Q3 2021 Adtalem Global Education Inc Earnings Call

Greetings and welcome to I'd tell them Global Education third quarter earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Marine and <unk>, Vice President of Treasury and Investor Relations you may begin.

Thank you 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 90, 95 with respect for the future performance and financial condition of <unk>.

The global education that involve risks and uncertainties.

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 SEC and August 18th 2020, and our other filings with the SEC.

Okay.

Any forward looking statement made by US is based only on the 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 verbal that may be made from time to time.

And there as a result of new information future developments or otherwise, except as required by law.

During today's call our commentary will refer to non-GAAP financial measures, which are intended to supplement though not substitute for our most direct comparable GAAP measures.

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

Please note that all financial results and comparison made during today's call are on the continuing operations basis, excluding special items and are and are in comparison to the prior year period, unless otherwise stated.

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

And that's the replays please refer to today's press release.

We will begin today's presentation with prepared remarks from Lisa Wardell and talents, Chairman and Chief Executive Officer, and Bob for you and interim Chief Financial Officer.

Following the prepared remarks, Stephen Byrd, our Chief operating officer will join us for the question and answer session.

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

Thank you for joining us on our third quarter earnings call. This afternoon.

And when we discuss our financial results I would like to start by welcome and Bob <unk>, Our interim Chief Financial Officer for the call. Bob is an accomplished financial leader and has been with that talent and since February of last year. He previously served as our vice President and Chief Accounting Officer, and has transitioned seamlessly into managing and ASP.

Team and partnering with our business leaders and with me welcome Bob.

Our third quarter performance was in line with expectations delivering revenue of 281 million and diluted EPS of <unk> 72, and we are reaffirming our full year outlook of 5% to 7% revenue growth and 28% to 32% diluted EPS growth.

Workforce solutions strategy continues to look to deliver strong results, we achieved 9% new student enrollment growth and our medical and healthcare institution and double digit revenue growth and our financial services segment, which reinforces our confidence in the full year outlook.

Let me provide a brief update on our planned acquisition of Walden University, we remain enthusiastic about the complementary programs and online capabilities that all of the Greens to ask how the acquisition of Walton University plays an important role and furthering our strategy permitting us to achieve market, leading scale and reach and health care entities.

Strengthening our core nursing offering expand into attractive high demand adjacencies, including social and behavioral sciences.

And extend the customer lifecycle from pre licensure program to graduate and advanced degrees.

Market and attractive mix of online on campus and hybrid learning modalities and engage our employee of partners and further scale as we announced during the quarter. We closed on $1 65 billion of financing related to the wall and the acquisition and we continue to expect the acquisition to close and the first quarter of fiscal 2020 two.

Yes.

And we are making good progress on integration planning, including our plans for realizing at least $60 million and cost synergies, which we believe will result, and enhanced service to our students and we have increased confidence that these are achievable financial metrics do our integration planning, we have seen cultural compatibility between ourselves and Walden reinforcing our belief that.

Walden is a fantastic fit for <unk> Global education.

As it relates to the U S Department of Justice inquiry into the alleged misrepresentations about of Walden related to its master of science and nursing program I want to reiterate that we take these matters extremely seriously.

While the and informed us that of completed its own investigation and did not find any evidence supporting the allegations contained and the Doj letter.

And presented those findings to the Doj on November 24th 2020.

As for our own investigation that work is ongoing also nearly complete we are nearing the completion of a thorough inquiry conducted by independent legal advisors and to date have not identified any violations of the federal false claims act with respect to the income component of Walgreens Nursing program.

With the addition of Walden and talent will become the Premier National Health care educator, providing comprehensive workforce solutions to the employers to proven and learning modalities the superior academic outcome the.

The investment benefits from a compelling financial rationale, including attractive synergy opportunities and robust contribution to free cash flow.

And our medical and healthcare segment, our scale and employer partnerships and superior student outcomes and differentiate our institutions and position us well to meet the growing need to fill critical critical work force gaps with the projected nursing shortage of more than 500000 registered nurses by 2030 and up to 139000 physicians.

By 2033, it is of public health and parents him to create a robust pipeline of qualified and diverse talent to meet these evolving needs and palm addresses these critical workforce shortages and facilitate the training and scale by expanding access to education, and establishing robust employer partnerships more than 800.

The third 60, Ross Med and AUC graduates have matched to residency programs the summer AUC and our U S and Grad school and the primary care residencies where the.

Physician shortage is projected to be the most severe at about twice the rate of the use of medical school graduate and counterparts.

As a graduate to take the next step and their medical education journey and go on to serve their communities, we applaud them for their resilience and dedication and achieving this incredible milestone during these challenging and unprecedented times and diversity and the health care industry continues to be a critical issue that we're committed to addressing.

Studies demonstrate that patients of color Optimus, the better care and health outcome when paired with the physician at the same rate Ross Med and AUC graduates more block positions than any other medical school and the United States.

And we continue to scale of highly diverse workforce of health care professionals for our employer partners. We're addressing both the physician shortage and health care and equities, we firmly believe the and talents unparalleled ability to create a tangible social impact continues to distinguish distinguish us and the industry and we intend to build on these initiatives moving for.

The only doesn't add talent the dress diversity and the industries. We serve and is also committed to advancing diversity equity and inclusion within the company. These long term efforts were recently recognized by add talent being named one of America's best employers for diversity 2021 by force.

I'm pleased to share the true.

Cable and performed well and the third quarter, reflecting operational improvements targeted marketing investments and superior student outcomes of our program change.

Chamberlain's National average and first time pass rate for the 2020 calendar year reached 97%.

Feeding the current national average of 93% the school achieved these results through our efforts over the past several years to promote student success with and enhanced curriculum increase student support and leading technology.

Chamberlain, new student enrollment increased by approximately 7% and the March session with growth and total student enrollment of about 6% growth and our campus BSN master's and doctoral level programs was partially offset by a slight decline and RN to BSN and frontline health care workers continue to be of challenge during the pandemic.

Just on March 2021 data released by the American Association of critical care and nurses Chamberlain's market share growth of between 20, and 50 basis points over prior year for each of the programs and operates including pre licensure BSN RN to BSN MSN family nurse practitioner and Doctor of nursing practice.

Based on the AC and data in 2020 Chamberlain was the largest nursing educator in the country.

Early last month, Chamberlain and announced the opening of the second, California campus and Pasadena to meet demand and a key area of the country. And addition, the enrollment of catheter Sacramento campus was raised in January.

Cable and now has 23 campus locations the vast majority of which do not have caps on enrollment and offers evening and weekend classes and three of them are starts per year and several campuses.

We are pleased that the Shameless, New Orleans campus scaffold recently lifted dislocation, which is on the Ochsner Health campus graduated its first 50 for students during the pandemic, but the 100% of those graduate and passing and Clarks and two thirds of the students sucked and job excepting job offers with Ochsner health. This is a strong example of the power.

Sure of our work force solutions model.

As of further demonstration of our workforce solutions partnerships. We recently started a hybrid BSN program with the University Hospital and Cleveland to allow working healthcare professional such as E. M. Ts paramedics and earn their BSN and while also balancing stanley's jobs and other responsibilities. This leverages, our existing campus program and and.

Infrastructure, while finding a new way to reach prospective students.

And the medical and veterinary schools, the January and new student enrollment increased 21% the highest January of new student start and over eight years as we anticipated and our commentary last quarter total student enrollment declined 6% as the winter surge and COVID-19 cases reduce the number of available clinical staff slots and.

Our hospital partners negatively impacting the enrollment of clinical science students. We anticipate those students who are awaiting clinical at the beginning of January as well as newly qualified clinical students will be placed into the clinical as over the coming quarters reversing the temporary decline in total students approximately 20% of the students who are waiting for clinical placement at the beginning of the.

This quarter have now been placed.

I'm proud to share that Ralph that set records for both the largest number of students as well as the highest enrollment for of January semester, reflecting the strong interest and the veterinary profession improvements and student support and the success of our brand investments. We believe that the strong appeal of veterinary medicine will continue and pet ownership of significantly.

Growth during the pandemic and addition, wrap that recently announced they will benefit from a grant from Petsmart charities, which will allow us students to receive enhanced trading opportunities, while providing access to veterinary services services to under resource populations within the community.

The strength of our health care brands has been supported by our institutions thought leadership and their respective sectors. For example, yesterday AUC and concert with the Caribbean Center for disaster Medicine hosted its international conference on disaster Health care education, and virtually emphasizing a one health approach to do the actors and Rob.

And that the school has been highlighting its alumni to pre veterinary students through a wide range of topics the of free Webinars and live streams to show the value of the D. B M degrees from rock that the series. So far has attracted over 2000 attendees.

And our financial services segment, we had a very strong performance in Q3 highlighted by double digit revenue growth as we continue to capture demand generated by strong secular trend. We are also establishing prominent growth factors to enable expansion and diversification diversification into new markets.

The first and new offerings are positioning the segment for long term growth.

<unk> remains the gold standard and the growing anti financial crimes marketplace, which has become even more important of online commerce volume continued to increase we continue to see strong demand for anti financial crime expertise across all the traditional financial firms as well as newer fintech companies.

Despite facing significant COVID-19 related headwinds, which impacted the in person conferences Atms has performed well non conference revenue grew about 25 per cent year over year and the third quarter driven by strong certification of risk assessment and sales. This performance reinforces the continued long term opportunities and the overall anti financial crime market.

And the strength of <unk> brand as it continues to address customer needs and so it's product and global diversification strategy and.

Example of this diversification is our sanction certification, which has been solid state has seen solid sales and membership growth since its introduction and fiscal year 2020.

And at Kansas also a leader in spite and human trafficking and illegal wildlife trafficking through the certifications and these areas are anti human trafficking certificates. The first of its kind of was developed and congestion junction with the Liechtenstein initiative for finance against slavery and trafficking and.

In addition, Inc.

Counts and the worldwide fund for nature have developed the training services certificate for individuals seeking to protect their organizations and the threats of illicit finance linked to the illegal wildlife trade. Both certificates have gained significant traction and camps members continued to see the value and our global conferences and we look forward to a return to in person.

And conferences when it's possible to do so we do plan to use the hybrid conference model to expand participation and supplement future growth of in person conferences, and we continue the whole successful virtual conferences and our most recent the virtual Hollywood Conference on April 13th was attended by a whole Inc.

1000 professionals.

And of course learning is capitalizing on its leadership position and capturing the heightened demand and the mortgage and banking sectors. We continue to meet the needs of our customers do various offerings, such as pre licensure exam preparation and continuing education.

<unk> has continued to build new relationships and expanded existing ones to drive long term growth overall, and we'll see all of the ability of scale volume to match clients demand has driven significant growth outperforming our expectations.

And Becker, we're maintaining our leadership position and the CPA test preparation market. Despite the COVID-19 related hiring headwinds impacting large CPA firms and our institutional clients and is well positioned for future of CPA review growth on the testing of market returns to pre COVID-19 levels.

Our targeted investments continued to drive strong growth and continuing education Becker's reputation has attracted book B to B and B to C customers seeking a variety of quality continuing education program and we're growing our enterprise relationships with significant expansion and to the CPA firms and corporate segments, adding two notable accounting firms and the third quarter.

And of course, offering new ways to meet demand, including targeted certificate program and always on webcast well designed to meet the evolving learning needs of busy professional.

The recent change by the by the administration to the 90, 10 rule, which requires including military benefits along with other title for federal funding will not impact out of town and fact and talent institutions have been voluntarily operating out of commitment of 80 515 inclusive of the military funding since two.

16, we believe the proactive policies like these and strong student outcomes of the Formula for success under any administration and talent institutions regularly provides superior student outcomes with strong cash rates of match rates and addition to favorable cohort default rates compared with their peers and the nonprofit education sector.

Each of each one of that talented institutions received and improved cohort default rate for the most recently evaluated year and add talent of the whole how the draft rate.

Of 252, 5%, even lower than the extremely low cohort default aggregate rate of three 1% published last year.

Our talent institutions have historically significantly outperformed relative to the peers highlighting the quality of that towns programs and our focus on delivering superior student outcomes and I will now provide and update on our strong corporate governance practices.

In line with our commitments of regularly refresh our board of directors with high quality diverse representation. We were pleased to announce the recent appointment of Dr. Charles Machine Zone, and independent member of that talent for Dr. Does change. The currently serves as director of clinical product and Google.

Of technology technology accelerates and changes in the way patients to seek and receive care got the decisions. The unique perspective will greatly help us and further enhancing our programs and offerings to meet the evolving needs of our health care employer partners and addressing the critical talent shortages facing the sector.

His background is a board certified M D and internal medicine will enable us enable us to leverages, the expertise and executing our strategy of becoming a leading provider of workforce solutions for the rapidly evolving health care industry.

Finally, as it relates to our transformation I am excited about the progress, we're making towards our workforce solutions strategy, which is driving new and expanded partnerships and bulk of medical and health care and financial services, our academic outcomes and the demand for our offerings continue to position us well for growth at.

And <unk> role and helping graduate health care professionals and response to significant demand for diverse and qualified talent and just one compelling example, the strategy and action. These talent shortages exacerbated by the pandemic create a large and unmet market opportunity for qualified graduates and the health care and behavioral Sciences professions and talent is playing an important role.

And helping meet market demand for these health care professional at a time when global health has never been more important.

We continue to invest and our financial services segment as part of our workforce solutions strategy financial services is experiencing double digit revenue growth at the segment capped a strong secular trends and we continue to see strong demand for us and certification and continuing education offerings are institutions and programs remain focused on superior student.

It comes out and impact the lives and communities and which.

We serve and provide access to education to those who may otherwise not have had the opportunity to pursue higher education. This is a strong differentiation differentiator for agile and one we believe will deliver long term value for all of our stakeholders.

And now I'll turn the call over to Bob to review the financials in detail.

Thank you Lisa and Hello, everyone I'm pleased to have the opportunity the share our solid third quarter financial results today.

And the third quarter, we continued to execute on our strategy delivering results that were in line with our expectations revenue increased three 4% to $287 million, we're seeing strong demand across our businesses driven by the strength of our student outcomes, and our investments and marketing and new offerings.

And the anticipated we faced incremental COVID-19 headwinds primarily related to reduced capacity and some of our clinical partners, which modestly impacted the top and bottom lines. We expect these transitory COVID-19 related headwinds to continue and the fourth quarter.

Looking ahead of the number of people being vaccinated and increases daily and we remain cautiously optimistic that the environment continues to improve as we enter into the next fiscal year.

The cost of educational services was $123 $1 million and the third quarter and an increase of three 7% compared with the prior year. This increase was primarily driven by increased cost of Chamberlain and to support growth.

Student services and administrative expense was 108 $5 million and the third quarter of $12 five per cent increase when compared to the prior year. This increase was primarily driven by added sales and marketing expense to support continued growth and an increase and employee benefit costs.

Consolidated operating income, excluding special items decreased 12, 9% and $49 $1 million and the third quarter of fiscal year, 2020, one primarily driven by lower clinical revenue and increase the administrative expense. This was partially offset by enrollment growth for the last 18 months of Chamberlain.

And revenue growth and financial services.

Net income from continuing operations, excluding special items was $36 $9 million compared with $43 2 million and the prior year and diluted earnings per share from continuing operations, excluding special items of 72 cents per.

For it to 81.

And of 11, 1% year over year decrease.

Now turning to our segment results for the quarter and medical and health care revenue for the vertical was $232 million of one 3% increase compared with the prior year. The increase was driven by enrollment growth at Chamberlain and over the last 18 months. This was partially offset by lower.

Clinical and housing revenue at Ross Med.

As Lisa and discussed Clinical's were impacted by the winter and a surge in COVID-19 cases, which reduced the availability of the clinical swaps and some of our partners.

Revenue of Chamberlain, and the third quarter increased eight 3% compared with the prior year period total student enrollment and increased five 8% for the March session.

Revenue for the medical and vet schools, and the third quarter decreased nine 1% compared with the prior year driven by lower clinical and housing revenue and Ross Med, we view, the clinical and revenue headwinds as transitory and expected at the end users we will resume growth in medical.

And that score revenue.

Medical and healthcare segment operating income excluding special items for the third quarter was $51 1 million and 11, 2% decrease the.

The decrease was driven by lower clinical and housing revenue and the prospect and the increased administrative expense.

Turning now to our financial services segment third quarter revenue was $54 million.

And increase of 14, 3% compared with the prior year driven by revenue growth of day cabs and of course learning and the Becker.

The <unk> revenue was strong and the quarter as they continued to diversify their offerings to address a broader range of customer needs and providing future growth opportunities.

And of course learnings grew revenue and grew revenue and the quarter by leveraging its leadership position.

Favorable mortgage market and the growth and continuing and professional education.

At Becker revenue was up slightly as continuing education revenue growth was partially offset by a decrease and CPA test prep revenue.

Becker continues to be impacted by softness in the test taking activity and hiring by accounting firms.

Third quarter operating income and the financial services segment decreased six 8% the $3 $9 million. The decrease in segment operating income was primarily driven by increased sales and marketing expenses.

Yeah.

Turning now to our balance sheet, we closed the third quarter with cash and cash equivalents $497 $7 million and obviously.

And these bank borrowings under our existing term loan b of 290 $128 million.

During the quarter, we finalized the financing for and the acquisition of Walden University by closing and $800 million of senior secured notes and pricing $850 million of term loan b to replace our existing term loan b upon close of the acquisition.

This $1 $65 billion of permanent financing long with its 400 millions of dollars revolver is in line with the committed financing that a company and our acquisition announcement last September.

We repurchased 975000 shares and the third quarter for a total of $37 million. As a result, we had $49 7 million shares outstanding as of March 31.

2021 <unk>.

We are planning to repurchase up to $100 million of shares during fiscal year 2021.

Turning to cash flow and the third quarter net cash provided by continuing operations $81 $9 million was $34 $4 million lower than the third quarter of last year due to the <unk>.

Timing of receipt of $35 $5 million title for funds and December that normally would be received in January of.

Our capital expenditures for the quarter total 10 $7 million as a result of free cash flow and the third quarter was $71 $3 million compared with free cash flow of $104 $6 million and the prior year period.

As a reminder, we define free cash flow as cash provided by continuing operations less capital expenditures.

Strong free cash flow generation is a hallmark of bad times operating model.

And has generated $177 $7 million of free cash flow on a trailing 12 month basis through March 31 2021.

And as discussed last quarter, we continue to expect significant free cash flow growth in the coming years, we anticipate the talent Standalone free cash flow will grow in line with earnings for the low double digit rate.

Well, the and integration, we would expect that talent the generated over $300 million of free cash flow on an annual basis the.

The strong free cash flow generation supports our commitment to delever the balance sheet to below two times net leverage and 24 months of the close of the acquisition.

Moving onto our outlook for the full fiscal year 2021, we continue to anticipate revenue this fiscal year to increase 5% to 7% and diluted earnings per share for continuing operations, excluding special items to grow 28% to 32% the inclusive of share.

Purchases.

And as previously stated we believe our stand alone business and the coming years will generate revenue growth and the mid single digits and earnings per share growth in the low double digits. Additionally, we're excited about the future cost synergies and earnings trajectory that the plan well of an acquisition we will provide that talent, we continue to expect adjusted.

And earnings per share accretion of $1 15 per share during the 12 months. Following the close date, excluding special items and purchase accounting effects.

If we were able to close the wall and acquisition and the first quarter of fiscal 2022 of the combined company would be expected to generate the quarter $4 of adjusted earnings per share for fiscal year of 2022 of them.

With that I'll now turn the call over to the operator for Q&A.

But for commencing in the Q&A portion of the call I would like to turn the call over to Stephen for your.

Chief operating officer at <unk>.

Thank you operator, before we turn to Q&A and have an important update on the department of Justice matter.

Last evening, Walden, and Laurie and for those the Department of Justice has concluded its investigation and to Weldon's Master of Science and nursing program.

In addition, they indicated that the Doj has decided that it will not intervene and the underlying lawsuit that's ought to bring claims on behalf of the government.

For more information on the Doj is determination I would refer you to <unk> disclosures on form 8-K filed with the SEC earlier this evening.

As for our own investigation, we are nearing the completion of a thorough inquiry conducted by independent legal advisers.

And to date, we have not identified any violations of the false claims act.

We are pleased that the Doj has declined to intervene and we remain optimistic that these developments will pave the way for closing the transaction and the first quarter of next fiscal and fiscal year as planned.

And with that update I will turn the call back to the operator for questions from the audience.

Yeah.

At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad. The confirmation tone will indicate that your line is and the question queue. If you you May press star two if he would like to remove your question from the queue for.

For participants using speaker equipment, and it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Our first question is with the Jeff Mueller with Baird. Please proceed with your question.

Yeah. Thank you and good afternoon, everyone.

So you're maintaining your full year guidance.

But there's this disruption the clinical availability and it sounds like RN to BSN remains under pressure understandably because of the frontline the nursing workers the with the COVID-19 surgeons, but I guess my question is.

The revenue was quite a bit below.

And this quarter than at least consensus had it modeled you're saying Q3 and mine and.

Yes, you're saying as anticipated increases and COVID-19 headwinds so should.

To be prudent should we assume the full year revenue is more likely to come in and the bottom half of the range or are you not viewing it that way.

Yeah, Jeff Thanks for the question let.

Let me start with the with the nursing side and and then move onto clinical and look I think the good news here is the this is of.

A pure COVID-19 story, and the tempo timing story right because as a reminder, actually I'll start with medical as a reminder, these of students who completed all of their basic sciences, they've taken the step one exam. The there in the Q1 of the things that has been helpful to look at the silver lining of of this pandemic is that.

Both medical schools, Ross and AUC, but obviously <unk> has a greater volume of students have really had to expand the partnership base for clinical so while we have many hospital partners that are not yet up to 100% or even 80, 85% capacity, we alcohol of added.

Partners to that network, so, while we do see and half of them.

Sat on our scripted remarks is one of those here that there will be COVID-19 impact into the next quarter as we as we ramp up of those clinical's, we're sort of 25% of ourselves.

On the other.

Students that were current and then of course, there are new students coming into our into the queue of past step one we do see that and speak of being a greater.

And and faster and come.

Come back into the clinical and we won't get them all of them in the next quarter or even the next two quarters, but certainly we see that clinical revenue coming back much faster than it did say in that first timing of clinical and when they were when they were shut down a lot to do with the resiliency of all of the hospital partner.

And then part of that to do with kind of vaccinations and.

And the the spread of that that's now, allowing for more and less urgent procedures and those procedures that are sort of backed up in these hospital systems are what clinical and.

The students can then get experience so.

Yes, it will continue but we believe that.

And we're gonna see good traction and those clinical weeks and of course, if you look at the actual student enrollments across medical and that a great new student enrollment and so that will drive into the next couple of quarters on the nursing side.

Syed on Chamberlain side, while there is as you pointed out a bit of pressure and RN to BSN.

And far more pressure in January and March which is why you see that January session, new students for a little bit lower but just as a reminder, we did gain share in RN to BSN and even though declined a bit and we gained share also across and most other programs M. S. N F N P and the pre licensure. So if we combine that.

With the fact that about 9% of our new students in Chamberlain, our actually through our evening and weekend classes, which youll recall.

Began sort of subtracting.

I think calendar September 2019, and then we have them on the five campuses now and we're rolling out another five campuses.

Pretty confident that we're gonna be.

And in good range of the revenue certainly it would be prudent to say as we look of 5% to 7% we feel comfortable in the in the mid range based on what we know about visibility into into May but we certainly are confident that we can be at a rate that 5% to 7% of guidance.

<unk>.

Okay helpful. And then I appreciate the update on the Doj and the 8-K there is.

Align about.

So I guess Walter.

Still having the public governments investigation designation with each L C, which the maybe a matter of time post the Doj decision before that falls away, but just reminded me on accreditation, where does Walden stand like one does it H L C.

Or any other accommodation cc and what does it run through or ones that renewed through.

So.

And just so I understand your question of accreditation and the ordinary course of or credit or approval of the transaction.

The credit they shouldn't and the ordinary course for Walden from eight youll see any of any other kind of importance of creditors.

Yes.

As we sit here today all of the audience programs are fully accredited and the creditors vary depending on the program as it relates to nursing they look for.

Credit is the CCA and.

And their accreditation is up for renewal next month.

And Walden and laureate expects that credit issue to be renewed and the ordinary course.

Okay.

Thank you all of the jump in queue. Thanks.

Yeah.

Our next question is with the Jeff Silber with BMO capital markets. Please proceed with your question.

Thanks, So much just one more on Walt and can you just remind us what the timeline is of what the.

What we need to expect before that deal closes.

So at this point.

The remaining stage gates are really of regulatory approvals so HFC.

Reviews, and approves the transaction and the HFC site visit.

Has occurred HFC is developing its report.

On the basis of that site visit to be presented to HFC for Italy, It's June meeting and.

And we expect it.

They will take it up at the June meeting we are currently on that agenda and we expect.

And that they will approve the transaction at that time after that the last gating issue relates to the department of Education is pre acquisition review of that work is underway at Ed and we have been responding to information requests from them of related to their review and then and watch the department of education sides off and we are in.

The position.

<unk> five of the remaining procedural closing conditions and closed the transaction on the timeline that we had previously indicated.

Okay. That's helpful I'm, sorry to keep the discussion around Washington, and but we had a pretty big announcement from the president yesterday regarding.

Regarding the American families plan and in and looking it over.

I'm thinking this could impact the company there could be some positive some negatives and there I'm just wondering what youre thinking and specifically you know a lot more funding going to the non for profit sector do you see that it's stronger competition and the other hand, and he talked about all of $2 billion pipeline for skilled healthcare workers with graduate degrees that in theory.

You could benefit from and so I'm just curious your thoughts thanks.

Yes, so I think the way we would characterize it is of that.

The myriad of initiatives there of represent a net positive for us that there are obviously some things of that.

To your point of the flow of dollars to not for profit institutions, but there's also quite a bit.

As we understand the package there the community college and those institutions often serve as the pipeline to our programs and so we view that as a positive as well and to your point some of the investments related to broader health care workforce improvement also plays to our strength so again.

All of them.

Lots to digest, we're still studying the proposals, but a preliminary perspective is that it's a net positive yeah and the only thing I would add to that Jeff is on the not for profit side, we see builds Israel partners Theres lots of things that we do and and have done.

With the the institutions, whether it's scale and capabilities of content or just partnering on the curriculum et cetera, and that's something that we want to continue to do and as Steve mentioned on the on the community College that aren't really that the pathway for asking of several programs of the Hughes Chamberlain as an example, where we.

We provide community college students with acts of free access to and <unk>.

Several of the RN to BSN and BSN pre licensure the classes just to see whether that's something that they want to do and feel like they can pursue and then we will enroll them off from the switch of good pathway for US and then I think just in general and <unk>.

The health care, and health care, and equities and how that relates to health care and education. You know my view is a great that money is being up and to that because it's just there's just such a dearth of.

Programs and physicians and institutions that are serving that social mission and and we're proud of you part of it.

Okay, that's great to hear.

I know youre, not giving guidance for fiscal 2022, just yet and obviously, they're going to be issues in terms of the timing of Walden, but lets assume for some reason that there is a delay.

And the acquisition closing just in terms of your core business is it possible and give us. Some early read on where you think growth would come from next year and what we should be expecting excluding robyn. Thanks.

Well I will I will let Bob answer that but I would just say in general as we look at the trends and we look at.

How the portfolio has performed during the pandemic in terms of resiliency and adaptability and new programs and things like that and it gives us a perfect example, right having to think through.

How to shift from that Empress of the conference.

Although it wasn't for a large part of the model that really is where a lot of the asset sales and continuity for other things came from and that that is shipped until we think of that will continue and we certainly see as we have you know this is not really of pandemic thing is over the last few years, we have shifts.

That and that health care portfolio to really meet the needs of our employee of partners, which is why we're focused for masters and doctoral and et cetera, and that talent from acquisitions of retention to prevent churn and these large hospital partners. We think that that's where a lot of our growth is going to come from from a qualitative.

Perspective, we don't see that going anywhere, we see a continuing and I.

From a financial perspective, and what we've said is that we do expect to have low double digit EPS.

S growth and mid single digit revenue growth. So I wanted to just make sure we had that out there and as you look at some of the disclosure we've got in the last part of the earnings release.

Can see that the.

And there even from the for low end of our estimate you can you can look at that and you can make some estimates off of that as well.

Alright, Thats really helpful. Thanks, so much.

Our next question is with Greg <unk> with Sidoti. Please proceed with your question.

Hey, just a couple of questions first of all of just on the marketing of Chamberlain.

And.

The companies in your space had been talking about.

Inflation in terms of marketing and I know you've been involved in sort of the step up on the.

The value of of Chamberlain, and Devry and can you kind of talk about where that stands nine months year to day and kind of how we should be think about that going forward.

Yeah look let me just start by saying it and general we certainly continue to make incremental marketing investment and and Chamberlain and because we see it as of as a real driver of growth.

But and we'll continue to do that and <unk>.

Ports are our enrollments, we've got good interest and visibility good visibility into may and and and September but what I would also say is that and we are absolutely seeing the benefit of partnerships with these hospital systems and and our partners who are.

Really helping us if you will with that brand and and marketing as we and we tie a lot of our social media marketing to the mission to our care to complete two Chamberlain cares and we're able to really get a broader lift from some of the Chamberlain brand marketing.

All of that we've done over the last I would say 12 to 18 months and so yeah. We clearly those areas that are certainly more competitive I mean are in the B S. M would be why and where you've got to really think through region to region of the marketing basis, but we're seeing good return off of the from the additional marketing dollars and and as.

Long as that continues we'll continue to invest and marketing on the on the Chamberlain side.

Okay, Great and then just shifting gears over to the regulatory side I understand you have good standing I guess on the 90 10 and <unk>.

And the heart default rates, but can you just talk a little bit of bad gainful employment, and specifically on veterinary and the medical schools and kind of how we should be thinking about that if that were to come back into the fold. Yeah. So we do not have.

Have a gainful employment risk based on the starting salaries and and sort of requirements of the of the doctor or the physician and veterinary and programs.

You may recall that when this came up.

Five years ago, the vet school was the one where we.

Hey, the most focus and from a starting salary of perspective because of those first years that are really called the <unk>.

Princess ship and that school, which are very much like a residency and and in an hour Pathic MD degree, we're not counted that way and so those early years of lower salaries of the accountant.

Since then we have partnered with some of our core I'm, a veterinarian hospital partners Banfield hospitals, as an example, and really driven and the increased starting salary for the veterinarian.

About 9% of the VAT true graduate and enter the workforce in the U S. Workforce graduated from rock that and Theres about a I don't know less of them one that her opening for a veterinarian and the use of those those are stacks that really allow us to place our students and then you.

Mentioned cohort default rate very connected the gainful employment rates of our draft cohort default rate for the vet School is now 7%, meaning that you know 99, 3% of paying back their loans. So we feel like we are and are in very good stead as it relates to our programs and gainful employment.

That's helpful. Thanks, a lot.

Yeah.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question is Jeff Mueller from Baird. Please proceed with your question.

Yeah. Thank you and hopefully I hope you'd be more of a fishing and your follow up calls later.

So you've been repurchasing stock, but the plan is to Delever.

Most acquisition close over the next 24 months now the I guess, the Doj has dropped at the inquiry and we're at the stage of the process of.

Are you planning to continue to repurchase stock until the close or at some point prior to the close.

The stock repurchasing.

Well, what I would say is that and as you saw in the release, we have repurchased $37 million of shares and the current quarter $82 million year to date.

And what we would plan to do is continue purchasing up to the $100 million that we had talked about before but we do have authorization.

Under our existing authorization for up to our or I should say, a little bit more than $200 million.

And that we were authorized for it but we're only going up for the $100 million at this point.

Okay, and then for on course learning.

Yeah.

And I don't know what rates are going to do but if the mortgage market does start to soften and.

The current mortgage underwriters become I guess less constrained and it doesn't impact and hiring activity.

<unk>.

How tied is on course learning revenue to new hiring activity and mortgage underwriters.

It's a not insignificant driver of the revenue there.

So and the scenario, you just outlined where that where that demand for <unk>.

Mortgage origination professionals, just like we would see that.

Flow through the revenue trajectory as it relates to the mortgage product that that having been said we are.

We are hard at work preparing to bolster our efforts and banking and credit Union as well as the webinar business. It won't it will never make up for the extraordinary run we've had in mortgage.

But.

We would expect that.

Proportionately and those would be the larger than what we get for mortgage revenue and a steady state run rate. So.

We plan to take full advantage of this tailwind for as long as it exists, but we do anticipate that it will revert to something more normal normalized yep.

It makes sense and then just last for me.

The totally sure if I'm reading it correctly, but there is.

And Laurie at Slide I guess, it's discontinued ops online enrollment I think that's molten but did want the new enrollment declined 4% in the fourth quarter and if so I guess why because it looks quite a bit worse than the year of the prior year to date last year and.

And you kind of update on more current insurance life.

Yeah.

Yes.

And whatever you can say that and.

And maybe get back to you on that the reporting segment.

For online for Lori and inquiries.

Some other assets that are not part of the world and business.

So I don't have the data in front of me, but we can certainly come back to you for that.

Okay. Thank you and I guess it will.

And it's in the online, but they they did not have a decline of last where they have not reported this quarter, but they did not have the decline last quarter. So we'll find out next week.

That's helpful. Thanks for clarifying thank you.

We have reached the end of the question and answer session and I will now turn the call back over to Marine Research. Please proceed.

Thank you and thank you all for joining our call. This afternoon as always and do you have any questions. Please reach out to me and thank you for joining.

Okay.

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