Covista Inc.

Previous wording

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read with and is qualified in its entirety by the Consolidated Financial Statements and the notes thereto included in this report. It should also be read in conjunction with the Cautionary Disclosure Regarding Forward-Looking Statements, the Risk Factors included in or incorporated by reference in this report (see Item 1A. “Risk Factors”), and the Financial Aid and Legislative and Regulatory Requirements disclosures set forth in this report. Adtalem reports on a fiscal year period ending on June 30. Therefore, this Quarterly Report for the quarterly period ended December 31, 2025 is for our second quarter of fiscal year 2026.

Current wording

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read with and is qualified in its entirety by the Consolidated Financial Statements and the notes thereto included in this report. It should also be read in conjunction with our consolidated financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operation as contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (the “2025 Form 10-K), the Cautionary Disclosure Regarding Forward-Looking Statements, the Risk Factors included in the 2025 Form 10-K, and the Financial Aid and Legislative and Regulatory Requirements disclosures set forth in this report. Covista reports on a fiscal year period ending on June 30. Therefore, this Quarterly Report for the quarterly period ended March 31, 2026 is for our third quarter of fiscal year 2026.

Previous wording

Certain items presented in tables may not sum due to rounding. Percentages presented are calculated from the underlying numbers in thousands. Discussions throughout this MD&A are based on continuing operations unless otherwise noted. The MD&A should be read in conjunction with the Consolidated Financial Statements and the notes thereto.

Current wording

Certain items presented in tables may not sum due to rounding. Percentages presented are calculated from the underlying numbers in thousands. Discussions throughout this MD&A are based on continuing operations unless otherwise noted.

Previous wording

We use our website (www.adtalem.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as one means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts. You may also access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as well as other reports relating to us that are filed with or furnished to the SEC, free of charge in the investor relations section of our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The content of the websites mentioned above is not incorporated into and should not be considered a part of this report.

Current wording

We use our website (www.covista.com) as a routine channel of distribution of company information, including press releases, presentations, and supplemental information, as one means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, you should monitor our website in addition to following press releases, SEC filings, and public conference calls and webcasts. You can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts. You may also access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, as well as other reports relating to us that are filed with or furnished to the SEC, free of charge in the investor relations section of our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The content of the websites mentioned above is not incorporated into and should not be considered a part of this report.

Previous wording

“Home Office” includes activities not allocated to a reportable segment. Financial and descriptive information about Adtalem’s reportable segments is presented in Note 18 “Segment Information” to the Consolidated Financial Statements.

Current wording

“Home Office” includes activities not allocated to a reportable segment. Financial and descriptive information about Covista’s reportable segments is presented in Note 18 “Segment Information” to the Consolidated Financial Statements.

Previous wording

Financial and operational highlights for the second quarter of fiscal year 2026 include:

Current wording

Financial and operational highlights for the third quarter of fiscal year 2026 include:

Previous wording

Chamberlain revenue increased 1.6%, or $2.8 million, to $183.8 million in the second quarter and increased 4.0%, or $14.1 million, to $363.0 million in the first six months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment in the September session and higher tuition rates. Enrollment increased in pre-licensure nursing programs; however, this growth was offset by a decline in post-licensure nursing program enrollment. Chamberlain is achieving pre-licensure growth by optimizing investments in student enrollment and experience while leveraging scale through a national footprint and providing a full breadth of nursing programs and modalities. Management is focused on optimizing marketing and enrollment operations to address post-licensure enrollment.

Current wording

session as increases in pre-licensure nursing program enrollment more than offset declines in post-licensure nursing program enrollment. The increase in revenue in the first nine months of fiscal year 2026 was driven by higher tuition rates and enrollment. Enrollment increased in pre-licensure nursing programs in all fiscal year 2026 sessions; however, enrollment has declined in post-licensure nursing programs during fiscal year 2026. Chamberlain is achieving pre-licensure growth by optimizing investments in student enrollment and experience while leveraging scale through a national footprint with in-person and online curriculum delivery modalities. Management is focused on optimizing marketing and enrollment operations to address post-licensure enrollment.

Previous wording

Tuition rates in the current fiscal year increased compared to the prior fiscal year for the Bachelor of Science in Nursing (“BSN”) onsite and online degree, Master of Science in Nursing (“MSN”) online degree, and Doctor of Nursing Practice (“DNP”) degree programs. The average increase across all of these programs was approximately 4.6% from the prior year.

Current wording

Tuition rates in the current fiscal year increased in January 2026 compared to the prior fiscal year for the Bachelor of Science in Nursing (“BSN”) onsite and online degree, Master of Science in Nursing (“MSN”), Master of Social Work (“MSW”) and Master of Public Health (“MPH”) online degree programs. The average increase across all of these programs was approximately 3.3% from the prior year.

Previous wording

Walden total student enrollment represents those students attending instructional sessions as of the dates identified above. Walden revenue increased 27.0%, or $46.3 million, to $217.6 million in the second quarter and increased 22.4%, or $74.7 million, to $407.5 million in the first six months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment, higher tuition rates, and an increase in average credit hours per student. In addition, Walden recognized one additional week of revenue during the second quarter of fiscal year 2026 compared to the prior year period due to the timing of its academic calendar. Walden’s improved enrollment has been accelerated by investments in student experience and brand along with providing flexibility to working adults through part-time and Tempo Learning® competency-based programs.

Current wording

Walden total student enrollment represents those students attending instructional sessions as of the dates identified above. Walden revenue increased 4.6%, or $8.2 million, to $186.6 million in the third quarter and increased 16.2%, or $82.9 million, to $594.1 million in the first nine months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment, higher tuition rates, and an increase in average credit hours per student. Walden revenue for the third quarter of fiscal year 2026 was impacted by the shift of one academic week from the third quarter to the second quarter, which resulted in $18.0 million of revenue being recognized during the second quarter of fiscal year 2026. Walden’s improved enrollment has been accelerated by investments in student experience and brand along with providing flexibility to working adults through part-time and Tempo Learning® competency-based programs.

Previous wording

Tuition rates for Walden programs, including general education are charged on a per credit hour basis that varies based on the nature of the program. For other programs such as those with a subscription-based learning modality, tuition is charged on a per term basis. Students are also charged program and clinical fees depending on the specific programs. Some programs require students to attend residencies, skills labs, and pre-practicum labs, for which tuition is charged per event. In most programs, these tuition rates, event charges, and fees increased by approximately 2.0% from the prior year.

Current wording

Tuition rates for Walden programs, including general education are charged on a per credit hour basis that varies based on the nature of the program. For other programs such as those with a subscription-based learning modality, tuition is charged on a per term basis. Students are also charged program and clinical fees depending on the specific programs. Some programs require students to attend residencies, skills labs, and pre-practicum labs, for which tuition is charged per event. In most programs, these tuition rates, event charges, and fees increased by approximately 2.6% from the prior year.

Previous wording

Medical and Veterinary revenue increased 6.9%, or $6.6 million, to $102.0 million in the second quarter and increased 6.4%, or $11.7 million, to $195.1 million in the first six months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment and higher tuition rates. Management continues to focus on increasing enrollment and renewing operational effectiveness, specifically around academic support and the enrollment experience.

Current wording

Medical and Veterinary revenue increased 8.9%, or $8.4 million, to $103.5 million in the third quarter and increased 7.2%, or $20.2 million, to $298.6 million in the first nine months of fiscal year 2026 compared to the prior year periods, driven by an increase in enrollment and higher tuition rates. Management continues to focus on increasing enrollment and driving operational effectiveness, specifically around academic support and the enrollment experience.

Previous wording

The cost of educational services expense category includes expenses related to the cost of faculty and staff who support educational operations, facilities, adjunct faculty, supplies, housing, bookstore, other educational materials, student education-related support activities, and the provision for bad debts. The following tables present cost of educational services by segment detailing the changes from the prior year periods (in thousands):

Current wording

The cost of educational services expense category includes expenses related to the cost of faculty and staff who support educational operations, facilities, adjunct faculty, supplies, housing, bookstore, other educational materials, student education-related support activities, and provision for bad debts. The following tables present cost of educational services by segment detailing the changes from the prior year periods (in thousands):

Previous wording

As a percentage of revenue, cost of educational services was 40.8% and 42.1% in the second quarter and first six months of fiscal year 2026, respectively, compared to 41.7% and 43.1% in the prior year periods. The decreases in the percentages were primarily the result of revenue growth accompanied by cost efficiencies.

Current wording

As a percentage of revenue, cost of educational services was 43.3% and 42.5% in the third quarter and first nine months of fiscal year 2026, respectively, compared to 42.9% and 43.0% in the prior year periods. The increase in the percentage for the third quarter of fiscal year 2026 was primarily the result of the $18.0 million impact on Walden revenue due to the shift of one academic week from the third quarter to the second quarter of fiscal year 2026. The decrease in the percentage for the first nine months of fiscal year 2026 was primarily the result of revenue growth accompanied by cost efficiencies.

Previous wording

Student services and administrative expense increased 16.5%, or $25.9 million, to $182.8 million in the second quarter and increased 13.5%, or $42.6 million, to $358.5 million in the first six months of fiscal year 2026 compared to the prior year periods. After excluding litigation reserve and strategic advisory costs, student services and administrative expense increased 7.8%, or $12.2 million, in the second quarter of fiscal year 2026 compared to the prior year period. After excluding litigation reserve, strategic advisory costs, and debt modification costs, student services and administrative expense increased 8.8%, or $27.9 million, in the first six months of fiscal year 2026 compared to the prior year period. These increases were primarily driven by an increase in marketing expense and investments to support growth initiatives.

Current wording

Student services and administrative expense increased 5.1%, or $8.9 million, to $184.1 million in the third quarter and increased 10.5%, or $51.5 million, to $542.6 million in the first nine months of fiscal year 2026 compared to the prior year periods. After excluding asset impairments and strategic advisory costs, student services and administrative expense increased 7.6%, or $13.2 million, in the third quarter of fiscal year 2026 compared to the prior year period. After excluding litigation reserve, asset impairments, strategic advisory costs, and debt modification costs, student services and administrative expense increased 8.4%, or $41.2 million, in the first nine months of fiscal year 2026 compared to the prior

Previous wording

As a percentage of revenue, student services and administrative expense was 36.3% and 37.1% in the second quarter and first six months of fiscal year 2026, respectively, compared to 35.0% and 36.5% in the prior year periods. The increases in the percentages were primarily the result of an increase in strategic advisory costs in the current year period and a reduction in litigation reserves in the prior year period, partially offset by revenue growth in the current year period. The reduction in litigation reserves in fiscal year 2025 represented a $5.6 million receipt in the second quarter of fiscal year 2025 from a claim made for indemnification under the Membership Interest Purchase Agreement with Laureate Education, Inc.

Current wording

As a percentage of revenue, student services and administrative expense was 37.8% and 37.4% in the third quarter and first nine months of fiscal year 2026, respectively, compared to 37.6% and 36.9% in the prior year periods. The increase in the percentage for the third quarter of fiscal year 2026 was primarily the result of the $18.0 million impact on Walden revenue due to the shift of one academic week from the third quarter to the second quarter of fiscal year 2026. The increase in the percentage for the first nine months of fiscal year 2026 was primarily the result of an increase in strategic advisory costs in the current year period and a reduction in litigation reserves in the prior year period, partially offset by revenue growth in the current year period. The reduction in litigation reserves in fiscal year 2025 represented a $5.6 million receipt in the second quarter of fiscal year 2025 from a claim made for indemnification under the Membership Interest Purchase Agreement with Laureate Education, Inc.

Previous wording

Restructuring expense was $4.1 million and $4.4 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $0.3 million and $2.4 million in the prior year periods. The increases in fiscal year 2026 were primarily driven by workforce reductions. In addition, we continue to incur restructuring charges or reversals related to exited leased space from previous restructuring activities.

Current wording

Restructuring expense was $0.9 million and $5.2 million in the third quarter and first nine months of fiscal year 2026, respectively, compared to $0.5 million and $2.9 million in the prior year periods. The increases in fiscal year 2026 were primarily driven by workforce reductions. In addition, we continue to incur restructuring charges or reversals related to exited leased space from previous restructuring activities.

Previous wording

The operating income increases in the second quarter and first six months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by a reduction in litigation reserves in the prior year period, and increases in strategic advisory costs, labor and other costs to support increased enrollment, marketing expense, and investments to support growth initiatives.

Current wording

partially offset by increases in strategic advisory costs, labor and other costs to support increased enrollment, marketing expense, and investments to support growth initiatives. The operating income increase in the first nine months of fiscal year 2026 was primarily driven by an increase in revenue and a reduction in asset impairments, partially offset by a reduction in litigation reserves in the prior year period, and increases in strategic advisory costs, labor and other costs to support increased enrollment, marketing expense, and investments to support growth initiatives.

Previous wording

Segment adjusted operating income decreased 20.0%, or $8.5 million, to $33.8 million in the second quarter and decreased 15.3%, or $10.7 million, to $59.4 million in the first six months of fiscal year 2026 compared to the prior year periods. The adjusted operating income decreases in the second quarter and first six months of fiscal year 2026 were primarily driven by increases in labor and other costs of educational services, marketing expense, and investments to support growth initiatives, partially offset by an increase in revenue.

Current wording

Segment adjusted operating income increased 0.8%, or $0.4 million, to $47.9 million in the third quarter and decreased 8.8%, or $10.3 million, to $107.3 million in the first nine months of fiscal year 2026 compared to the prior year periods. The adjusted operating income increase in the third quarter of fiscal year 2026 was primarily driven by an increase in revenue, partially offset by increases in labor and other costs of educational services, marketing expense, and investments to support growth initiatives. The adjusted operating income decrease in the first nine months of fiscal year 2026 was primarily driven by increases in labor and other costs of educational services, marketing expense, and investments to support growth initiatives, partially offset by an increase in revenue.

Previous wording

Segment adjusted operating income increased 16.3%, or $3.5 million, to $25.0 million in the second quarter and increased 15.3%, or $5.6 million, to $41.8 million in the first six months of fiscal year 2026 compared to the prior year periods. The adjusted operating income increases in the second quarter and first six months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by increases in investments to support initiatives to drive growth and investments in academic support.

Current wording

Segment adjusted operating income increased 20.0%, or $3.6 million, to $21.5 million in the third quarter and increased 16.9%, or $9.1 million, to $63.3 million in the first nine months of fiscal year 2026 compared to the prior year periods. The adjusted operating income increases in the third quarter and first nine months of fiscal year 2026 were primarily driven by an increase in revenue, partially offset by increases in investments to support initiatives to drive growth, investments in academic support, and marketing expense.

Previous wording

Interest expense was $10.9 million and $22.0 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $13.9 million and $28.4 million in the prior year periods. The interest expense decreases in the second quarter and first six months of fiscal year 2026 were primarily driven by lower interest expense on our Term Loan B due to decreased borrowings and a lower interest rate, and lower outstanding letters of credit balances during the period (as discussed in Note 13 “Debt” to the Consolidated Financial Statements).

Current wording

Interest expense was $13.6 million and $35.6 million in the third quarter and first nine months of fiscal year 2026, respectively, compared to $13.1 million and $41.5 million in the prior year periods. The interest expense increase in the third quarter of fiscal year 2026 was primarily driven by an increase in a loss on debt extinguishment from the write-off of debt issuance costs (as discussed in Note 13 “Debt” to the Consolidated Financial Statements). The interest expense decrease in the first nine months of fiscal year 2026 was primarily driven by lower interest expense due to decreased

Previous wording

Our effective tax rate from continuing operations was 25.2% and 23.2% in the second quarter and first six months of fiscal year 2026, respectively, and 22.8% and 22.0% in the second quarter and first six months of fiscal year 2025, respectively. The effective tax rate for the second quarter of fiscal year 2026 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions. The effective tax rate for the first six months of fiscal year 2026 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions and an increase in tax benefits on stock-based compensation.

Current wording

Our effective tax rate from continuing operations was 25.6% and 24.0% in the third quarter and first nine months of fiscal year 2026, respectively, and 23.4% and 22.5% in the third quarter and first nine months of fiscal year 2025, respectively. The effective tax rate for the third quarter of fiscal year 2026 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions. The effective tax rate for the first nine months of fiscal year 2026 increased compared to the prior year period primarily due to an increase in the limitation of tax benefits on certain executive compensation, partially offset by a decrease in the percentage of earnings from operations in higher taxed jurisdictions and an increase in tax benefits on stock-based compensation.

Previous wording

In July 2025, OBBBA was signed into law, which introduced substantial changes to U.S. tax provisions. The most relevant provisions to Adtalem for fiscal year 2026 include allowing accelerated tax deductions for qualified property and research and development expenditures. The impacts of OBBBA were not material to the income tax provision for the second quarter and six months ended December 31, 2025.

Current wording

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which introduced substantial changes to U.S. tax provisions. The most relevant provisions to Covista for fiscal year 2026 include allowing accelerated tax deductions for qualified property and research and development expenditures. The impacts of OBBBA were not material to the income tax provision for the third quarter and nine months ended March 31, 2026.

Previous wording

We had income from discontinued operations of $0.2 million and $1.0 million in the second quarter and first six months of fiscal year 2026, respectively, compared to $4.7 million and $4.6 million in the prior year periods. We recorded income within discontinued operations related to the DeVry University earn-out of $0.5 million and $7.0 million in the second quarter and first six months of fiscal year 2026 and 2025, respectively. In addition, we continue to incur costs associated with ongoing litigation and settlements related to divestitures, which are classified as expenses within discontinued operations.

Current wording

We had a loss from discontinued operations of $16.3 million and $15.4 million in the third quarter and first nine months of fiscal year 2026, respectively, compared to income of $0.04 million and $4.6 million in the prior year periods. We recorded income within discontinued operations related to the DeVry University earn-out of $0.5 million and $7.0 million in the first nine months of fiscal year 2026 and 2025, respectively. In addition, we continue to have activity associated with ongoing litigation and settlements related to divestitures, which is classified within discontinued operations.

Previous wording

Like other higher education institutions, Adtalem’s institutions are dependent upon the timely receipt of federal financial aid funds. All public financial aid programs are subject to political and governmental budgetary considerations. Adtalem’s institutions and their students participate in a wide range of financial aid programs, including U.S. federal financial aid, state financial aid, Canadian financial aid, private loan programs, tax-favored programs, Adtalem-provided financial assistance, and employer-provided financial assistance. In the U.S., the Higher Education Act (as reauthorized, the “HEA”) guides the federal government’s support of postsecondary education. Changes to financial aid programs that restrict student eligibility or reduce funding levels could have a material adverse effect on Adtalem’s business, financial condition, results of operations, and cash flows. See Item 1A. “Risk Factors” in our 2025 Form 10-K for a discussion of student financial aid related risks.

Current wording

Like other higher education institutions, Covista’s institutions are dependent upon the timely receipt of federal financial aid funds. All public financial aid programs are subject to political and governmental budgetary considerations. Covista’s institutions and their students participate in a wide range of financial aid programs, including U.S. federal financial aid, state financial aid, Canadian financial aid, private loan programs, tax-favored programs, Covista-provided financial assistance, and employer-provided financial assistance. In the U.S., the Higher Education Act (as reauthorized, the “HEA”) guides the federal government’s support of postsecondary education. Changes to financial aid programs that restrict student eligibility or reduce funding levels could have a material adverse effect on Covista’s business, financial condition, results of operations, and cash flows. See Item 1A. “Risk Factors” in our 2025 Form 10-K for a discussion of student financial aid related risks.

Previous wording

Government-funded financial assistance programs are governed by extensive and complex regulations in the U.S. Like any other educational institution, Adtalem’s institutions’ administration of these programs is periodically reviewed by regulatory agencies and is subject to audit or investigation by other authorities. Any violation could be the basis for penalties or other disciplinary action, including initiation of a suspension, limitation, or termination proceeding.

Current wording

Government-funded financial assistance programs are governed by extensive and complex regulations in the U.S. Like any other educational institution, Covista’s institutions’ administration of these programs is periodically reviewed by regulatory agencies and is subject to audit or investigation by other authorities. Any violation could be the basis for penalties or other disciplinary action, including initiation of a suspension, limitation, or termination proceeding.

Previous wording

Institutions must pass an ED financial responsibility test, also known as a “composite score,” to maintain eligibility to participate in Title IV aid programs. For Adtalem’s institutions, this test is calculated at the consolidated Adtalem level. Applying various financial elements from annual audited financial statements, the score is a composite of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably. A score greater than or equal to 1.5 indicates the institution is considered financially responsible. A score less than 1.5 but greater than or equal to 1.0 is considered financially responsible but requires additional oversight. For example, an institution with a score in this range is subject to heightened cash monitoring and other participation requirements. An institution with a score of less than 1.0 is not considered financially responsible but may continue to participate in the Title IV programs under provisional certification. In addition, this lower score typically requires that the institution be subject

Current wording

Institutions must pass an ED financial responsibility test, also known as a “composite score,” to maintain eligibility to participate in Title IV aid programs. For Covista’s institutions, this test is calculated at the consolidated Covista level. Applying various financial elements from annual audited financial statements, the score is a composite of three ratios: an equity ratio that measures the institution’s capital resources; a primary reserve ratio that measures an institution’s ability to fund its operations from current resources; and a net income ratio that measures an institution’s ability to operate profitably. A score greater than or equal to 1.5 indicates the institution is considered financially responsible. A score less than 1.5 but greater than or equal to 1.0 is considered financially responsible but requires additional oversight. For example, an institution with a score in this range is subject to heightened cash monitoring and other participation requirements. An institution with a score of less than 1.0 is not considered financially responsible but may continue to participate in the Title IV programs under provisional certification. In addition, this lower score typically requires that the institution be subject to heightened cash monitoring requirements and post a letter of credit (equal to a minimum of 10% of the Title IV aid it received in the institution's most recent fiscal year).

Previous wording

Prior to fiscal year 2022, Adtalem’s composite score was greater than 1.5. However, on September 25, 2023, ED notified Adtalem that its fiscal year 2022 composite score had declined to 0.2. As previously disclosed, this was expected due to the acquisition of Walden and other transactions. ED advised that Adtalem’s five institutions will be permitted to continue to participate in Title IV under provisional certifications with heightened cash monitoring and continued reporting. Management does not believe these conditions will have a material adverse effect on Adtalem’s operations. At ED’s request, Adtalem maintains three surety-backed letters of credit in favor of ED totaling $202.6 million representing 10% of the consolidated Title IV funds Adtalem’s institutions received during fiscal year 2025. See “Off-Balance Sheet Arrangements” in Note 13 “Debt” to the Consolidated Financial Statements for additional information.

Current wording

Prior to fiscal year 2022, Covista’s composite score was greater than 1.5. However, on September 25, 2023, ED notified Covista that its fiscal year 2022 composite score had declined to 0.2. As previously disclosed, this was expected due to the acquisition of Walden and other transactions. ED advised that Covista’s five institutions will be permitted to continue to participate in Title IV under provisional certifications with heightened cash monitoring and continued reporting. Management does not believe these conditions will have a material adverse effect on Covista’s operations. At ED’s request, Covista maintains surety-backed letters of credit in favor of ED totaling $202.6 million representing 10% of the consolidated Title IV funds Covista’s institutions received during fiscal year 2025. See “Off-Balance Sheet Arrangements” in Note 13 “Debt” to the Consolidated Financial Statements for additional information.

Previous wording

ED provisionally recertified AUC and RUSM’s Title IV PPAs through March 31, 2025. Materially complete applications for AUC and RUSM’s PPA recertification were timely submitted to ED. ED has provisionally recertified RUSVM’s Title IV PPA through March 31, 2027.

Current wording

ED provisionally recertified RUSVM’s Title IV PPA through March 31, 2027.

Previous wording

The provisional nature of the PPAs stemmed from Adtalem’s composite score declining and failing to meet ED’s standards of financial responsibility as described above.

Current wording

The provisional nature of the PPAs stemmed from Covista’s composite score declining and failing to meet ED’s standards of financial responsibility as described above.

Previous wording

Walden, AUC, RUSM, and RUSVM’s provisional PPAs included financial requirements, such as letter of credit and heightened cash monitoring, and AUC, RUSM, and RUSVM’s provisional PPAs require additional reporting. We do not believe these requirements will have a material effect on Adtalem’s financial condition or results of operations. With the approval of its change in ownership, Walden has the ability to request ED approval for new programs.

Current wording

Walden, AUC, RUSM, and RUSVM’s provisional PPAs included financial requirements, such as letter of credit and heightened cash monitoring, and RUSM and RUSVM’s provisional PPAs require additional reporting. We do not believe these requirements will have a material effect on Covista’s financial condition or results of operations.

Previous wording

The HEA requires certificate programs at all Title IV institutions and degree programs at proprietary Title IV institutions to prepare students for gainful employment in a recognized occupation. In October 2023, ED released new Financial Value Transparency (“FVT”) and Gainful Employment (“GE”) rules effective July 1, 2024. GE programs must meet a debt-to-earnings test in which graduates’ annual debt payments must not exceed 8% of their annual earnings or 20% of their discretionary earnings. GE programs must also meet an earnings premium test in which graduates’ earnings must exceed those of a typical high school graduate. Under the regulation, programs that fail either metric must provide warnings to students and prospective students that the program is at risk of losing Title IV eligibility and programs that fail the same measure in two out of three consecutive years lose Title IV eligibility. The GE regulation also includes a transparency framework in which debt-to-earnings, earnings premium, and a wide range of other program outcomes for all Title IV programs are disclosed on a website hosted by ED. Because there are many factors and unknowns, including the earnings of program graduates, Adtalem is reviewing the regulation to determine what impact, if any, the regulation will have on its programs. In addition, multiple parties sought to block enforcement of the FVT/GE rule under the Administrative Procedure Act and other legal theories. On October 2, 2025, a federal district judge ruled in ED’s favor, upholding the FVT/GE rules. The decision is subject to appeal. On February 14, 2025, ED extended the institutional reporting deadline for 2023-2024 and earlier award years until September 30, 2025. The reporting deadline for the 2024-2025 award year was October 1, 2025. On July 25, 2025, ED announced its intent to establish negotiated rulemaking committees in advance of issuing draft regulations on various topics, including FVT/GE. The negotiating committee addressing FVT/GE met in December 2025 and January 2026. ED’s initial proposal includes amendments to the FVT/GE rules including elimination of debt to earnings.

Current wording

The HEA requires certificate programs at all Title IV institutions and degree programs at proprietary Title IV institutions to prepare students for gainful employment in a recognized occupation. In October 2023, ED released new Financial Value Transparency (“FVT”) and Gainful Employment (“GE”) rules effective July 1, 2024. GE programs must meet a debt-to-earnings test in which graduates’ annual debt payments must not exceed 8% of their annual earnings or 20% of their discretionary earnings. GE programs must also meet an earnings premium test in which graduates’ earnings must exceed those of a typical high school graduate. Under the regulation, programs that fail either metric must provide warnings to students and prospective students that the program is at risk of losing Title IV eligibility and programs that fail the same measure in two out of three consecutive years lose Title IV eligibility. The GE regulation also includes a transparency framework in which debt-to-earnings, earnings premium, and a wide range of other program outcomes for all Title IV programs are disclosed on a website hosted by ED. Because there are many factors and unknowns, including the earnings of program graduates, Covista is reviewing the regulation to determine what impact, if any, the regulation will have on its programs. In addition, multiple parties sought to block enforcement of the FVT/GE rule under the Administrative Procedure Act and other legal theories. On October 2, 2025, a federal district judge ruled in ED’s favor, upholding the FVT/GE rules. The decision is subject to appeal. On February 14, 2025, ED extended the institutional reporting deadline for 2023-2024 and earlier award years until September 30, 2025. The reporting deadline for the 2024-2025 award year was October 1, 2025. On July 25, 2025, ED announced its intent to establish negotiated rulemaking committees in advance of issuing draft regulations on various topics, including FVT/GE. The negotiating committee addressing FVT/GE met in December 2025 and January 2026. ED’s initial proposal includes amendments to the FVT/GE rules including elimination of debt to earnings.

Previous wording

An ED regulation known as the 90/10 Rule affects only proprietary institutions participating in Title IV programs, including each of Adtalem’s institutions. Under this regulation, an institution that derives more than 90% of its revenue on a cash basis from Title IV student financial assistance programs in two consecutive fiscal years loses eligibility to participate in Title IV programs. The following table shows the 90/10 rates for each Adtalem institution for fiscal year 2025 and fiscal year 2024. We are also providing a consolidated rate for Adtalem even though it is not subject to 90/10 requirements.

Current wording

An ED regulation known as the 90/10 Rule affects only proprietary institutions participating in Title IV programs, including each of Covista’s institutions. Under this regulation, an institution that derives more than 90% of its revenue on a cash basis from Federal education assistance funds in two consecutive fiscal years loses eligibility to participate in Title IV programs. The following table shows the 90/10 rates for each Covista institution for fiscal year 2025 and fiscal year 2024. A consolidated rate for Covista is also provided even though it is not subject to 90/10 requirements.

Previous wording

Under the HEA, ED is authorized to specify acts or omissions of an institution that a borrower may assert as a Borrower Defense to Repayment (“BDR”) of their Title IV loans made under the Federal Direct Loan Program. The 2022 BDR regulations were scheduled to go into effect on July 1, 2023 that included a lower threshold for establishing misrepresentation, no statute of limitation for claims submission, expanded reasons to file a claim including aggressive or deceptive recruitment tactics and omission of fact, weakened due processes afforded to institutions, and reinstated provisions for group discharges. ED also included a six-year statute of limitations for recovery of funds from institutions. These changes would increase financial liability risk and reputational risk for Adtalem. However, the updated rules were delayed by litigation from another party and the July 2025 enactment of OBBBA restored the 2019 BDR regulations and delayed the 2022 regulations until July 1, 2035. Consequently, on August 8, 2025, the parties in the litigation dismissed the appeal of the preliminary injunction order, returning the merits of the case to the district court.

Current wording

Under the HEA, ED is authorized to specify acts or omissions of an institution that a borrower may assert as a Borrower Defense to Repayment (“BDR”) of their Title IV loans made under the Federal Direct Loan Program. The 2022 BDR regulations were scheduled to go into effect on July 1, 2023 that included a lower threshold for establishing misrepresentation, no statute of limitation for claims submission, expanded reasons to file a claim including aggressive or deceptive recruitment tactics and omission of fact, weakened due processes afforded to institutions, and reinstated provisions for group discharges. ED also included a six-year statute of limitations for recovery of funds from institutions. These changes would increase financial liability risk and reputational risk for Covista. However, the updated rules were delayed by litigation from another party and the July 2025 enactment of OBBBA, which restored the 2019 BDR regulations and delayed the 2022 regulations until July 1, 2035. Consequently, on August 8, 2025, the parties in the litigation dismissed the appeal of the preliminary injunction order, returning the merits of the case to the district court.

Previous wording

Adtalem’s primary source of liquidity is the cash received from payments for student tuition, fees, books, and other educational materials. These payments include funds originating as financial aid from various federal and state loan and grant programs, student and family educational loans, employer educational reimbursements, scholarships, and student and family financial resources. Adtalem continues to provide financing options for its students, including Adtalem’s credit extension programs.

Current wording

Covista’s primary source of liquidity is the cash received from payments for student tuition, fees, books, and other educational materials. These payments include funds originating as financial aid from various federal and state loan and grant programs, student and family educational loans, employer educational reimbursements, scholarships, and student and family financial resources. Covista continues to provide financing options for its students, including Covista’s credit extension programs.

Previous wording

The pattern of cash receipts during the year is seasonal. Adtalem’s cash collections on accounts receivable peak at the start of each institution’s term. Accounts receivable reach their lowest level at the end of each institution’s term.

Current wording

The pattern of cash receipts during the year is seasonal. Covista’s cash collections on accounts receivable peak at the start of each institution’s term. Accounts receivable reach their lowest level at the end of each institution’s term.

Previous wording

Adtalem’s consolidated cash and cash equivalents balance of $56.3 million and $199.6 million as of December 31, 2025 and June 30, 2025, respectively, included cash and cash equivalents held at Adtalem’s international operations of $5.7 million and $22.9 million as of December 31, 2025 and June 30, 2025, respectively, which is available to Adtalem for general corporate purposes.

Current wording

Covista’s consolidated cash and cash equivalents balance of $147.0 million and $199.6 million as of March 31, 2026 and June 30, 2025, respectively, included cash and cash equivalents held at Covista’s international operations of $3.3 million and $22.9 million as of March 31, 2026 and June 30, 2025, respectively, which is available to Covista for general corporate purposes.

Previous wording

Net cash provided by operating activities from continuing operations in the six months ended December 31, 2025 increased $94.2 million to $160.1 million, compared to $66.0 million in the prior year period. This increase was primarily driven by a $81.0 million increase in cash collected from students, a $22.9 million decrease in net legal settlement payments, and a $9.2 million decrease in interest payments, partially offset by a $11.7 million increase in payments to employees and vendors and a $6.2 million increase in income tax payments.

Current wording

Net cash provided by operating activities from continuing operations in the nine months ended March 31, 2026 increased $72.6 million to $346.4 million, compared to $273.8 million in the prior year period. This increase was primarily driven by a $125.3 million increase in cash collected from students, a $22.9 million decrease in net legal settlement payments, a $6.8 million decrease in interest payments, and a $2.3 million decrease in income tax payments, partially offset by a $82.1 million increase in payments to employees and vendors.

Previous wording

Net cash used in investing activities in the six months ended December 31, 2025 and 2024 was $35.6 million and $20.2 million, respectively, and was primarily driven by capital expenditures of $30.6 million and $21.1 million, respectively. In addition, during the six months ended December 31, 2025 we made a $5.0 million minority investment in a business. Capital expenditures for fiscal year 2026 are expected to include information technology investments and new campus development at Chamberlain.

Current wording

Net cash used in investing activities in the nine months ended March 31, 2026 and 2025 was $55.9 million and $30.3 million, respectively, and was primarily driven by capital expenditures of $50.9 million and $31.3 million, respectively. In addition, during the nine months ended March 31, 2026, we made a $5.0 million minority investment in a business. Capital expenditures for fiscal year 2026 primarily include information technology investments and new campus development at Chamberlain.

Previous wording

Net cash used in financing activities in the six months ended December 31, 2025 was $267.2 million, primarily driven by share repurchases of $172.4 million, net repayments under long-term debt obligations of $50.0 million, and employee taxes paid on withholding shares of $42.0 million. Net cash used in financing activities in the six months ended December 31, 2024 was $75.9 million, primarily driven by share repurchases of $74.1 million.

Current wording

Net cash used in financing activities in the nine months ended March 31, 2026 was $342.9 million, primarily driven by share repurchases of $239.9 million, net repayments under long-term debt obligations of $50.8 million, and employee taxes paid on withholding shares of $42.1 million. Net cash used in financing activities in the nine months ended March 31, 2025 was $248.0 million, primarily driven by share repurchases of $146.4 million and net repayments under long-term debt obligations of $100.0 million.

Previous wording

2025, $727.5 million of authorized share repurchases remained under the sixteenth share repurchase program. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors. See Note 14 “Share Repurchases” to the Consolidated Financial Statements for additional information on our share repurchase programs.

Current wording

On December 15, 2025, we announced that the Board authorized Covista’s sixteenth share repurchase program, which allows Covista to repurchase up to $750.0 million of its common stock through December 15, 2028. As of March 31, 2026, $661.8 million of authorized share repurchases remained under the sixteenth share repurchase program. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors. See Note 14 “Share Repurchases” to the Consolidated Financial Statements for additional information on our share repurchase programs.

Previous wording

Long-Term Debt– As of December 31, 2025, we have principal balances of $405.0 million of 5.50% Senior Secured Notes due 2028 (the “Notes”), which mature on March 1, 2028 and $103.3 million of Term Loan B under our Credit Facility, which matures on August 12, 2028 and requires interest payments. As a result of previous Term Loan B prepayments, we are no longer required to make quarterly principal installment payments on the Term Loan B. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on the Notes and our Credit Facility.

Current wording

Long-Term Debt– As of March 31, 2026, Covista had a Term Loan B principal amount of $510.0 million under its Credit Facility, which matures on March 2, 2033 and requires quarterly interest payments. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on our Credit Facility.