenue.

Importantly, absent Trovan 19, we estimate that medical and veterinary revenue would have delivered year over year growth in the quarter.

The medical Health care segment operating income for the fourth quarter was $39.6 million remaining nearly flat year over year. Despite despite the clinical revenue headwind from coven 19.

We were able to offset this negative impact through strong student enrollment and prudent cost management within the vertical.

Turning now to our financial services segment fourth quarter revenue decreased 9.7% to $48.3 million. The overall segment decline was driven by cobot 19 impacts in a khamsin Becker.

EMS revenue decline as a result of the cancellation of in person conferences.

Becker's revenue decrease was driven by the temporary closure of SCPA test taking centers. They can stream spend on the part of our B to b customers.

This decrease was partially offset by the addition of our course learning revenue, which continues to ramp up and meet heightened demand for its mortgage offerings.

Excluding special items operating income in the fourth quarter declined 46.9% to $8.5 million.

The decrease in segment operating income is primarily the result of covert driven declines in a camps and decker revenue and corporate cost that were previously allocated to our former business and lost segment.

Turning to our balance sheet and liquidity.

Add talent continues to maintain a robust financial position, which we are focused on leveraging to execute our workforce solutions provider strategy and accelerate growth.

Net cash provided by continuing operations for fiscal 2020 totaled $149.6 million.

A 19.4% decrease compared with the prior year.

Our capital expenditures for the year totaled $44.1 million.

As a result, we generated free cash flow of $105.4 million compared with $127.9 million last year.

This decline is largely driven by lower earnings impacted by Kobin 19.

We define free cash flow as cash provided by continuing operations less capital expenditures.

We closed the school 2020, with cash and cash equivalents of $500.5 million and outstanding Bank borrowings of $294 million, we have no borrowings under our revolver.

Our balance sheet insurers ample liquidity content, just continue to successfully manage through the pandemic well executing on our strategic growth priorities in the current environment.

We remain committed to a thoughtful capital allocation approach, which includes strategic M&A investing to grow the business and returning capital to shareholders as we continue to maintain financial flexibility.

Moving to our forward looking perspective, we're confident in our long term trajectory and our ability to grow revenue in the mid single digits and earnings per share in the low double digits over the long term. However for fiscal year 2021, we will not be providing full year guidance at this time around.

Certainties associated with Coven 19, with that I will now turn the call over to the operator for QNX.

Thank you.

Ladies and gentlemen at this time, we will be conducting our question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad, a confirmation Tom would indicate that your line is in the question Q.

You May press the Star key followed by the number two if you would like to remove your question from the Q.

Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Once again [laughter] queue up for a question press star followed by the number one key on your telephone keypad, well pause for a moment as you pull for questions. Thank you.

Our first question comes from Jeff Silber with BMO capital markets. Please state your question.

Thanks, So much I appreciate you guys trying to highlight the Kogan I came at impact on the quarterly and annual results.

Winter seasonal issues in the fourth quarter and the reason I'm asking would it make sense. If this pandemic continues.

For the next for the rest are your fiscal year to just kind of analog annualized impact on the fourth quarter over the rest of the year.

Hi, Jeff This is Lisa Thank you on the question Oh.

What I would say if we do expect some continued impact into Q1 and moving into next year, if a very different actually a controlling the controllables than we saw in Q4 to five break down the three buckets I'm just a as a reminder from our last call a majority.

On the impact and you see that and the result is from clinical and specific to and you Medical school.

We sit here today about 80% of the clinical students are back on the Clinicals are open in student come back in those Clinicals students are currently placed.

And are there any a lack of virtual clinical but I smaller percentage by our Oh students I'm not currently placing clinicals right that has or seven sonesta student back on campus in in the needed Clinicals and then horse on the Chamberlain nursing side, while we don't have.

Specifically clinical revenues so to see clinical are needed for FMT and some of the other programs as you know and those fundamental part are now being placed whether its tell how are back into the hospital system I felt open up and.

Our primary some confidence here is never currently doing quite well a lot of course, we don't know what will happen with a pandemic in terms of friend the surges or second wave, except around a into the fall and Ah certainly for the first half of the fiscal year.

The primary impact that you're seeing it needs yourself I'm stuck and on the financial services side. There's two pieces soccer those testing sites were closed we now know that 90% metrics a casting sensors are open at about 60% capacity social Justice thing.

But that allows us that you have to go through and that obviously will be the impetus for students to take that CPH <unk>, Yeah, and then finally, the eight cams conferences us transitioning those from physical to virtual a and seeing what the impact will be there certainly are first first of all conference.

What successful and the next largest one that is Ah I highlight of the conference schedule for enhancement here in Las Vegas is virtual and we're seeing good momentum in terms of paid our registry. So that's how we view called moving into next fiscal year.

Hey, that's actually very helpful. I appreciate that I'm can you give us some insight on both the nursing side in the medical side in terms of current enrollment trends I guess for you know that the starts that are coming up this fall or your I guess the July start even in Chamberlain.

Yes, Oh sure can sell into I'll start with the medical schools, you can see that the enrollments there for may on trending well, we're seeing continued momentum oh for them at a one that well so mad men pet schools in the September session I assume you have visibility there.

We have not seen any adverse effect on those enrollment given that we will be starting in the September session on line for the basic Sciences fickle preschool Trinity enrollments that ambitions are trending quite well and Chamberlain had.

A record enrollment period for May the onsite B S and which I use essay monitor obviously that is online currently was up and in a double digit growth as we see that demand for the B S that at home health care.

Ah professions.

Being even accelerated with the pandemic, we do you see some oh pressure on the RN to BSN, which is understandable going into the fall as these nurses are obviously on the front line, but certainly or not.

In anyway.

In a negative trend at all but just a slower growth there, which takes us a and the other online program. Good trends hold for managed to September. So we're feeling very good about the momentum for additions and enrollment into the fall season.

Okay great.

One question you disclosed in your K about some provisional recertification for you see and Ross because of I'm just reading. It here increased dinner repeated title for compliance audit filings can we just get a little bit more color about what's going on there and should this be concerned for investors. Thanks.

Yeah sure I've no no not out a concern obviously something always wanted just well that had to do with processing around some title for funding et cetera, I think give you. Some context of that couple hundred assumes the AC I use AC number because I believe there.

I know that im from memory, it's not for claims that lead to slow processing of title for not getting the right funds, obviously as we transition to I'm not having sold in the opposite the remote work and things like Oh, we had some Ah we had some issues there minor all been man.

It through a add wasn't good relationship there so no concern of foreign investors that that's a larger issue.

Oh.

Okay. Appreciate color. Thanks, so much.

Our next question comes from just Mueller with Baird. Please state your question.

Yes. Thank you, how you're thinking about kind of the marketing budget across the medical and healthcare.

Institutions, there was the period, where you pulled back close to Hurricanes. When you kind of had two to normalize it but it seems like the trends are are going well from a new enrollment perspective. So do you further lean in and should we expect another increase or is it at a point, where you'd expect to start to show some leverage.

Yeah, I will start and then I will ask Mike you I'm, just trying to comment on that John Hi, Jeff Meuler, So that everyone else I'd say in.

Sometimes its [laughter] on the Chamberlain side, you will recall that we were doing some marketing certainly obviously on the RN to BSN to turn that and and we feel very confident that we have just though and this background I trends as we look at RN to BSN. We also invested in Chamberlain as they.

Ran pandemic has actually helped us to do that even more as we look at our care for caregivers and some of the items that I mentioned in the in the our prepared remarks, I, we've really been able to drive some brand awareness to that marketing and I think some at Chamberlain perspective, a week.

Got the right level of investment there are four for the growth that we're seeing in fact the growth we're seeing well obviously some of it is driven by just the burgeoning demand I sum of is it is from quarter to quarter a investment in the last two to four quarters and specifically, Mike why don't I actually a comp.

On the vessels in the overall marketing percentages, it's got to ask questions answered.

Sure so to your two year to your point, Jeff This past year, we stepped up marketing.

Marketing in a meaningful way and I would just say that that that was inherently driven by analytics around marketing, where we started we continue to look at what the incremental return.

On marketing investment versus the cost of the incremental marketing investment as we looked earlier in the year, we were under invested and you now see the benefits.

In new enrollment trends in Chamberlain and in med.

And so this year, we obviously had a fairly significant step up in marketing what I would say as we move forward, we could still see some increase in marketing, but I wouldn't necessarily expect the step up that you saw this past year, but but ultimately it's going to be return driven if we see opportunities to profitably with good ROI.

Hi characteristics.

Invest to generate high quality increase that we think have a good propensity to convert we're going to we're going to continue to lean in and we're taking a view well beyond the current quarter, we're taking a view of.

What what the payback on that over the next couple of years and that's the way we are thinking about it.

Got it and then and then make sense.

Dressbar restructuring actions and I guess, a little bit unclear to me to what extent. So first what did you what did you do what type of savings would you expect but then.

Yes.

Maybe from a qualitative perspective is this more directly in reaction to coconut or is this kind of post the.

Brazil divestiture and kind of Rightsizing does the size of the overall organization.

Yeah, Let me just just start before I prefer I'm flipping over to Mike on the details I'd say you know here at and how long a this is really about not letting any price is going away and so there were several he says that we knew for some time that we needed to address.

I'm just like some inefficiencies perspective, and then added to that are within thing within and around the pandemic that lots of interest companies are seeing a real estate footprint. As an example of what we're seeing the productivity of people at home and then you know understanding that we don't need necessarily.

The same number of satellite offices that we have.

Before about where an example, Mike could you want to add some color just specifics there.

Sure so of the $18 million restructuring charge. The large majority of that it was primarily driven by.

Reducing our real estate footprint into what leaf indicated.

As we evaluated.

You'll have to Covidien, we evaluated where people are working and how people work, we looked at certain locations and we made the decision to.

Close certain offices, we hadn't Chicago, New York and in Florida market that makes up the primary element of the restructuring charge and obviously from that we will have cost savings you know on an ongoing basis in the low single digit millions of dollars on an annual basis.

From these restructuring charges, but we think its continued.

Cost effectiveness in cost efficiency and this is one of the things that where we look at you know these types of things and how to gain become more efficient overtime.

Okay, and then Becker counting.

What a revenue mix between B to B and B to C and for the beat a beep customers.

How did they typically pay or like is this annual contracts being negotiated lower or is there just some big upfront fee. When things are signed just trying to understand the size of the impacts in the quarter. Thanks.

Yeah, Mike I'll, let you start and then I'll I'll chime in on a on the next piece if you like.

Sure. The majority of the revenue in back or is it ultimately comes through B to b relationships, a large number of them all come through contracts that we ultimately negotiate on primarily with accounting firms. So everything from the big for two or the.

That's the other the other next free.

As well in terms of the global seven as well as a whole series of accounting firms and so we're negotiating contracts on a continued basis.

With them that makes up the majority of the revenue.

And so it comes through a contrast, the b to C, which is an area during coven, which we've actually started to see we've seen more strength is actually more like traditional ecommerce.

Business, where someone is coming through our portal in their purchasing they're SCPA test prep product and they are consuming it in this instance, primarily online historically somewhat conducted online some would do a live in person classes.

And just to put a point on on the theater the out because obviously, we mentioned that there's pressure on those on those.

Budget out we have our contracts are there, but there also are any number of either C. D E offerings or other offerings that that that Ah Ah CPH, who are already employed and and upscaling or wanting certainly feels when it comes with right through the B to B channel.

We just don't know what that's going to look like into the next couple of quarters given that also pushing I'll start dates as an example from September to you to January for new hires et cetera, we have not had and any of the large b to b a contract not redo or anything of that nature, but just or not.

Sure what others, then they're going to have in and around C.D.A. I'm happy to see side I would say that is we see good momentum and that is growing primarily as a CPT I'd say, yes, CP. He I'm happy to see side and a part of that weren't really leading into with marketing et cetera.

As long as product development and content development, because we see that as an ongoing trend trends, particularly through the pandemic and then you know I think the other issue with back or as I mentioned before it's justice should hold up in terms of testing if you're thinking about taking that as you want to do you want to take.

Got review are pretty close to one you're actually going to be able to go and sit and schedule. Your test than just now over the last couple of weeks employers have it and back or have been encouraging students to go ahead and sign up at the testing centers open.

Got it thank you.

Thank you.

And just a reminder to ask a question at this time. Please press star one on your telephone keypad.

Our next question comes from Greg Pendy with Sidoti. Please state your question.

Hi, guys. Thanks for taking my question I'm just in light of the end Clecs pass rates, hitting 92% and I guess the demand being there are there any notable caps in place over the next 12 months that we should be aware of that any of the campuses that are up maybe for a review.

Oh, Hey, Greg. Thanks for the question show, what I would say is the opportunity likely is more when we certainly see an uncapped or had our comps increased and so we now have how hot [laughter] enrollment ability do trends like as an example.

I will weaken the only things in a way of growth there is in our ability to to have this capacity from a faculty perspective for the students. So I think that the says the main opportunities there are going to be at case campuses that are just that you've been uncapped.

Oh, we've had our cats lifted as it relates to pre licensure be a sense of Sacramento, who runs like et cetera, no, Louisiana and that of with our Masters program. They're yes, we are seeing and and and in fact decline for capital cost to be lifted on the program.

Although the online so they could be anywhere, but the actual program. Due to result is just coming through and their academic outcomes. So so we do see some not so good momentum there.

Great and then just one more if I can I think on the last call you mentioned in underperformance I think specifically at eight camps not the financial services, if I'm sticking out of place just let me know, but just how would you think about this.

After the fourth quarter results on a go forward basis, and just given the fact that you've narrowed your focus now the two divisions. How are you going to be rating the financial services overall, how should we be thinking about that sort of internally from your score card how are you thinking about.

What what the targets are in a hurdle rates up bar.

Yeah. So let me just start with with a little bit of context on that because I think it's really important for us to understand that that while the financial services companies are certainly smaller from a from a relative size perspective to our Matt health care they represent of course.

Three companies that are not a title for and drive revenue I'm that Ah that Rob our payer base significantly a very important she left I, what I mentioned before it was not so much declined eight counts, but our desire to see it grow.

A lot faster given what we know our the opportunities and frankly that has just increased from an opportunity perspective, given the pandemic in large part because of the acceleration into virtual assets in digital banking, so I sit where whereas it was all in coming you know, we sort of see two years.

Have a momentum there in a couple of months as as a whole world has continued to go virtual so from our perspective, where at an inflection point ATM relative plant health blacked out a bit and we are investing and of course if of course, because you're investing in theory for future period I'm only.

Gentlemen growth, but we are investing and staying on sales talent, we're investing in technology marketing and also product development and we're seeing some early trends that are really encouraging on the topline we mentioned cgss as an example, but more recently have introduced our know your customer and other short certified.

Issues are those frontline workers, who are no longer going into physical branch locations. They are doing that work out when folks who are banking digitally so lots of opportunity there, but also when we asked for investment and for US is critical as we think about our enterprise strategy being.

Workforce solutions provider solving problems for employers Oh, we do that in both and serve a and the mental health care industry.

That's helpful. Thanks, a lot.

Welcome.

Thank you are next question comes from Alex Paris with Barrington Research. Please state your question.

Alex Paris, you may have yourself muted, we can't hear you.

Yeah, sorry can you hear me now.

Yes, I am Okay, Hi, how are you doing show I just want to.

Dive, a little deeper or get a little clarification on Clinicals, obviously, the biggest challenge within the medical in health care for the quarter.

Obviously clinicals cannot be postponed until cobot, it's gone issue that said and you're seeing a and you didnt know that clinicals were halted early in the quarter.

I might've missed it, but but where do we where do we stand at this point in terms of Clinicals in.

In the medical schools, and then specifically within the you know graduate level nursing and S&P in children.

Sure. So in the on the medical side, perhaps what would be helpful. If I'm missing a walking through what has changed so last quarter when the pandemic and I'll just talk about you laugh when the pandemic I'm really shift the hospital system here sort of in different regions of the country Uh Huh.

So two things happened the hospitals when not prepared to maintain having this clinical students and they're going to save environment. They didn't have the P.D. and they also had not isolated there when they got cold and boards are called hospitals. So there was not a place for clinical students could I'm getting a practical experience in on non.

Colin I patients over the last two to four months, depending on the hospital system that has changed a and and students are able to go back family into clinical settings in our student have been invited back.

Choose to about 80% of the clinical Oh spaces that we would otherwise have then and we still are working on capacity because of course, we had students that that missed a few weeks or didn't weeks of Alaska's online and now needs to get their physical clinical practice as well as the new students.

Who work in that stage of going into clinical but we feel very confident that we can get done there that change and then the second thing that change that I've mentioned in my prepared remarks, I well call. It. This is I'm not a hurricane. This is a problem that every medical school in the United States have and sell the general I can.

Damage Medical College Academy has said, we have to get clinical she'd back into the hospitals for two reasons. One the health care system is stretched and frankly, they could use that workforce I know students, particularly do help with the non coal that patients, but then secondly that.

This is really important clinical experience bundles nurses and physicians, who are ultimately going to go out and be a part of our health care system. So with those two train changes we've seen a good momentum and getting the clinical back like I said about 80% and I'm. The only thing we remain cautious about of course.

And if so called insurgent Sturgis overcome hospital systems again and different pockets and then we said I'm, having a plan of action of trying to make sure we're able to move region by region. These clinical students. So that's what's happening in medical.

If I just take a moment for Chamberlain to recall, our clinical theres not a clinical revenue impact, but it is and then.

I don't really important a piece of the education for our students, particularly those family nurse practitioner. They cannot maintain their track and getting graduated out and getting their placements unless we're able to get clinicals and so that's our that's hockey there region choosing.

Thanks, keeping the students and their safety and in mind and as our top priority. One is really shifting to tele health telemedicine clinicals, they're actually going extremely well and will also pair our students because we didn't see as a nation a lot more tele health from now going forward, that's not going to go west it's great.

Experience for them and then we've also done the same thing they show that we got opportunities for that were in C. S. P D and they're getting the exposure obviously in a safe way to how to treat patients. So we're feeling pretty good about being able to place most almost all of our students who are currently in.

Pipeline and needing clinical experience in bad and a in the nurses.

Joe the 80% comment that you made that refers to the medical schools.

Only or does that also include graduate level nursing.

On the 80% is a medical school a number the nursing I I wouldnt were little higher than that we have certain students that we need planes, but in general as we look across you know the several thousands units there either in a perpetual or hello.

On a with affiliates or actual clinical.

At this point.

Yes.

Okay. Good and then lastly on the Becker you made a comment that 90%. The parametric centers are now open a.

Short of a Ah Ah resurgence or a second wave that should continue to improve going forward.

That's right, but it just as a reminder, the capacity in no centers is about 60%. So of course, we've got to encourage students to get in and get signed up but the actual centers are open then again you know we're all learning right how to Levendusky normal. So you know they figured out how to mask and clean and do all those things.

That we're all doing to get to that so I I anticipate adults will remain open as barring. Some you know like I said second wave surge or something that changes lots of things on not just that.

Sure I would think then kind of summing it up you should be in a position to give guidance again, if it weren't for the big question Mark of resurgence in second life.

Yeah, I think that I think that that's accurate. It's just you know if they pandemic and so lastly, we want to do as be you know you as public schools, Yes, let's open Oh I'm sorry, two days later, so we would just trying to be cautious so honestly I'm trying to make sure that would be very transparent about the controllable.

So we feel like we got a really really good handle Alex on the under control.

Great well, thank you very much I appreciate it.

Huh.

Thank you there no further questions at this time I'll turn it back to marine respect for closing remarks. Thank you.

Thank you. Thank you everyone for joining us today as always if you have any follow up questions. Please contact me directly.

Thank you. This concludes todays conference all parties may disconnect have a great day.