Covista Inc. (CVSA) Q2 2019 Earnings Report, Transcript and Summary

Greetings and welcome to the Adtalem Second Quarter 2019 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Chaka Patterson, Vice President and Deputy General Counsel. Thank you. Please begin.

Thank you, and good afternoon. With me today from Adtalem’s leadership team are Lisa Wardell, President and Chief Executive Officer; and Patrick Unzicker, Chief Financial Officer and Treasurer. I'd like to remind you that this conference call will contain forward-looking statements which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict which could cause actual results to differ materially from those expressed or implied in these statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We'll refer you to our Annual Report on Form 10-K for the year ended June 30, 2018 and other recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating results and financial condition. We disclaim any intentions or obligations to update or revise any forward-looking statements except as required by law. During today’s call, we will refer to non-GAAP financial measures, which are intended to supplement, though not substitute for our most directly comparable GAAP measures. Our press release, which contains the financial and other quantitative information to be discussed today, as well as reconciliation of non-GAAP to GAAP measures, is also available on our website. Telephone and webcast replays of today’s call are available for 30 days. To access the replays, please refer to today’s release. And with that, I’d now turn the call over to Lisa.

Good afternoon, and thank you for joining our second quarter fiscal 2019 earnings call. During the quarter we delivered growing enrollments in our medical and healthcare segment and strong results in our professional education segment driven by the refreshed product differentiation in the Becker business and continued growth in ACAMS. Through our January 2019 term, Adtalem new student enrollment increased 4.9% while total student enrollment increased 2.9% from the prior year. Compared to the prior year period, second quarter 2019 revenue increased nearly 3% and operating income increased approximately 17%, aided largely by a one-time benefit from insurance proceeds related to hurricanes Irma and Maria. Excluding the one-time insurance benefit and other special items, operating income decreased by about 5%, in line with our expectations. Further, we achieved several major milestones in the quarter, including the successful completion of the DeVry University and Carrington College transfers of ownership, as well as the permanent relocation of the Ross University School of Medicine to Barbados. These initiatives required tremendous energy from the entire team. And with this successful conclusion, we are now focused on pursuing additional business development opportunities across our portfolio. Before I talk about our plans for the second-half of fiscal 2019, let me give you a high level overview of our segment results during the quarter. Enrollments in our medical and healthcare segment was strong. Further we're seeing traction for our new facilities and newly developed partnerships in the vertical. With regard to Ross University School of Medicine, we opened the doors to its permanent home in Barbados in January. While it is still early, we're already seeing encouraging trends and increase from prospective students now that RUSM has a permanent home. Our new medical campuses, sciences campus in Barbados represents a state-of-the-art academic institution including a society for simulation and healthcare, SSH accredited simulation center. Additionally, a cutting edge virtual anatomy lab and a best-in-class patient care center allows our faculty to better prepare medical students for the clinical experiences they pursue upon completion of their basic medical sciences training, giving them an early competitive advantage relative to their peers. As we discussed last quarter, the new location for Ross Med has greatly improved airlift access from the United States, Canada, and Europe. This will allow us to drive student enrollment growth toward and potentially above the previous peak enrollment that we achieved in 2014. Ross Med continues to capitalize on the supply and demand imbalances in veterinary medicine, as well as building awareness for its new research center which continues to attract clinicians and academicians from around the globe, including Dr. Robert Gilbert, Professor Emeritus at Cornell University and a leading professor of animal reproductive biology and Dr. Kerry Ralph, a leading European specialist in companion animal internal medicine and former faculty member at the University of Edinburgh. In November 2018, Ross Med hosted the annual West Indies veterinary conference, the largest to date with nearly 500 attendees, further enhancing Ross Meds reputation in the global veterinary profession. Meanwhile the American University of the Caribbean School of Medicine has established a partnership with the University of Central Lancashire in Preston, England, providing a presence in the U.K. with its first cohort of medical school students expected to start in September of 2019. AUC also launched the Caribbean Center for disaster medicine in partnership with Harvard medical faculty physicians of Beth Israel Deaconess Medical Center. In March of this year, the center will host its first Caribbean disaster medicine international conference. Dr. Gregory Ciottone, international expert in disaster medicine from Harvard Medical School is headlining the event. The lineup also includes experts from Harvard T. H. Chan School of Public Health, Johns Hopkins School of Nursing and other global institutions. And finally, Chamberlain University continues to see strong market demand for its campus based BSN program, including at the Ochsner colocated campus in Louisiana, and with the recent increases in enrollment caps at Las Vegas, Troy Michigan and North Brunswick New Jersey. All three are experiencing market demand well in excess of the previous enrollment caps. This market demand is driven largely by more students enrolling directly into BSN program rather than our ends pursuing the BSN credential, Chamberlain also continued to experience solid market demand for its master and doctoral nursing programs. NCLEX pass rates for Chamberlain students continue to strengthen, showing a significant upward trend from 2017s annual rate of 84%. With the third quarter calendar combined total pass rate of 91.4%, 12 of our 19 campuses that had NCLEX test takers exceeded the national NCLEX rate average. In our professional education segment we had a strong quarter with revenue growth of approximately 39% including the improved performance of the Becker business unit due to enhanced marketing effectiveness and refreshed product differentiation. In addition to growth in accounting products and services including exam preparation, we're expanding our professional development content to support key changes in the accounting profession including the training of stem professionals in the industry. For example, Becker is partnering with a large global accounting firm to co develop and accounting and auditing for non accountants, training course for the firm stem professionals. The content helps to speed onboarding of stem professionals to accounting and audit services engagements. In ACAMS we continue to see solid growth globally including in the U.S., Europe, and Latin America. Our European efforts include expansion into Poland and Germany. We have also gained some early traction in Panama, Mexico and Brazil. Our conferences continue to post record year-over-year growth with the Las Vegas conference attendees growing over 10%. While we are encouraged by our results, we continue to invest in the core business in order to position ourselves for further rapid expansion. And finally in Brazil, while we continue to face currency headwinds and some top line revenue pressure, we remain confident that the recent change in administration will settle the economy and provide ongoing stability. The growth trends in distance learning since our soft launch in March 2018 are very positive. And we're certain that this trend will continue based on our ability to deliver high quality academic programs and experience to our students. Our academic quality rankings by the Brazilian Ministry of Education as reflected in our IGC score, a composite score focused on the national end of program exam [indiscernible], faculty credentials and student satisfaction continues to consistently improve. Our average IGC result was 282 this year, the 6th year of improvement in that metric for Adtalem Brazil. Among the main national private institutions, Adtalem Brazil institutions are ranked as the number one institution in 8 of the 13 cities we serve based on the Brazilian Ministry of Education IGC metric. As we enter the second-half of fiscal 2019, we remain poised for our continued organic growth in revenue and earnings driven by student enrollment increases, the addition of new differentiated programs and products, and enhanced technology enabled student learning environments. We have accomplished a great deal over the course of the last several years and believe we are a stronger business for today. As we look ahead to the balance of fiscal 2019, we have strong cash flow, brands that are associated with market leadership in each of our verticals, products and services that are clearly differentiated in their respective markets, and a team that understands both scale and profitability. Our team is more experienced, diverse and growth oriented. And that is reflected in our ability to deliver consistent operating results. We will continue to focus and strategically align our portfolio to deliver growth while driving improved operating efficiencies across our organization and prudently balancing our capital allocation by investing in platforms for growth while providing direct returns to our owners in the form of share repurchases. Our continued share repurchases reflect our ongoing confidence and excitement in our business. As always, we are committed to building a long-term value for our fellow owners. With that, let me turn the call over to Patrick for a deeper look at our financials for the quarter.

Thank you, Lisa, good afternoon everyone. Now turning to our results. During the second quarter, Adtalem revenue of $317 million, grew nearly 3% from the prior year. Growing enrollments in our medical and healthcare segment and the strength in our professional education segment driven by the improved performance of Becker and growth in ACAMS, but somewhat offset by foreign currency headwinds in Brazil. On a constant currency basis, Adtalem revenue in the quarter increased 6.2% compared to the prior year. Operating costs excluding special items were $258 million in the second quarter compared to $247 million in the prior year. The 4.6% increase was due primarily to investments including Ross University School of Medicine Barbados transitionary costs, in Chamberlain new campus start up expenses as well as the impact of stranded costs. We are tracking to our plan to reduce our home office expenses. Operating income from continuing operations excluding special items was $58.4 million compared to $61.3 million in the prior year. Net income from continuing operations excluding special items was $44.5 million compared to $50.3 million in the prior year. Diluted earnings per share from continuing operations excluding special items was $0.74 compared to $0.81 in the prior year, in line with our expectations. Fiscal 2019 second quarter results also reflect total pretax special items including restructuring charges of $3.6 million primarily related to exiting the Ross University School of Medicine campus in Dominica and real estate consolidations in Adtalem's home office. In addition, we recorded a gain of $15.6 million from insurance proceeds related to hurricanes Irma and Maria. Turning to our second quarter segment results, starting with medical and healthcare, revenue of $213 million increased 4.6% compared to the prior year. Chamberlain revenue increased 6.2% in the quarter. But the November session, which is only a post-licensure intake, new student enrollment decreased 6.7%. Total student enrollment grew 3.7% compared to the prior year. In January, new student enrollment grew 6.4% and total students increased 3.3%. New student enrollment growth included an impressive increase of 31% in our on-campus BSN programs as well as growth across our master and doctoral level nursing program. Revenue in the quarter for the medical and veterinary schools increased 2.4% to $90 million as compared to the prior year. New student enrollment declined 8.5%, and total student enrollment declined 6.6% percent in the January 2019 semester compared to the same semester last year. The decline in new students is due to a shift in starts of students in the prior year from the September to January session due to hurricanes Irma and Maria. Excluding this impact, new student enrollment increased 6.6%. Segment operating income excluding special items in the second quarter was $47.5 million compared to $55 million in the prior year. The 14% decrease was due to cost increases to support future growth and return to a normal level of expense at the medical schools. Now turning to our professional education segment, second quarter revenue increased 39% to $42 million compared to the prior year. The significant improvement was due to a 16% increase in Becker revenue due to enhanced marketing effectiveness, while ACAMS increased almost 65% due and part to the impact of the planned timing shift of the North American annual conference from fiscal Q1 in the prior year to fiscal 2Q in 2019. Revenue associated with this conference totaled approximately $5 million during the quarter. Segment operating income was $9.6 million compared to $2.2 million in the prior year driven by revenue growth across both Becker and ACAMS. Second quarter Technology and Business segment revenue totaled $62.6 million, a decrease of 16.6% and down 2.4% on a constant currency basis. The decrease is included lower tuition pricing necessary to offset the effect of student financial aid program reductions and increased competition. However, the segment is well positioned for new student enrollment growth in its online platforms. Segment operating income in the second quarter was $8.5 million compared to $14 million in the prior year. Second quarter operating income on a constant currency basis was $10.6 million. The operating income reduction in the quarter was primarily driven by lower revenue. The Brazilian Government recently changed regulations on opening and operating distance learning in the country. The approval process for launching online facilities are streamlined, making this segment more economically attractive to larger institutions. Adtalem Brazil began offering several bachelors and associates degree programs via distance learning in February 2018. These programs are offered under the Wyden Online brand. They are delivered to the DiMaggio network of over 200 learning centers which currently has the infrastructure and staff necessary to support distance learning degrees. 2,085 new students enrolled in Wyden Online in the September 2018 session. Our effective tax rate from continuing operations excluding special items was 17% in the second quarter. Now turning to our balance sheet and financial position, cash flow from operations for the first 6 months of fiscal 2019 totaled $23 million compared to $50 million in the prior year. Fiscal year-to-date capital expenditures totaled $35 million compared to $32 million in the prior year. Our net accounts receivable at December 31, 2018 was $139 million, an increase of 3.3% driven by the timing of financial aid received. For the first 6 months of the fiscal year, bad debt as a percentage of revenue was 1.1% compared to 1.3% in the prior year, reflecting the quality of our programs and solid student outcomes. We closed the quarter with cash and cash equivalents of $295 million and outstanding bank borrowings of $299 million. We are committed to maintaining a healthy balance sheet to support our growth strategy and enhance shareholder returns. During the first 6 months of fiscal year 2019, we repurchased approximately 2.4 million shares of common stock at an average purchase price of $49.01 per share for a total of $115.9 million. In January 2019, we completed our 10th share repurchase program. We are now buying back shares under the $300 million program approved by our Board last November 2018. We remain confident and committed to executing our long-term strategic plan including share repurchasing as a part of our capital allocation strategy. Now turning to our outlook. For the fiscal third quarter of 2019, we expect revenue to grow 1% to 2% compared to the prior year. We expect third quarter 2019 operating costs before special items to increase 3% to 4% compared to the prior year. The third quarter outlook assumes an exchange rate of BRL3.77 to the U.S. dollar. Consistent with our previous fiscal 2019 full year outlook, we expect revenue to increase approximately 3% to 4% compared to the prior year and earnings per share from continuing operations before special items to grow in the 2% to 3% range compared to the prior year. We anticipate our effective income tax rate to be in the 16% to 17% range. The full year outlook assumes an exchange rate of BRL3.8 to the U.S. dollar. Full year capital spending is expected to be in the $65 million to $70 million range, including approximately $20 million to $25 million for the relocation of RUSM to Barbados. With that, I will now turn the call over to the operator for Q&A.

[Operator Instructions] And thank you, our first question comes from the line of Peter Appert with Piper Jaffray. Please proceed.

So maybe you could just expand a little bit on what you're seeing in Brazil, you highlighted increased competition and I guess the FIES exposure is an issue. It seems like those issues might persist. What would give you some confidence that you can improve the financial results there?

So a couple of things. Certainly well, we believe that the macro environment is stabilizing somewhat with the new administration et cetera. We certainly understand that we don't have the control level there. As we look at our market we've seen pricing pressure primarily on the Wyden institution. So separate from the America Online et cetera. There's a couple of things there. One, is that, pricing pressure a lot of it is coming from the FIES or students that are using FIES. Our FIES percentage now is around 18% across all of our portfolio, certainly below 20% which is less than half of what it was just a couple years ago. And then as we look at pricing, we certainly become more competitive in the market at the Wyden institution, but we're focused on a couple of things, making sure that we're differentiating those programs so that they are not as price sensitive. We certainly have had some successes there and trending the right way. We are seeing growth in that segment as you look at the enrollment on statistics and then as we look at Wyden Online, very early on in that program what we're seeing that comes through the DiMaggio channel and obviously that's going to do that and improve our operating margin because that's flowing through to the bottom line not just on site variable cost. So I think between that and some of the things that we're doing in the [indiscernible] program with that brand, we're seeing really good growth there across some of the new programs partnerships etcetera. We're pretty confident that we are going to be able to face those headwinds in Brazil as it relates to currencies et cetera. No doubt there's a risk-return, so we're in a market, in that type of emerging market but we are really well positioned from a brand perspective from a product differentiation perspective, from a program perspective and across different elements of that market, we're pretty confident.

Peter, seeing very nice continuation of build in our new student enrollments in response to some of the pricing actions we've taken. So if you recall back in September, new student enrollments in Brazil were up about 24%. It's a very successful continuation of our online launch even excluding that the base business new student enrollments were up almost 9.5%. So as we come into the key enrollment cycle here in February and March and where we stand we're feeling increasingly confident on nice continuation of those trends.

And then on the nursing, really it feels like it's a tale of two stories here, right. The RN to BSN quite weak, the pre licensure quite strong, anything you can do or anything structurally pricing wise, marketing wise, I'm not sure what, to perhaps stabilize the RN to BSN side of things?

Yes, we certainly - if you look at RN to BSN in terms of the decline, we're closing that gap. And a lot of that has to do certainly with the marketing and some of the operational things we're trying to do to drive that. As you look at –part of it is the overall market and we've discussed that before. And we feel that certainly it's good to be positioned with the onsite as you look at the 31% growth there helps us understand that the market is shifting a bit. Well, we see some of the pricing and some of the competitive trends there. One of the things that we really are focusing on Peter is thinking about how we can continue to work our hospital system and partnership systems there so that we continue to decrease those marketing cost and we're getting those students directly. Ochsner co-location is a perfect example but certainly with a more aggressive look at that across the portfolio. So, yes, certainly I understand that but we feel like we got the right actions in place on both sides of those and very confident on the on-site as the market continues to shift.

And sticking with that for a second, Lisa, the Ochsner relationship obviously has worked really well for you. Any thoughts in terms of new campus locations perhaps with other hospital partners?

Yes. So obviously we wanted to prove out that model for one quarter [indiscernible] we feel that we’re at that point now where we are really stepping up across Chamberlain University in general our partnership discussions we are not at point now where we can identify here is the next one but certainly we have identified this is a model that works for us, works for the hospital partners. So as we start to think more about solving the pain points for our hospital system across their workforce model, this partnership with us really helps us understand how to do that better and we we’re able to really do what are the other cost that we’re able to save and streamline because of that. So we are actively looking. As you may recall we have a new campus and excellent in terms of standalone or Chamberlain University campuses scheduled for San Antonio Texas that is on track and so we will open that but absolutely fact of being able to do something in parallel should we get the right partner and we got a few in the funnel.

And then Peter just add with that, we've seen very nice increases in our enrollment caps based on the continuation of very solid [indiscernible] results. So we seen caps increased in Michigan, Las Vegas, north front of New Jersey so as that market continues to shift as Lisa said, we're really well-positioned with our campus footprint but increasingly sell our ability to increase the campus size as to meet that market demand.

And last thing in all and some else get on had the guide would suggest very strong fiscal fourth quarter numbers I think if I am doing my math correctly. Can you just highlight some of the things that are really causing me inflection in the results later in the year?

Yes, that’s very much consistent with our point of view increasingly as we exit fiscal 2019 and then start to see an acceleration of both our revenue and earnings in fiscal 2020. We will start to all share that and see that in the fourth quarter driven by the continuation of the very nice build in total student enrollments at Chamberlain increasingly as we see total student enrollments build at Brazil. And then with increased contribution and the nice stability that we’re seeing with Becker in profit, those are all coming together quite nicely. And then of course the inherent leverage in the businesses that flow through the bottom line to see both the revenue and earnings growth.

Our next question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed.

Wanted to focus on margins for the medical and health business they were down somewhat year-over-year and I know that there was some noise in terms of a timing shift and maybe some relocation costs. Would we expect margins on a year-over-year basis in that segment to be up year-over-year in the second half?

On a full-year basis we’d expect margins to be somewhat comparable to slightly lower - just slightly lower than prior year full year FY 2018 just as a result of a little bit of that noise you referenced and some higher absorption of home office cost. But as we move into 2020 then, we’ll start to see the margin expand with the benefit of the growing enrollments.

And just focusing on the - I think you said there was 31% year-over-year increase in enrollments, on campus in your BSN program. I knew you had a number of caps lifted if I remember correctly there were also some new schools that were open. Do you have that on a same school basis excluding the caps I am just trying to normalize what the growth was?

So really as you look about the way we think about it this is on a same school basis with the exception of Aashna which would have contributed about 30 new student enrollments.

That's a pretty good number. And then you would mentioned in your prepared remarks about - I think you call additional business development activities across the portfolio if we can just get a little bit more color on what you're referring to?

So really as we look at this back half of 2019, this is really first time that we’ve been able to clear a lot of the noise as you can imagine, a lot of our resources and focus across - certainly across home office and the entire portfolio has been very focused on both divestitures, as well as there was relocation. And so as we go into back half of the year we have been having a lot more conversations across the portfolio that relates to how we can better serve our employers. So we have employer relationship obviously the hospital system but multinational finance institutions on the ACAMS and Becker side. We are starting to see transaction in terms of - potential partnerships to cross-sell within professional education between Becker and ACAMS we have mentioned it before but really was more of a paper exercise versus getting those partnership to play. On the medical side as an example AUC now having a campus where we will actually have students in September on the UCAN plan campus in the U.K. small class to start but certainly growth potential there as we built that incremental students and revenue for us on the Ross Med side articulation agreements where we announced Charles Drew we have several others that will be announced in the next month or so actually this month that will allow us to both try students at lower margining cost that type of things. So we’re really getting out as we now have this group president model that we think about it the last person to fill that team out for me. I mentioned before where [indiscernible] on the mental healthcare group of just last May/June timeframe. So now with the relow of Ross complete and having a permanent home there, we are geared up talk to you do what we do quite well and we have the time and capacity and that is to develop relationships that are dry new student enrollment across the portfolio.

Our next question comes from line of Alex Paris with Barrington Research. Please proceed.

This is Chris Howe sitting in for Alex. My first question is, you touched on it many times and provided some great color on this. Just in regard to ACAMS and Becker, you mentioned the longer term guidance for ACAMS prior to this call. How should we look at these two businesses on a longer-term basis beyond this fiscal year? Where would you say it is as far as its runway for growth and its contribution to longer term guidance?

Great question Chris and we’re very much in line and tracking with the longer term guidance that we provided back in May at Investor Day, that you know we would see very nice continuation of double-digit revenue growth and then see a very nice flow through and margins continuing to expand over time but as we continue to reinvest in the business. So, very much on track with what we had shared in our five-year plan and very pleased to see some very nice stabilization of Becker and a continuation of those trends.

And this leaves me to my follow-up question, Lisa touched on a little bit about the different cross-selling opportunities between Becker and ACAMS where would you say you are as far as the awareness of these opportunities and the realization of monetizing the cross-selling opportunities here?

I would say and the good news is its early stage in terms of the monetize - easy for me to say making revenue from that but in terms of awareness it’s very high rate because we now have as I mentioned a group president that is able to shift in among the institutions as well obviously the folks who run those institutions. And sort of putting in some new talent six to nine months ago or almost a year now for ACAMS this is really starting to pay dividends as we see these connections. So I think accounting for stem is just early state. We’re seeing lots of different things that we're able to do as we think about not only the ACAMS model but what are the other places in terms of certifications et cetera that we would be able to use that model because we are recognized in the market as it relate to certifications et cetera. So more to come there but certainly feel like we have a long runway for that in terms of revenue, but probably five or six out of 10 in terms of awareness as we talk to our employers, our customers et cetera.

Our next question comes from the line of Jeff Meuler with Baird. Please proceed.

Maybe just I guess glass half empty take on the guidance question. The Q3 guidance just given that you know really strong implied Q4, is there anything in Q3 that we should be considering from a timing or comp perspective or something along those lines just given that there is I guess slower growth in Q3 and I know Q2 benefited from the timing of the ACAMS conference, but just any other comments on considerations for Q3 guidance?

Yes Jeff, we will have - and once we're out of Q3 of next year, have overlapped some of the noise from the hurricanes. If we go back and look, we've been very transparent on our prior disclosures on the quantification there. But of course there was a shift of revenue as we needed to delay classes for a couple of weeks. So revenue that we would have normally tautened would - have recognized in the second quarter had shifted into the third quarter the prior year. So we'll be overcoming a little bit of that and then of course just the seasonality of the third quarter is one of our weaker in earnings because Brazil isn't teaching for just a month-and-half in that quarter and then that we'll obviously see the nice acceleration. And again, as we sit here today very much unchanged from our full year guidance in terms of both revenue and EPS.

I would just going to ask - to make it the glass half full, I would say we've got significant upside and confidence in our Q4 particularly as some of these other corporate development initiatives are driving through the portfolio. So very confident in our full year guidance and again as Patrick said been very transparent about what shifted as it relates to Q3.

And then on the nursing enrollment cap increases, I guess to what extent is that a direct link to the improved NCLEX passage rates and can increased caps kind of become a regular thing that we see year in and year out?

Yes, so it is a direct correlation. Each state - as you know this is part of our competitive differentiation because each state board of nursing makes these distances particularly when you start talking about when you become uncapped as in New Brunswick and that it's all about your capacity to take new students and so we absolutely anticipate that that will continue when you think about our three newest campuses all testing at a 100% pass rate for the NCLEX students that came through Sacramento et cetera. The newer campuses we would anticipate that those caps would get listed obviously lot earlier depending on our ability to continue to show post those kind of NCLEX scores. So while the academic quality thesis is the most important to us just because our mission is education, it really does tie very nicely to how we think about financial metrics and revenue growth.

And then Becker, really impressive turn around there I guess I'm just trying - the sustainability or how we could think about or how you think about underlying growth potential of that business following the changes to product to marketing?

Yes, so very much - see, this is being very sustainable as we pivoted. Specifically in sharpening our value prop and our competitive pricing in the B2C side of the business that represents about 30% of Beckers overall revenue. So we have seen a very strong market response to the improved product and some of the pricing changes. And we're starting to see a continuation of that into the current quarter. And again as we stack 3-4 quarters in a row here, we're increasingly confident in terms of the stabilization of that business. And then I think as we think about Becker more strategically, the continued growth of, the continued professional education, so look we’re going to help 40,000 students a year prepare and start their careers at CPA. And now we want to leverage that reputation, the impact that we've had in keeping them in the career with continuing professional education. And we've had some very nice wins lately with some large accounting firms and helping them solve some workforce problems. So we're really starting to see a nice continuation in growing Becker beyond just being known for the CPA test prep.

And then last one from me, Lisa could you just help me better understand Steven's role with the promotion? I guess you know from my perspective usually I see COO's have either P&L or some sort of business unit responsibility. So the description reads a little different and then I think he also leads IR but he doesn't have a formal role on conference call. So just if you could just maybe talk about that promotion and his role? Thanks.

Sure, absolutely. So it actually ties directly to some of the things that I've been talking about here but obviously in general terms because we wanted to make sure that we're tick-and-tied and announce. Naturally on the strategy and corporate development side and so if you think about what I have done in the past and actually what would Steve did in his past role, it's really around corporate development, business development, relationships, certainly M&A, we have both organic and inorganic as we think about across the longer strategic time horizon and so his role in terms of adding the Chief Operating Officer is really to enable us to have that capacity and have someone who can drive these things from start to finish as we work with the group presidents and think about how we can better position ourselves as it relates to being responsive to employers beyond the institutions themselves. Obviously that is important as we educate. But beyond that as we think about how do we have life-long learners and how do we drive through the work force or employer sort of life cycle and student life cycle, that's something that he can really be helpful with as we think about his past experience and then how he interacts in and among the institutions and the units here.

Well, we would like to thank everybody for joining the Adtalem Global Education Q2 conference call. We really appreciate your support and we look forward to talking to you next quarter.

Okay, thank you everybody.

And thank you. This will conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.