CVSA Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics

Revenue: Increased 4.5% to $487 million; excluding a one-week calendar shift, organic growth would have been 8.4%.
Adjusted EBITDA: Reported at $127.9 million; adjusted for the calendar shift, it would have risen 14.2% to $145.9 million, with a margin of 28.9%.
Adjusted Operating Income: $102.2 million; adjusted for the calendar shift, it would have increased 14.1% to $120.3 million.
Adjusted Net Income: $69 million; adjusted EPS was $1.98, impacted by the calendar shift.
Free Cash Flow: Grew 17% to $336 million over the trailing 12 months.
Net Leverage: Improved to 0.7x, with cash and equivalents of $147 million.
Stock Repurchase: $66 million repurchased during the quarter.

2. Strategic Updates and Business Highlights

Enrollment Growth: Total enrollment surpassed 100,000 students, with Chamberlain returning to positive growth (0.5%) and Walden achieving 12.3% growth.
Chamberlain Initiatives: Focused on expanding admission pathways, campus expansion (six new campuses), and a new brand campaign.
Walden's Performance: Continued strong enrollment and retention rates, with new programs launched in clinical psychology and behavioral analysis.
AI Initiatives: Collaboration with Google Cloud to develop AI-powered educational tools and credentials, with significant enrollment in AI-related courses.
Leadership Changes: New President for Chamberlain, Amelia Manning, and expanded role for Michael Betz as Chief Growth and Innovation Officer.

3. Forward Guidance and Outlook

Revenue Guidance: Raised to $1.93 billion to $1.945 billion, reflecting 8% to 9% growth for the year.
Adjusted EPS Guidance: Increased to $7.95 to $8.15, indicating a 19% to 22% growth year-over-year.
Q4 Expectations: Anticipate continued enrollment growth at Chamberlain similar to Q3, with strategic investments planned.

4. Bad News, Challenges, or Points of Concern

Chamberlain's Recovery: While positive enrollment growth was achieved, it was only 0.5%, indicating a slow recovery from previous underperformance.
Market Dynamics: The RN to BSN program is not growing as rapidly as in the past, presenting a challenge in maintaining leadership in that segment.
Investment Needs: Increased capital expenditures are necessary for campus expansions, which could pressure short-term financials.

5. Notable Q&A Insights

SSM Partnership: The relationship is strong, with increased applications and interest; further partnerships are being explored.
Investment Timing: No expenses were pushed from Q3 to Q4; investments are being made incrementally.
Chamberlain's Enrollment: Conversion rates have normalized to historical levels, indicating improved execution in marketing and admissions.
Future CapEx: Expect further ramp-up in capital expenditures in Q4, with a similar trend anticipated into the next fiscal year.

Overall, Covista's Q3 2026 results reflect a strong recovery trajectory, particularly in enrollment, while also highlighting challenges in specific segments and the need for continued investment in growth initiatives.

CVSA — Covista Inc.