An education solutions analyst, pleased to introduce Adtalem as the next presenting company in this room. Adtalem is a leading provider of healthcare-centric degrees. With me on stage, to my immediate left is Steve Beard, Adtalem CEO since 2021, after previously serving as the company's COO. Also with us on stage is CFO Bob Phelan, and then, Jay Spitzer, the VP of IR, is in the audience as well. We're gonna open it up with Steve going through some slides, then we'll get into Q&A. If you want to ask a question, just feel free to raise your hand, or you can also send them in to sessionfour@rbbear.com. But with that, thanks for being here, and I'll hand it over to you, Steve. Thanks, Jeff. It's a pleasure to be here. I'll be brief on the open. Just wanted to provide an overview of the company, what we do, and why we think it's so important. So Adtalem is a mission-driven organization focused on educating the next generation of healthcare clinicians. We're excited about that positioning, the opportunity it provides for us to create real value for all of our stakeholders, including our shareholders, but also an opportunity to address what we believe are chronic workforce shortages across the healthcare industry. We go to market through five institutions, all post-secondary higher education institutions. Chamberlain University, which is the country's largest nursing school. Walden University, which is one of the country's largest online graduate-focused schools, which inside of it houses the third-largest nursing school in the country. Then our medical and veterinary segment, which houses three institutions: two medical schools, the American University of the Caribbean, Ross University School of Medicine, and then a veterinary school, the Ross University School of Veterinary Medicine. Taken together, it's about more than 80,000 students, all with a center of gravity in healthcare and all providing much-needed clinical capacity to U.S. healthcare. We are a scaled national provider. We maintain physical campuses in 17 states across the United States, including the Caribbean. Over 150 programs, as I said before, many of them with a center of gravity in healthcare. What is probably less well known is about 95% of our programs are delivered online. We like to think of ourselves as a bona fide health tech play. We've got clinical relationships with nearly all of the major providers in the United States, the top 30 integrated delivery networks, whether that's clinical rotations for our medical students, preceptors for our nursing students. So we are hard at work at making ourselves systemically important to the healthcare industry at a time when they need clinical talent most. When we think about the investment thesis for Adtalem, we think we play in the most attractive corner of education. It's a large market, healthcare education, super attractive, with long and durable secular demand trends. Inside that corner of the market, we think we enjoy leading market scale. We're the only nationally scaled platform, in that space, and that's actually something that's quite difficult to duplicate, given all the state-by-state requirements to stand up these types of institutions, all the accreditation and regulatory requirements that come with them. And then I think we've taken our business, and we've optimized it in a way, that ensures we can deliver, consistent, attractive operating performance over time. And so these three attributes, taken together, we think make us, an interesting investment opportunity, and I look forward to getting into more of that with you. Finally, just want to talk a little bit about the strategy that animates our performance to date. We refer to it internally as growth with purpose. It's a strategy really focused on, accelerating the operational excellence of the business. It's about optimizing our activities across five pillars: marketing, enrollment, retention, pricing, and programs. Pulling all of those levers at the same time in ways that allow us to dramatically accelerate our speed to market, improve the student experience in meaningful ways, capture more than our fair share of the market, and optimize the return on those investments in terms of increased revenue trajectory and enhanced profitability. That has shown up in the early days of this strategy in the form of our enrollment trends, which I know we'll get into, Jeff, but the fact of the matter is that we are growing enrollments in every institution we take to market in nearly all of our programs, and we're growing it at rates that are really precedent-setting for our five institutions. And then to sort of bring it all together, you know, we think Adtalem is well positioned to take advantage of some long-term secular demand trends. We think the growth trajectory that we're on is early, but it's durable. We think it's a really attractive financial profile, where we expect to grow revenue in mid-single digits consistently year in and year out, and expand our operating margins by about 100 basis points cycle in and cycle out. But just as importantly, we're providing real access to careers that have historically been out of reach for students who want to pursue them at a time when we as a nation need those clinicians more than ever. So it's a privilege to introduce you to the business, and I'll hand it back to Jeff to get into Q&A. Excellent. Thank you, Steve. So you hit on this, I think a couple of the phrases you used within healthcare was much-needed capacity, chronic workforce shortages. What is it about the, I'll call it, traditional academia system, the not-for-profits, that they have not delivered enough capacity, and that's been a long-standing thing? So, like, what's the barrier? Yeah, I think there are a couple of things. First, I'll give credit to the not-for-profit side of higher ed and point out that they are well aware of the challenge, and they recognize that these chronic workforce shortages are crippling healthcare and would like to do everything they can to support it. But actually bringing that capacity online, Jeff, is a long slog. You know, it's a state-by-state exercise in nursing programs. It takes a long time to stand up new medical schools. And the fact of the matter is that even with folks looking to address this problem, it's going to take many, many years for them to do so. I think the other dynamic that's important to note is that much of higher ed has really gravitated towards a value proposition that's rooted in high selectivity and historical prestige. That lends itself to small schools, small programs, that churn out fantastic clinicians, but do so at a scale that's not likely to move the needle straight away. One example I use is Kaiser Permanente, one of the largest providers in the U.S. They have a medical school. All of their students attend that medical school for free. They've been intentional about recruiting diverse students to that medical school, and those folks are going to do fantastic things. But they've got a class of 45 students, and at 45 students a clip, there's a really, really long journey to address these workforce shortages. So our proposition is that we are scaled. We delivered almost 800 physicians to residency last year. We educate these students at scale. We have almost 45,000 nursing students enrolled in any given time. So it's just a unique opportunity for us to step in and bridge the gap because it's just very difficult for folks to pivot in that direction if they are currently set up to do so. As you, you showed the enrollment trends, and you called it precedent-setting for the, for the organization. I think you just had the best quarter in my 13 years of covering Adtalem- Yeah ... and the predecessor. So I know part of it is growth with a purpose, and I want to go there in a minute, but what's your view on kind of like the end market or competitive dynamics, I guess both in terms of post-COVID, if we can call it that, recovery, as well as what are you seeing from a competitive perspective, and if there's any sort of like retrenchment anywhere? Yeah, so I think everyone is enjoying a bit of a post-COVID reversion to the norm. Now that's in the rearview mirror at this point, but there was a one-time reset post-COVID where enrollments snapped back to something that felt more normalized because of a return of normalized demand trends, and everyone's benefiting from that. But as you look across the proprietary space, what you've got are institutions that are focused on delivering programs that are market responsive that are available to audiences that may not be appropriate for traditional higher ed. You are seeing a bit of all boats rising in this environment as folks that have market-responsive, thoughtful programs that appeal to students with flexibility, with in some instances appeal to them in terms of affordability. Those institutions are actually seeing enrollment growth, and we're among them. Within that set, however, to the point I know we'll get into in a moment, you know, we think we've got a formula for executing against that opportunity that is advantage relative to our competitors in the marketplace. When you say that the growth opportunity, it's early in terms of you proving it out, but it should be durable. Help us understand with the growth with the purpose strategy and the five pillars that you showed, where have you seen kind of like early results and maybe what's on the come in terms of where you've implemented things, but there's still a lot more opportunity, or we just haven't, like, seen the benefit yet? Yeah, so, so five pillars to growth with purpose: marketing, enrollment, persistence, price, and programs. The two I'll emphasize for purposes of the early returns are marketing and persistence. So in marketing, Adtalem had been out of the brand investment game for some time, and at the end of our fiscal 2023, Bob, if I've got that right- Yep ... we made some major investments in brand campaigns for all five of our institutions. It had been a long time since we'd done that. It was an expensive undertaking, but it was well worth doing. We raised the awareness of the value proposition of our five institutions in ways that is now translating into lower cost of enrollment, by way of example. We're following on those brand investments with more targeted campaigns that are both product focused and consumer focused to continue to leverage the awareness that we have in the marketplace. So that's an early investment that's now paying off in what you're seeing in enrollment trends. The other place I'll go to is persistence. In the tail end of the pandemic, we knew it was difficult to grow new enrollments because folks just weren't going back to school, and that's particularly true in nursing, given the demands on that profession. So we spent most of our time investing around growth with purpose on tools that helped us improve the persistence of students, new student support platforms, new ways of advising students, leveraging technology, shoring up our core of faculty, and student support personnel. And we were able to realize record persistence at institutions like Walden and at Chamberlain. Once the new enrollment came in on top of those persistence gains, it had a flywheel effect on the overall total enrollment story. So those are two of the early investments, Jeff, that we made that we're enjoying the benefits of now. As we look ahead, we've got opportunities, we think, to take price in certain programs. We've got opportunities to optimize price in other programs, and we're now in a position where we can bring to market new programs. I would think about our physician assistant program by way of example. As more and more of clinical work gets pushed down from physicians to PAs, that's a high-demand program. We're investing heavily in Tempo, which is a competency-based, self-paced program at Walden, and we're really bullish on that. Within our core nursing program at Chamberlain, we've got several specialty-focused curriculums that are tailored to specific niches within nursing, whether that's perioperative nursing, whether that's home healthcare, and we're seeing a lot of demand for that as well, and we expect that to show up in later cycles in the total enrollment story. So your comps get harder, but you just put up, I think, 12% revenue growth in the most recent quarter. You had an Investor Day in June of 2023, and at the time, you laid out these, like, multi-year targets that look like this, like, nice multi-year acceleration, 4%-6% in 2025, 5%-8% in 2026. So I guess you're a victim of your own success in running ahead of that. But, are you seeing anything in terms of leading indicators, or is there anything beyond tough comps that would suggest that the growth should decelerate down to those targets? No, it's a really good problem to have. We are pacing ahead of our original expectations. We believe that the multi-year targets we put out at Investor Day are an appropriate proxy for now. But as we get to the end of our fiscal 2024 and begin to set guidance for fiscal 2025, we're certainly gonna revisit those, given the momentum that we enjoy. Nothing we're seeing in the current market signals that we monitor suggests a meaningful slowdown in our trajectory. We're seeing really great trends in search terms for our brands relative to the category. Inquiries are up across our program mix. We continue to enjoy record persistence across many of our programs. So when it's time to revisit guidance in the near term and the long term, you know, we've got the best of all problems. We need to calibrate consistent with what we're enjoying now. And then the expectation is to get to 100 basis points per year of annual margin expansion. I guess two questions there. One, just go into, like, what the investments were. I know you hit on marketing, but any other investments this year because you're not getting the margin expansion this year, which is consistent with the plan that you had laid out last June. And then what's the runway for that, or what's the margin ceiling that you can get to? Bob, I'll let you take that in terms of, investments in 2024- Sure. and how we think about margins in the out years. I guess, in terms of investments, we talked about marketing, but also on the technology side, there's been significant investments we've made. So we do see that some of that is going to fall off, but we're gonna continue on the retention, so we will have some technology investments going forward. As you mentioned, we do expect margin expansion of 100 basis points next year. We're also looking at another 100 basis points of improvement in fiscal year 2026, which is the second year from now. So we do expect that we would see expanding margins as we go forward, Jeff. We do continue to make investments in the business, however, so we think we can do both at the same time, given the revenue trajectory. Fiscal 2024 was the first full year of Growth with Purpose, and there was, by design, a bit of front-loaded investment there. As we look to the out years, you know, we're confident that that 100 basis point expansion that we've guided folks to is something we can deliver and deliver consistently. Got it. So there's the organization is now healthcare-centric in terms of the five different institutions. There's been a pretty massive portfolio transition at Adtalem or DeVry over time. What are the leverage points or the synergies between the various healthcare institutions in the portfolio? Yes, you correctly point out that once upon a time, it was a far more disparate portfolio with wildly different operating models inside that portfolio, test prep businesses, membership organizations, traditional post-secondary higher ed. What we really like about the portfolio today is that it really is a set of like-kind institutions, and we can support those institutions oftentimes on single platforms. So we've gotten down to a single LMS, for example, single SMS, working our way to a single instance of Salesforce. We're also enjoying synergies in things like student support. We've got cross-institutional faculty appointments. We're able to move marketing spend between these institutions in a much more seamless and sort of nimble way. And so it's a more efficient way to support the portfolio, which is part of the profitability story we enjoy. But it's also a way to ensure that each of our institutions is more competitive because they're a part of this portfolio than they would be if they were standalone entities. Got it. So my view is, like, the stock is trading at a really low multiple relative to the financials. I think part of the reason for that is perceptions around regulatory risk. There are always regulatory topics in this industry. I guess if we could just address a few of them, where do you have Gainful Employment exposure, and what are the paths to mitigate it? Sure. So, gainful employment, the only place we have any risk there, and I view that risk is theoretical, for reasons I'll get into, is at the vet school. The rest of the portfolio would pass the tests that are inherent in the gainful employment rule, or are subject to longer measurement periods for income, as part of the revisions made to the final rule. As it relates to the vet school, we are actively engaged with the Department of Education, advocating for a longer measurement period for DVM programs because the earnings trajectory is very similar to what you see in medicine, and medicine enjoys a longer measurement period for purposes of GE. Those conversations have been really constructive with the department, and we're encouraged by them. In addition, we're also thinking about other alternatives around the way we price the program and how we support our students in financing the programs, should we prove to be unsuccessful in convincing Ed to treat veterinarians the way they treat doctors for purposes of GE. But we're confident that as the largest veterinary program in the United States that provides nearly 10% of all vets to the U.S. market, that we can arrive at a solution here that doesn't threaten the efficacy of that program. Then can you comment on Ross Med's 90/10 rate? I think it rose to 87% in the most recent fiscal year, which is getting close to the 90% threshold. What are you doing to address that? So one of the things that happened at Ross Med is, in the pandemic and in the immediate wake of the pandemic, because of travel restrictions and other dynamics, we really curtailed our international student recruitment at Ross, and that's partially what's behind the rise in the ratio. We have rectified that. Ross has always been a popular destination for Canadian students in particular. We feel good about our international recruitment efforts, and we expect those to reduce that ratio to be comfortably below 90/10. Got it. And then this isn't a regulatory metric per se, but one of the main focus areas for all nursing schools is the NCLEX first-time passing rate. Chamberlain's had dipped for a bit. I think that you had some remediation efforts. So what drove the decline in 2022, and what drives the, or what was the 2023 outcome for Chamberlain's NCLEX passing rate? So the 2022 dip was driven largely by the fact that the students that were taking the NCLEX that year had completed most of their studies during COVID, and so there was a national dip in NCLEX scores as a result of that, just as there were for, you know, GRE scores and LSAT scores and MCAT scores. So that was a COVID anomaly. Obviously, we had to step in to address that, and we got the scores up accordingly. And in 2023, Bob, where did we land with NCLEX? Over 80%. Yeah, so, and we feel good about that, but that was primarily driven by the COVID dynamic. Got it. Let's get into some of the institutional-level kind of growth drivers. You mentioned some of, like, the new program additions, but I think the BSN Online is another big one for- Mm-hmm ... Chamberlain. So, go into how big is the program, how fast is it growing, and, I guess, what's the runway for the growth, and at some point, do you need to unlock some new states to sustain it? So BSN Online is a super exciting programmatic development for Chamberlain. We've only had the program for a couple of years. We're now in 33 states with 1,700 students? Seventeen hundred. 1,700 students. What we like about the program is the flexibility that it provides students, particularly when you sit it next to our campus-based BSN programs. It allows us to move students between online modalities and campus-based modalities and hybrid modalities as their needs dictate. And many of these folks are working students, and that flexibility is a real selling feature for BSN Online. So we're excited about the trajectory of that program. In many ways, we look at it the way we looked at RN to BSN some years ago, and our goal at Chamberlain is really to own the BSN product nationally, in a way that widens our competitive moat. Just as you mentioned, RN to BSN, that market went through a rapid growth period, then there was a little bit of a recalibration period. Where are you today in terms of RN to BSN trends? Yeah, so for the benefit of our audience, RN to BSN was a huge growth driver for Chamberlain for many years because so many hospitals and providers needed to achieve Magnet status, and one of the ways you achieve Magnet status as a hospital is to get a critical mass of your nursing staff to have a BSN. We were a pioneer in that space, a first mover. We enjoyed a wonderful trajectory there, but there's a demographic element to that as more and more RNs move to BSN and as more and more RNs retire. So the growth curve in that product has flattened out, but the good news for us is that Chamberlain continues to take share in RN to BSN, as does Walden. So even though there's a flattening growth curve there, we continue to grow RN to BSN across our two institutions in ways that are really encouraging. And then what are the other, I guess, just growth drivers that you wanna highlight for Chamberlain? Like, I know you've announced some new campuses that are co-located at healthcare providers. Just anything else you want to highlight. Yes, so BSN Online, obviously, sort of the most exciting product there, but our physician assistant program is one that is super exciting, and there's a ton of demand. There are also all of the practice-ready, specialty-focused programs that I mentioned earlier are enjoying a robust demand, and even though Chamberlain is the largest nursing school in the country, we're still not in a number of geographies where we think we've got really attractive opportunities, so geographic expansion also remains a growth driver for that institution. So when we talked about the healthcare, the chronic healthcare provider shortages, you talked about, hey, it's a long haul, it's a state-by-state process, NCLEX passing rates can play into that. Just- Mm-hmm. Do you have any campuses where your enrollment's capped or any sort of, like, alleviation of caps or expansion that's happening, including with the improvement that you've seen in the NCLEX passing rates? Yes, so the majority of our campuses are uncapped, and those that are capped are the newer campuses, where we've got to demonstrate the right kind of academic outcomes for a period of time before those caps are lifted. But this is something that Chamberlain has done for years. We are probably the best in the industry at standing up new campuses and new markets and satisfying the needs of local state boards of nursing. So even as we think about campus expansion beyond the existing footprint, we feel confident that we can quickly check the boxes for those state boards of nursing, get enrollment caps removed, and enjoy the growth that comes with that. So when you acquired Walden, there was a step back in enrollment. It's hard from the outside to tell how much of that was just due to COVID dynamics or due to other factors. Maybe if you can characterize that for the audience, and then what kind of operational changes have you made at Walden specifically? Because I think it was previously run more as a cash cow to fund some international expansion for the prior owner, Laureate. And I think you're taking a different approach to how you're managing it. Sure. So, at the outset, we are super bullish on Walden as a, as a brand, as an institution, and as a member of this portfolio. But, you're right, Laureate managed their U.S.-based assets, in part to fund their geographic expansion ex-U.S. We completed the purchase of the Walden asset right before the pandemic hit. The institution suffered, as just about everyone did during the pandemic, with a severe dip in enrollments. We spent that time during the pandemic retooling the Walden business, trimming the product portfolio, making appropriate changes in leadership and other staff roles, beginning the march on improving persistence across those programs, such that when the demand environment for those programs normalized, we could take full advantage of that on the way out of the pandemic, and that's exactly what we've done. So, and, you know, we've brought to Walden some innovations that we think bear well for the rest of the portfolio. One of which is sort of the Believe and Achieve Scholarship program, which is a novel approach to scholarshipping at Walden, which basically rewards students not for enrolling in programs, but for persisting through them. And if they persist all the way through the programs, in fact, they end up often paying net lower tuition than they would have, but for the scholarship. So, it, you know, the COVID dynamic and the retooling necessary post-acquisition was all things that needed to be done. But as we think about the trajectory of Walden going forward, we're super excited. You said within Walden, it's the third largest nursing school in the country? That's correct. How do you differentiate in the market a Walden nursing degree from a Chamberlain nursing degree? Sure. So, first, it's important to remember that, Walden is all post-licensure nursing, whereas at Chamberlain, you have a mix of pre- and post-licensure. You also have a mix in Chamberlain of online and campus-based programs, whereas Walden is all online. So it actually ends up being quite complementary. Walden has sort of the killer brand in the MSN space, the Master of Science in Nursing space, and is a go-to provider for that credential. Whereas Chamberlain is, you know, kind of the go-to provider for the BSN credential. They're priced differently. They have different value propositions in terms of the type of student that they appeal to. So there's very little in the way of overlap or cannibalization between the two nursing programs, and we enjoy the benefit of being able to cross-pollinate faculty, curriculum, instruction, innovation across the two schools, so they actually play well together in the portfolio. So Chamberlain and Walden were kind of, like, earlier to see the turn on the enrollment growth. Your vet school, which is part of the med vet segment, is already operating near capacity. Med was the one that was struggling. You made a management change. You have a remediation plan. Tell us what you changed and what you're seeing in terms of the turn. Bob, you want to take this one again? Yeah. I mean, first off, when you talk about what happened, it was the fourth quarter of last year, our May enrollment cycle for the medical schools was where we fell short. We quickly realized that what it was, was an execution issue, execution issue. So really, what we had to do was go in, look at the problem. We had inquiries, so we were getting lots of demand. We feel good about the demand structure with the medical schools. What we ended up doing was looking at the operations, making operational changes, also bringing in a new management team. So we brought in a new president of that business. We also brought in somebody who was in charge of enrollment. So we've really kind of fixed, if you will, the operational issues. We're now starting to see progress on that on a quarter-to-quarter basis, and we feel good about where we're heading with our remediation plans. And then just last, capital allocation priorities, what's the leverage target? How do the letters of credit demands kind of factor into current capital allocation? I could jump in. From a leverage target perspective, we like to stay below 2x leverage. We're at 1.3 in the latest quarter, so we'll fluctuate between there. But we like to stay below 2x from a targeting perspective. It gives us the flexibility for share repurchases. Letters of credit, you asked about, one of the things that happened this quarter was we had Department of Ed release the letter of credit or expired, that we did not have to replace. So we've reduced our letters of credit outstanding by $76 million. We've also received a letter that we're going to be reducing another one of the LCs by about $15 million. So substantially bringing down the requirements for our letters of credit related to the Department of Ed. All right. That's all the time we have in here. So exciting story right now. Please join me in thanking Steve and Bob for their insights on Adtalem.