Adtalem Global Education Inc.

Greetings, and welcome to ADTALM Global Education Third Quarter Earring 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 that this conference is being recorded. I will now turn the conference over to your host, Maureen Rezac, 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 1995 with respect to the future performance and financial condition of ed-talent 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 in Item 1A, Risk Factors, of our most recent annual report on Form 10-K, filed with the SEC on August 18, 2020, and our other filings with the SEC. 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, whether 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 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 a continuing operations basis, exclude special items, and are in comparison to the prior year period, unless otherwise stated. Telephone and webcast replays of today's call are available for 30 days. To access the replays, please refer to today's press release. We'll begin today's presentation with prepared remarks from Lisa Wardell, Ad Talent's Chairman and Chief Executive Officer, and Bob Phelan, Interim Chief Financial Officer. Following the prepared remarks, Stephen Beard, 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. Before we discuss our financial results, I would like to start by welcoming Bob Phelan, our Interim Chief Financial Officer, to the call. Bob is an accomplished financial leader and has been with AdTalent since February of last year. He previously served as our Vice President and Chief Accounting Officer and has transitioned seamlessly into managing the finance 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 $0.72. And we are reaffirming our full-year outlook of 5% to 7% revenue growth and 28% to 32% diluted EPS growth. Our workforce solution strategy continues to deliver strong results. We achieved 9% new student enrollment growth at our medical and health care institutions and double-digit revenue growth in our financial services segments. 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 complimentary programs and online capabilities that Walden brings to our town. The acquisition of Walden University plays an important role in furthering our strategy, permitting us to achieve market-leading scale and reach in healthcare education, strengthening our core nursing offerings, expand into attractive high-demand adjacencies, including social and behavioral sciences, and extend the customer lifecycle from pre-licensure programs to graduate and advanced degrees, market an attractive mix of online, on-campus, and hybrid learning modalities, and engage our employee partners at further scale. As we announced during the quarter, we closed our $1.65 billion of financing related to the Walden acquisition, and we continue to expect the acquisition to close in the first quarter of fiscal 2022. We are making good progress on integration planning, including our plan for realizing at least $60 million in cost synergies, which we believe will result in enhanced service to our students, and we have increased confidence that these are achievable financial metrics. Through our integration planning, we have seen cultural compatibility between ourselves and Walden, reinforcing our belief that Walden is a fantastic fit for AgTAL and Global Education. As it relates to the U.S. Department of Justice's inquiry into the alleged misrepresentations by Walden related to its Master of Science in Nursing program, I want to reiterate that we take these matters extremely seriously. Walden informed us that it completed its own investigation and did not find any evidence supporting the allegations contained in the DOJ letter. Walden presented those findings to the DOJ on November 24, 2020. As for our own investigation, that work is ongoing, although 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 practicum component of Walden's nursing program. With the addition of Walden, AdTalent will become the premier national health care educator, providing comprehensive workforce solutions to employers through proven learning modalities with superior academic outcomes. The investment benefits from a compelling financial rationale, including attractive synergy opportunities and robust contributions to free cash flow. In our medical and health care segment, our scale, employer partnerships, and superior student outcomes differentiate our institutions and position us well to meet the growing need to fill critical workforce gaps. With a projected nursing shortage of more than 500,000 registered nurses by 2030 and up to 139,000 physicians by 2033, it is a public health imperative to create a robust pipeline of qualified and diverse talent to meet these evolving needs. AdTalem addresses these critical workforce shortages and facilitates training at scale by expanding access to education and establishing robust employer partnerships. More than 860 RothMed and AUC graduates have matched to residency programs this summer. AUC and RUSM grads will enter primary care residencies where the physician shortage is projected to be the most severe at about twice the rate of their U.S. medical school graduate counterparts. As our graduates take the next step in their medical education journey and go on to serve their communities, we applaud them for their resilience and dedication in achieving this incredible milestone during these challenging and unprecedented times. Diversity in the healthcare industry continues to be a critical issue that we're committed to addressing. Studies demonstrate that patients of color often receive better care and health outcomes when paired with a physician of the same rank. Roth Med and AUC graduate more black physicians than any other medical schools in the United States. As we continue to scale a highly diverse workforce of healthcare professionals for our employer partners, we're addressing both the physician shortage and healthcare inequities. We firmly believe that AdTalent's unparalleled ability to create a tangible social impact continues to distinguish us in the industry, and we intend to build on these initiatives moving forward. Not only does ADTALM address diversity in the industries we serve, but it's also committed to advancing diversity, equity, and inclusion within the company. These long-term efforts were recently recognized by ADTALM being named one of America's best employers for diversity 2021 by Forbes. I'm pleased to share that Chamberlain performed well in the third quarter, reflecting operational improvements, targeted marketing investments, and superior student outcomes of our programs. Chamberlain's national average NCLEX first-time pass rate for the 2020 calendar year reached 90.7%, exceeding the current national average of 90.3%. The school achieved these results through our efforts over the past several years to promote student success with an enhanced curriculum, increased student support, and leading technology. Chamberlain's new student enrollment increased by approximately 7% in the March session, with growth in total student enrollment of about 6%. Growth in our campus BSN, master's, and doctoral-level programs was partially offset by a slight decline in RN's BSN as frontline healthcare workers continued to be challenged during the pandemic. Based on March 2021 data released by the American Association of Critical Care Nurses, Chamberlain's market share grew between 20 and 50 basis points over prior year for each of the programs it operates, including pre-licensure BSN, RN to BSN, MSN, family nurse practitioner, and doctor of nursing practice. Based on the AACN data, in 2020, Chamberlain was the largest nursing educator in the country. Early last month, Chamberlain announced the opening of its second California campus in Pasadena to meet demand in a key area of the country. In addition, the enrollment cap at our Sacramento campus was raised in January. Chamberlain now has 23 campus locations, the vast majority of which do not have caps on enrollment and offers evening and weekend classes and three or more starts per year at several campuses. We are pleased that the Chamberlain's New Orleans campus cap was recently lifted. This location, which is on the Ashna Health Campus, graduated its first 54 students during the pandemic with 100% of those graduates passing NCLEX and two-thirds of the students accepting job offers with Ashna Health. This is a strong example of the power of our workforce solutions model. As a further demonstration of our workforce solutions partnerships, we recently started a hybrid BSN program with University Hospital in Cleveland to allow working healthcare professionals, such as EMTs, paramedics, to earn their BSN while also balancing families, jobs, and other responsibilities. This leverages our existing campus, program, and infrastructure while finding a new way to reach prospective students. In the medical and veterinary schools, the January new student enrollment increased 21%, the highest January new student start in over eight years. As we anticipated in our commentary last quarter, total student enrollment declined 6% as the winter surge in COVID-19 cases reduced the number of available clinical slots at our hospital partners, negatively impacting enrollment of clinical science students. We anticipate those students who were awaiting clinicals at the beginning of January, as well as newly qualified clinical students, will be placed into clinicals over the coming quarters, reversing the temporary decline in total students. Approximately 20% of the students who were waiting for clinical placement at the beginning of this quarter have now been placed. I'm proud to share that Ross Vet set records for both the largest number of students as well as highest enrollment for a January semester, reflecting the strong interest in the veterinary profession, improvements in student support, and the success of our brand investments. We believe that the strong appeal of veterinary medicine will continue as pet ownership has significantly grown during the pandemic. In addition, Ross Vet recently announced it will benefit from a grant from PetSmart Charities, which will allow its students to receive enhanced training opportunities while providing access to veterinary services to under-resourced populations within the community. The strength of our healthcare brands has been supported by our institution's thought leadership in their respective sectors. For example, yesterday AUC, in concert with the Caribbean Center for Disaster Medicine, hosted its International Conference on Disaster Healthcare Education virtually, emphasizing a one-health approach to disasters. At Ross Vet, the school has been highlighting its alumni to pre-veterinary students through a wide range of topics via free webinars and live streams to show the value of a DVM degree from Ross Vet. The series so far has attracted over 2,000 attendees. In 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 trends. We are also establishing prominent growth factors to enable expansion and diversification into new markets. Investments and new offerings are positioning the segment for long-term growth. ACAMS remains the gold standard in the growing anti-financial crimes marketplace. which has become even more important as online commerce volumes continue to increase. We continue to see strong demand for anti-financial crime expertise across both traditional financial firms as well as newer fintech companies. Despite facing significant COVID-related headwinds, which impacted in-person conferences, AKIS has performed well. Non-conference revenue grew about 25% year-over-year in the third quarter, driven by strong certification and risk assessment sales. This performance reinforces the continued long-term opportunities in the overall anti-financial crime market and the strength of ACAM's brand as it continues to address customer needs through its product and global diversification strategy. An example of this diversification is our sanctions certification, which has seen solid sales and membership growth since its introduction in fiscal year 2020. ACAM's is also a leader in fighting human trafficking and illegal wildlife trafficking through its certifications in these areas. Our anti-human trafficking certificate, the first of its kind, was developed in conjunction with the Lichtenstein Initiative for Finance Against Slavery and Trafficking. In addition, ACAMS and the Worldwide Fund for Nature have developed a training certificate for individuals seeking to protect their organizations from the threats of illicit finance linked to the illegal wildlife trade. Both certificates have gained significant traction. ACAM's members continue to see the value in our global conferences, and we look forward to a return to in-person conferences when it's possible to do so. We do plan to use a hybrid conference model to expand participation and supplement future growth of in-person conferences. We continue to host successful virtual conferences, and our most recent, the Virtual Hollywood Conference on April 13th, was attended by over 1,000 professionals. OnCourse Learning is capitalizing on its leadership position and capturing the heightened demand in the mortgage and banking sectors. We continue to meet the needs of our customers through various offerings, such as pre-licensure, exam preparation, and continuing education. OCL has continued to build new relationships and expanded to existing ones to drive long-term growth. Overall, OCL's ability to scale volume to match client demand has driven significant growth, outperforming our expectations. At Becker, we're maintaining our leadership position in the CPA test preparation market despite the COVID-related hiring headwinds impacting large CPA firms and our institutional clients. Becker is well-positioned for future CPA review growth when the test-taker market returns to pre-COVID levels. Our targeted investments continue to drive strong growth in continuing education. Becker's reputation has attracted both B2B and B2C customers seeking a variety of quality continuing education programs. We're growing our enterprise relationships with significant expansion into the CPA firms and corporate segments, adding two notable accounting firms in the third quarter. Bankers offering new ways to meet demand, including targeted certificate programs and always-on webcasts, both designed to meet the evolving learning needs of busy professionals. The recent change by the Biden administration to the 90-10 rule, which requires including military benefits along with other Title IV federal funding, will not impact our talent. In fact, our talent institutions have been voluntarily operating at a commitment of 85-15 inclusive of military funding since 2016. We believe that proactive policies like these and strong student outcomes are the formula for success under any administration. Our talent institutions regularly provide superior student outcomes with strong pass rates and match rates in addition to favorable cohort default rates compared with their peers and the nonprofit education sector. Each one of AdTalent's institutions received an improved cohort default rate for the most recently evaluated year, and AdTalent as a whole has a draft rate of 2.5%, even lower than the extremely low cohort default aggregate rate of 3.1% published last year. AdTalent institutions have historically significantly outperformed relative to their peers, highlighting the quality of AdTalent's programs and our focus on delivering superior student outcomes. I will now provide an update on our strong corporate governance practices. In line with our commitment to regularly refresh our board of directors with high-quality, diverse representation, we were pleased to announce the recent appointment of Dr. Charles DeShazer as an independent member of AdTalent's board. Dr. DeShazer currently serves as Director of Clinical Products at Google, As technology accelerates changes in the way patients seek and receive care, Dr. Deshaise's unique perspective will greatly help us in further enhancing our programs and offerings to meet the evolving needs of our healthcare employer partners and addressing the critical talent shortages facing this sector. His background as a board-certified MD in internal medicine will enable us to leverage his expertise in executing our strategy of becoming a leading provider of workforce solutions for the rapidly evolving healthcare industry. Finally, as it relates to our transformation, I am excited about the progress we're making towards our workforce solution strategy, which is driving new and expanded partnerships in both medical and healthcare and financial services. Our academic outcomes and the demand for our offerings continue to position us well for growth. AtTalent's role in helping graduate healthcare professionals in response to significant Demand for diverse and qualified talent is just one compelling example of this strategy in action. These talent shortages exacerbated by the pandemic create a large and unmet market opportunity for qualified graduates in the healthcare and behavioral sciences professions. AgTalent is playing an important role in helping meet market demand for these healthcare professionals at a time when global health has never been more important. We continue to invest in our financial services segment as part of our workforce solution strategy. Financial services is experiencing double-digit revenue growth as the segment captures strong secular trends, and we continue to see strong demand for our certification and continuing education offerings. Our institutions and programs remain focused on superior student outcomes that impact the lives and communities in 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 differentiator for AgTalents, 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.