Covista (CVSA) Q4 2026 earnings review
Record Enrollments Mask a Decelerating FY27 Outlook
Covista (formerly Adtalem) capped off its fiscal 2026 with an exceptional Q4, driven by a 12th consecutive quarter of enterprise-wide enrollment growth (+8.4% YoY). Walden University continues to be the dominant engine, printing record enrollment numbers, while the historically challenged Chamberlain segment confirmed a reversing trend back to positive growth. The financial flow-through was robust: Q4 revenue grew 9.7% and Adjusted EPS surged 25.9%. However, the newly initiated FY27 guidance implies a sharp deceleration. Management projects revenue growth to cool to 5-7% and EPS growth to normalize to 8-11%, signaling that the massive post-restructuring leverage gains may be largely in the rearview mirror.
🐂 Bull Case
Walden University's enrollment growth is accelerating, hitting +14.0% in Q4 (its highest enrollment in history). This segment is carrying the enterprise with exceptional 32.3% YoY adjusted EBITDA growth.
Covista ended the year with just 0.5x net leverage after retiring $50M in debt and repurchasing $238M of stock. The company has immense firepower to continue aggressive buybacks.
🐻 Bear Case
The massive earnings leverage (23.7% FY26 Adj EPS growth) is decelerating. FY27 guidance implies mid-single-digit top-line growth and EPS growth of ~9.5% at the midpoint, suggesting margin expansion is tapping out.
While Chamberlain's enrollment growth has technically reversed from negative to positive, the 1.6% Q4 growth rate is still weak compared to the rest of the portfolio, pressuring overall operational efficiency.
⚖️ Verdict: ⚪
Neutral. The company is executing its operational turnaround beautifully and generating heavy cash flow, but the valuation must now grapple with a fundamentally decelerating growth profile in FY27.
Key Themes
Walden University Segment Surging
Walden is the absolute cornerstone of Covista's success. Total enrollment growth is accelerating, printing 14.0% in Q4 (up from 12.3% in Q3 and 13.0% in Q2). This resulted in a 15.7% revenue jump to $210.8M for the quarter. More importantly, operational leverage is immense: a 15.7% revenue increase drove a 32.3% jump in Adjusted EBITDA for the segment, yielding a massive 33.0% margin.
Chamberlain Turnaround Taking Hold
After suffering a -1.1% enrollment decline in Q2 due to what management previously called 'execution failures' in marketing and funnel conversions, Chamberlain's trajectory is reversing positively. Q4 saw 1.6% enrollment growth to 39,501 students and a 16th consecutive quarter of pre-licensure BSN growth. Revenue grew 3.2% to $190.2M, though this segment remains a significant laggard compared to the enterprise average.
Chamberlain Margin Pressure
While Chamberlain's enrollment and revenue are recovering, profitability is a concern. For the full FY26 year, Chamberlain's Adjusted Operating Income actually declined 6.3% YoY to $143.6M despite a 3.4% increase in revenue. In Q4, Adjusted EBITDA grew only 3.8% (lagging the consolidated 15.2% growth), indicating that the cost to acquire and retain these students is remaining elevated as they rebuild the marketing funnel.
Macro Tailwinds: U.S. Healthcare Workforce Crisis
Management continues to successfully position Covista as the scaled infrastructure solution to the structural U.S. healthcare labor shortage. The strategic collaboration with Advocate Health (the 3rd largest U.S. non-profit health system) serves as a blueprint for direct education-to-employment pipelines, reducing friction in student acquisition and improving post-graduate outcomes.
AI Product Innovation Fueling Alternate Credentials
Through a partnership with Google Cloud, Covista added nine new AI professional certificates in Q4 covering veterinary, mental health, and public health applications. Having enrolled over 9,000 learners to date, this demonstrates a successful land-and-expand strategy to monetize alumni and active professionals beyond traditional degree programs.
Other KPIs
Down from 0.7x in Q3 and 0.9x in Q2. The balance sheet is fortress-like. The company sits on $406.3M in cash and cash equivalents against $662.8M in total debt. This ultra-low leverage profile gives Covista maximum flexibility to execute M&A or continue aggressive share repurchases under their long-term authorization.
Stable and accelerating slightly. The segment generated 12.3% YoY Adjusted EBITDA growth in Q4 on a 7.3% enrollment increase, showcasing excellent pricing power and operating leverage. The schools successfully graduated over 1,100 students in the fiscal year.
Guidance
Decelerating. The midpoint of $2,070M represents roughly 6.0% YoY growth. This is a noticeable step-down from the 9.3% revenue growth achieved in FY26, suggesting that the massive pandemic-recovery comps and pricing levers are normalizing.
Decelerating. The midpoint of $9.02 implies a 9.3% YoY growth rate. While healthy in a vacuum, it compares starkly to the 23.7% growth delivered in FY26. This implies that the 'easy' margin expansion from recent restructuring and real estate consolidation has been fully recognized.
Key Questions
Margin Expansion Limits
With FY27 EPS growth (8-11%) tracking much closer to top-line growth (5-7%) than it did in FY26 (23.7% vs 9.3%), has the company reached peak Adjusted EBITDA margins, or are there hidden strategic investments weighing down the FY27 guide?
Chamberlain's Long-Term Growth Rate
Chamberlain returned to 1.6% enrollment growth this quarter. Is this low-single-digit rate the 'new normal' for the mature nursing business, or do you expect it to eventually catch up with Walden's double-digit cadence?
Pacing of Capital Returns
Net leverage sits at a remarkably low 0.5x. With the FY27 top-line decelerating, will management lean more aggressively into the remaining capacity of the $750M share repurchase authorization to artificially support EPS growth?