Covista Inc. (CVSA) - Form 10-K Summary
Business Context and Reporting Period
Company: Covista Inc. (formerly Adtalem Global Education Inc.)
Reporting Period: Fiscal year ended June 30, 2026
Business Overview: Covista is America's largest healthcare educator, operating five accredited institutions: Chamberlain University, Walden University, American University of the Caribbean School of Medicine (AUC), Ross University School of Medicine (RUSM), and Ross University School of Veterinary Medicine (RUSVM). The company serves approximately 100,000 students with a focus on nursing, medicine, veterinary medicine, and social sciences.
Segments: Chamberlain, Walden, and Medical and Veterinary.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Revenue | $1,954.1 million | $1,788.3 million | +9.3% |
| Net Income | $251.6 million | $237.1 million | +6.1% |
| Diluted EPS | $7.04 | $6.18 | +13.9% |
| Adjusted Net Income | $294.7 million | $255.6 million | +15.3% |
| Operating Cash Flow | $470.8 million | $333.7 million | +41.1% |
| Cash & Equivalents | $406.3 million | $199.6 million | +103.6% |
| Total Debt (Principal) | $673.0 million | $558.3 million | +20.5% |
| Operating Margin (GAAP) | 19.6% | 19.1% | +0.5 pts |
Material Changes vs. Prior Period
- Revenue Growth: Driven by increased enrollment and tuition rate hikes across all segments. Walden revenue grew 16.1% due to a 13.2% increase in average enrollment. Medical and Veterinary revenue grew 8.1%.
- Enrollment Trends: Chamberlain average enrollment increased 1.1% (pre-licensure growth offset by post-licensure decline). Walden average enrollment increased 13.2%. Medical and Veterinary average enrollment increased 4.5%.
- Debt Restructuring: On March 2, 2026, Covista incurred $510.0 million in new Term Loan B borrowings (maturing 2033) and repaid the remaining $405.0 million of Senior Secured Notes due 2028. This resulted in a $4.8 million loss on debt extinguishment.
- Share Repurchases: Repurchased 2.42 million shares for $239.9 million during the fiscal year. As of June 30, 2026, $661.8 million remained available under the current repurchase program.
- Discontinued Operations: Recorded a loss of $15.8 million in fiscal 2026, compared to income of $4.4 million in fiscal 2025, primarily due to ongoing litigation and settlements related to the DeVry University divestiture.
Guidance, Outlook, and Risks
Management Commentary: Management continues to focus on "Purpose at Scale," emphasizing operational excellence and employer integration. The company is investing in marketing and student experience to drive enrollment growth, particularly in pre-licensure nursing and medical/veterinary programs.
Regulatory Risks:
- Title IV Eligibility: Covista's composite financial responsibility score declined to 0.2 in fiscal 2022, resulting in provisional certification for all institutions. The company maintains $202.6 million in letters of credit (10% of Title IV funds) and $80.0 million in surety bonds to satisfy regulatory requirements.
- 90/10 Rule: Consolidated revenue from federal education assistance funds was 78% in fiscal 2025, well below the 90% threshold that would trigger loss of eligibility.
- Do No Harm Provisions: New regulations under the One Big Beautiful Bill Act (OBBBA) establish earnings-based accountability frameworks effective July 1, 2027, which could impact Title IV eligibility if graduate earnings do not meet specific benchmarks.
- Borrower Defense to Repayment (BDR): Institutions have received thousands of BDR claims. While no recoupment notices have been received as of June 30, 2026, the company is actively defending these claims.
Unusual Items: Fiscal 2026 included $18.6 million in strategic advisory costs and $6.3 million in restructuring expenses, primarily related to workforce reductions.
Investor Verification Checklist
- Regulatory Status: Verify the current status of ED provisional certifications and any new requirements for letters of credit or cash monitoring.
- Enrollment Quality: Monitor the divergence between pre-licensure growth and post-licensure decline at Chamberlain to assess long-term revenue stability.
- Debt Covenants: Confirm continued compliance with the Total Net Leverage Ratio covenant (max 3.25:1) under the amended Credit Agreement.
- BDR Exposure: Track the resolution of Borrower Defense to Repayment claims and any potential recoupment actions by the Department of Education.
- Goodwill Impairment: Review the annual impairment testing results for the AUC reporting unit, which holds significant goodwill and indefinite-lived intangible assets ($305.5 million goodwill; $611.1 million Title IV intangibles).