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Adtalem Global Education Inc. (NYSE:ATGE)
Q4 2018 Earnings Conference Call
Aug. 16, 2018, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Adtalem Fourth Quarter and Full Year 2018 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Beth Coronelli, please go ahead.

Beth Coronelli -- Investor Relations

Thank you and good afternoon everyone. With me today from Adtalem's leadership team are Lisa Wardell, President and Chief Executive Officer and Patrick Unzicker, our Chief Financial Officer and Treasurer.

I'd like to remind you that this conference call will contain forward-looking statements with respect to the future performance and financial condition of Adtalem Global Education that involves risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied. These factors are discussed under Risk Factors and elsewhere in our quarterly reports and Form 10-K for fiscal 2017 [ph] filed with the SEC and available on our website at www.adtalem.com. Adtalem disclaims any obligation to update any forward-looking statements made during the call.

During today's call, we will refer to non-GAAP financial measures, which are intended to supplement, though not substitute for our direct most comparable GAAP measures. Our press release, which contains the financial and other quantitative information to be discussed today as well as a 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'll now turn the call over to Lisa.

Lisa Wardell -- President and Chief Executive Officer

Thank you, Beth. Good afternoon everyone and thank you for joining us on today's call. Fiscal 2018 was a transformative year for Adtalem Global Education. This year, we solidified our position within our three core verticals, Medical and Healthcare, Professional Education, and Technology and Business to increase our long-term growth and profitability potential.

We made significant progress on improving student outcomes and enhancing academic excellence. We delivered organic revenue growth, expanded operating margins and generated strong cash flow. We strengthened our operations maintaining academic and business continuity and serving our students in response to the hurricanes, which impacted our medical school operations. We expanded our talent through the addition of leaders on our management team and new board members broadening the expertise and strategic capabilities of the organization and we announced the transfer of ownership of both DeVry University and Carrington College with the support of new owners who are committed to the missions of these institutions and their mandates to deliver high quality programs and strong student outcome.

We will continue to execute on our strategic plan as we move into fiscal 2019 with an ongoing focus on creating value for our owners. For the transfer of DeVry University to Cogswell Education, we're still targeting completion of the transaction in early fiscal year 2019 with the final closing schedule dependent on the timing of receiving all necessary regulatory and accreditor approval. We have final approval from the Illinois Board of Higher Education, we have received the Department of Education pre-acquisition approval letter and we are collaborating with Cogswell Education to finalize the requirements and we are engaging with The Higher Learning Commission on an ongoing basis to facilitate HLC board review.

During our fiscal fourth quarter, we entered into an agreement to transfer ownership of Carrington College to San Joaquin Valley College, Inc., the parent organization of San Joaquin Valley College, a family owned, California-based career college with a 41-year history and more than 60,000 graduates. San Joaquin Valley College and Carrington College complement each other by both offering quality allied health programs. Both institutions are committed to helping students reach their career goals. We're working to ensure a smooth transition for our students and colleagues and pending final regulatory and accreditor approval, anticipate the transfer to be complete mid-year fiscal 2019.

Before I share an update on our operating segments, on the regulatory front, the draft gainful employment rules were published by the Department of Education last week and we are encouraged by the proposed new rules. We support the requirement and call for student outcomes reporting and transparency for all institutions of higher learning.

We are building on a solid position in each of our three core verticals where we have the right to win based on solid market demand for our programs, cross-vertical synergies and continued economies of scale from shared service operations such as our digital marketing, innovation and student operation centers of excellence. From a continuing operations perspective, for the full year, approximately three-quarters of our operating income came from Medical and Healthcare and the remainder was split between Professional Education and Technology and Business.

In Medical and Healthcare, we continue to gain momentum as we further strengthen and expand our program, fill capacity within our institutions, and begin to explore opportunities for cross-institution collaboration. At Chamberlain, we were pleased to announce the appointment of Dr. Karen Cox as the new president of Chamberlain University, joining us later this month from her role as Executive Vice President and Chief Operating Officer of Children's Mercy Medical Center in Kansas City. She is also President of the American Academy of Nursing. Dr. Cox will lead Chamberlain into its next chapter. It is an honor to recognize Dr. Susan Groenwald as our President Emeritus. Susan, as we announced in May, has retired as Chamberlain President, but will continue to serve on the Board of the Adtalem Foundation and as a Trustee for Ross University School of Medicine and Ross University School of Veterinary Medicine. She has led the evolution of Chamberlain University throughout the past 12 years and we thank Susan for her transformational leadership, which embodies excellence in nursing.

We're focused on student outcomes and we're seeing improvement in NCLEX scores, session-to-session persistence and average credit hours. We reported growth across our programs at Chamberlain as we diversify our mix by adding programs such as the Masters of Public Health. Based on student outcomes, we have received approval to increase our enrollment levels at our Las Vegas and North Brunswick, New Jersey campuses. Also, Chamberlain's 21st Campus, which opened in Louisiana in May in conjunction with Ochsner Health started with a full class and is ahead of our enrollment expectations for the September session.

At the American University of the Caribbean, the majority of our students moved back to St. Maarten from the United Kingdom in the January and May semesters and the school will make a full return for the September session. We augmented our crisis preparedness process based on key learnings from our experience with last year's hurricane. Our academic program did not encounter any timing setback despite the dual campus operations and we are encouraged by the improvement in student outcomes with solid gains in USMLE Step 1 scores and persistence.

Ross University School of Medicine, which celebrated its 40th anniversary in June, reported solid growth in the quarter and we announced earlier this month that we are relocating the RUSM campus to Barbados, eliminating the need for RUSM to run dual campus operation. The decision to relocate from Dominica was made after considerable deliberation, including a review of our academic and infrastructure requirements and future plan. We were fortunate to maintain the quality and continuity of the RUSM medical education program at our temporary locations in Tennessee and St. Kitts, while we were unable to use our Dominica campus. We have received approval from CAAM-HP to operate in Barbados with CAAM-HP as our primary accreditor. Students will begin the January 2019 semester in Barbados pending final regulatory approval from the US Department of Education. We have worked with our accreditors and regulators and the Barbados government to support academic and business continuity. Our new location will include state-of-the-art facilities and new student housing. In addition, Barbados has a mature healthcare delivery system including a teaching hospital to support our students and faculty, infrastructure that can support the size of the RUSM student body and considerable direct flights from the United States and Canada.

Ross University School of Veterinary Medicine continues to perform well and we're pleased with the institution's enrollment growth. The global animal healthcare market is expanding at a healthy rate and demand for veterinary education continues to outstrip supply. For perspective, RUSVM now has over 5,000 alumni working in the field, representing one of the largest alumni groups in veterinary medicine. Serving as a strong and tangible advocacy base, this network is expected to represent one in 20 veterinarians working in the US and Canada in the near future.

In July, RUSVM opened a state-of-the-art research and pathology building. At the same time, the One Health Foundation, an independent non-profit organization was formed with a goal to advance research related to animal, human and environmental well-being. This expanded research capability provides an enhanced learning experience, supports student and faculty recruitment, and enables an environment for conducting studies aimed at addressing critical research gaps. The opening of the new facility and participation in One Health supports efforts to maintain RUSVM's position within the premier league of top accredited research-focused veterinary schools.

In our Professional Education segment, ACAMS continues to post strong growth as we attract new members and build scale across our membership, certification and conference revenue stream. Now serving over 65,000 members, we see significant runway with strong international growth and continued expansion opportunities. Since we acquired ACAMS, we have grown in North America and Europe and the most significant growth is in Asia Pacific. Going forward, we anticipate it having more balanced growth across geographies and see opportunity for expansion in the Latin American market. We were pleased to have our largest attendance to date at our North American and European conferences, up 13% and 14% year-over-year, respectively. We're expanding products internationally focused on local needs including the expansion of our certifications in Europe.

Becker's performance improved this quarter, supported by the launch of its new video solutions product in early May. This offering has been well received with significant positive feedback from students. We're gaining traction on the leadership, product and marketing changes we made in the past year as we refine our value proposition to stabilize Becker and return to consistent growth.

In the Technology and Business segment, we are well-positioned academically with strong brand awareness and student satisfaction serving the Brazilian education market through three umbrella brands with a national footprint as well as an emerging online presence. While we're seeing increases in retention, growth in new student enrollment is below our expectations. We're taking targeted actions to return to sustainable new student enrollment growth and to ensure long-term profitability for the segment. First, we continue to advance our marketing approach, evaluating opportunities to incorporate dynamic pricing and implementing plans to account for economic drivers and the volatility in FIES, Brazil's federal student loan program. We are implementing an augmented plan to build on the foundation and accelerate growth in the distance learning program, which we launched in February. We're rebranding to widen online and developing a more integrated approach with the campuses adding blended programs with a mix of onsite and online offerings.

We are also expanding our targeted outreach efforts. As an example through Wyden and Ibmec, we're building relationships with high schools and students directly through digital campaigns and local interaction. We are expanding our offerings across our institutions. For SJT, which we acquired in November 2017, the team is collaborating with Adtalem Professional Education to expand share in the $80 million to $100 million Brazilian test prep market for medical residencies. We're gaining traction with our deployment earlier this year of Ibmec Sao Paulo, serving the largest market in Brazil. We also have added a new Wyden UniFanor campus in Fortaleza, which has a strong potential student population.

From an operations perspective, we're managing the cost base, focusing the right talent on our growth initiatives, and adjusting processes to increase efficiency and effectiveness, including realigning our contact center. Returning to growth in our Technology and Business segment is a top priority and we will share an update on our progress as we report enrollments for the September session in our first quarter fiscal year 2019 call in November.

In closing, our business objectives are firmly aligned with our mission and our student commitments. Looking ahead, as we have fully positioned our portfolio in three core verticals; Medical and Healthcare, Professional Education, and Technology and Business, we will continue to invest in and diversify our programs in growth sectors, drive innovation across our portfolio, maintain a disciplined approach to cost management and driving economies of scale, and balance our capital allocation, investing in the core and delivering direct returns to our owners. Now, let me turn the call over to Patrick for the financial review.

Patrick Unzicker -- Chief Financial Officer

Thank you, Lisa, and good afternoon everyone. In the fourth quarter, we grew the topline, increased our operating margins and net income, and realigned our portfolio. We enter fiscal 2019 focused in our core verticals with an improved growth profile and are in strong financial position. We are in the process of transferring ownership of DeVry University and Carrington College, results from both institutions are presented as discontinued operations.

Now turning to our results, during the fourth quarter, Adtalem revenue of $319.8 million was up 1.5% from the prior year, driven by growth in our Medical and Healthcare and Professional Education segments, which was partially offset by decreased revenue in our Technology and Business segment. Operating costs, excluding special items for the fourth quarter, were $252.7 million, down 1% compared to last year. Pre-tax special items in the fourth quarter were $1.9 million related to workforce reductions and real estate consolidation. Operating income from continuing operations, excluding special items for the fourth quarter, increased 11.7% as compared to the prior year to $67.1 million. Net income from continuing operations, excluding special items, was $53 million during the fourth quarter compared to $48.1 million in the prior year. Earnings per share from continuing operations, excluding special items, was $0.86, up nearly 15% as compared to last year.

Now, to review our segment performance for the fourth quarter, starting with Medical and Healthcare, revenue was up 4.1% to $201 million. Segment operating income, excluding special items, increased 12.5% over the prior year to $48.3 million. Chamberlain revenue was up 2.7% in the quarter, driven by improved persistence and student enrollment growth. In the May session, new student enrollments grew 3.1% and total students grew 4.7%. In July, new student enrollment grew 1% and total students grew 4.6%. To share a broader view of our programs, for fiscal year 2018, we reported higher enrollment in all tracks of the Master of Science in Nursing degree as well as the new Master of Public Health program launched in July 2017 and improved new student enrollment and retention in the campus-based Bachelor of Science program. These were partially offset by a modest decline in total student enrollments in the RN to BSN program. Looking forward to fiscal 2019, we expect mid-single new student enrollment growth at Chamberlain. Revenue at our medical and veterinary schools was up 6% during the quarter. In May, new student enrollment increased 9% and total students increased 1.2%. Medical and veterinary new student enrollments are on track to grow in a similar range for the September 2018 semester.

Turning to our Professional Education segment, revenue increased 13.6% to $45.3 million in the quarter with growth coming from both ACAMS and Becker. Segment operating income, excluding special items, was up 17.3% to $13 million compared to the prior year. In our Technology and Business segment, revenue was $74.3 million, a decrease of approximately 10%, but nearly a 1% increase on a constant currency basis. Segment operating income, excluding special items for the fourth quarter, was $14.9 million, a decrease of 23% compared to the prior year. Our effective income tax rate from continuing operations, excluding special items, was 12.6% for the quarter and 14.8% for the full year.

Now turning to our balance sheet and financial position, cash flow from operations for fiscal 2018 was $239 million as compared to approximately $231 million in the prior year. Our capital expenditures for fiscal 2018 were $67 million compared to $43 million in the prior year. We closed the year with cash and cash equivalents of $431 million, while outstanding bank borrowings were $300 million. We're committed to maintaining a healthy balance sheet and ensuring we have ample resources to support our growth strategy.

Our net accounts receivable was $147 million, a decrease of 1.3% from the prior year, primarily related to the lower Brazilian exchange rate, which was partially offset by the timing of financial aid receipt at the medical and veterinary schools. For the full year, bad debt as a percentage of revenue was 1.4% compared to 1.6% in fiscal 2017. During the quarter, we repurchased approximately 531,000 shares. For full year fiscal 2018, we repurchased approximately 3.5 million shares for $137 million at an average price of approximately $39 per share. We continue to see opportunity as we implement our strategic plan to incorporate share repurchase as a part of our capital allocation strategy.

Turning to our outlook, for the first quarter of fiscal 2019, we expect revenue to increase approximately 1% compared to the prior year, primarily coming from our Medical and Healthcare segment this quarter. Our large ACAMS conference, which historically was held during the first quarter will now occur in October, shifting revenue to the second quarter of fiscal 2019. The weaker Brazilian real compared to the US dollar will create some revenue headwinds in the first half of the fiscal year. First quarter of fiscal 2019 operating costs before special items are expected to be flat to up approximately 1% compared to the prior year as we invest in future growth opportunities.

For the full 2019 fiscal year, revenue is expected to grow 3% to 4% compared to the prior year. We anticipate our tax rate for fiscal year 2019 to be in the 18% to 19% range. Earnings per share from continuing operations before special items is expected to be in line with prior year. We anticipate capital spending for fiscal 2019 to be in the $70 million to $75 million range primarily driven by investments within our Technology and Business and Medical and Healthcare segments including approximately $25 million to $30 million for the relocation of Ross Med to Barbados.

We continue to position Adtalem for strong multi-year organic growth in accordance with our strategic plan. Our outlook for the year supports the long range guidance we provided at our Investor Day this past May with a projected revenue compound annual growth rate of 5% to 7% delivering double-digit EBITDA growth over the five-year planning horizon.

Now, I'll ask the operator to open the call for the question-and-answer session.

Questions and Answers:

Operator

Thank you. At this time, we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Jeff Silber with BMO Capital Markets. Please proceed with your question.

Jeff Silber -- BMO Capital Markets -- Analyst

Thank you so much. Wanted to focus on the outlook for the year to start, you're projecting or you're looking for 3% to 4% revenue growth, yet you're looking for earnings roughly flat year-over-year. Is there something specific going on this year that's going to be different than the next five years when you're expecting EBITDA growth faster than revenue growth?

Patrick Unzicker -- Chief Financial Officer

Yes, there is a couple of things this year as it relates to the pending divestitures of DeVry University and Carrington. Our ability then to realign the organization as we look at those stranded costs and then we do have some incremental or some transitionary cost associated with the Ross relocation to Barbados would be the kind of the primary or larger factors there.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay. Is it possible to give us some rough estimate of what those costs are so we can kind of take it out of our model going forward?

Patrick Unzicker -- Chief Financial Officer

Yes, so as we look at the incremental impact from the Ross relo, we're thinking about at least where we stand today about a $5 million incremental impact from an expense perspective. And then as we look at the opportunity of the costs that were previously being absorbed by DeVry University and Carrington that just given the size, scale, who we are, a lot of shared common IT platforms et cetera, in total, that's about $30 million, but we do see opportunity to reduce that as we move throughout the year.

Lisa Wardell -- President and Chief Executive Officer

Yes, and Jeff, the only thing that I would add to that on both of those, obviously, as we think about Ross in Barbados and just the increased (inaudible) infrastructure, healthcare delivery system as it compares to Dominica, we think about what that means from an inquiry and conversion rate with students as well as just faculty recruitment and retention. Obviously in the long term, we see it -- or not even long term, near and long term as a very good move for RUSM. We're really positioned for earnings growth in that vertical and in that institution by 2020. So that's why you're seeing that pressure on 2019 and I don't think that I need to really -- probably I guess I will remind everybody that (inaudible) from our perspective, DVU and Carrington are going to much better owners for them. We have done what we need to do in terms of owning it until we don't and that is apparent in the enrollment numbers that we've put out this week, but we certainly see taking those costs in 2019 as a positive move toward rightsizing that portfolio where we have the right to win, so that falls into 2019.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay, great and then -- and speaking of your portfolio, are you happy with the segments and the offerings you have now? Will we be seeing any more divestitures?

Lisa Wardell -- President and Chief Executive Officer

We are happy. We feel that we are in the right content areas and the right institutions right now and that's why you hear us talking a lot about the organic growth. Certainly, as we look at Medical and Healthcare, we have a lot of programmatic growth to go in Chamberlain and a bit a medical education too. We have talked about Professional Education, as you can see, we have done a lot of work as it relates to Becker and that growth and sort of structuring that business to have better performance this quarter, which we're pleased about, we know that's trending the right way to do more and obviously, ACAMS is ahead of our expectations as it relates to both revenue and bottom line. So, I would imagine that part of the question is around Brazil. As you can see, we've had some challenges there, but we believe that we have really good assets within the Brazil market. They're in the right segments of that market and we've been doing some things in this quarter that are going to continue and be trending into the next quarter around pricing and the things that we need to do from an inquiry and conversion perspective across that portfolio particularly in Wyden and then our distance learning, which we launched and got, I would say, results that were less than what we anticipated and we are making those operation and execution changes to see that there. So across the portfolio, we're quite happy with where we're positioned.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay, great. I'll jump back in the queue. Thanks so much.

Lisa Wardell -- President and Chief Executive Officer

Thanks, Jeff.

Operator

Our next question comes from the line of Corey Greendale with First Analysis. Please proceed with your question.

Corey Greendale -- First Analysis -- Analyst

Hi, good afternoon.

Lisa Wardell -- President and Chief Executive Officer

Hi, Corey.

Corey Greendale -- First Analysis -- Analyst

So actually want to stay on the same topic. So, first of all, on the guidance, I just want to clarify the -- you're calling for flat operating income from continuing ops ex-special items. So like the $5 million of cost you said associated with moving Ross, you are not going to be carving that out as a special item?

Patrick Unzicker -- Chief Financial Officer

That's correct and to further clarify that flat, that's earnings-per-share growth, not operating income growth.

Corey Greendale -- First Analysis -- Analyst

Okay. So actually I have to do more math to see what that means, given the (inaudible) on the fly here translate what that means in terms of operating income?

Patrick Unzicker -- Chief Financial Officer

So I think you can imply that there would be some operating income growth and then partially offset as we move into this next year at a little bit higher of a tax rate, we had some positive benefits in FY '18 that won't continue per se into FY '19 and then a slightly higher interest expense as a result of our refinancing with a better position our capitalization going forward.

Corey Greendale -- First Analysis -- Analyst

And the $30 million you said, can you just go back to that. You're saying $30 million of cost could come out or what exactly were you saying?

Patrick Unzicker -- Chief Financial Officer

That's the -- as we look at with DeVry University and Carrington going out of our portfolio, costs that were previously being allocated and absorbed that now we need to take an opportunity to reduce. Is it realistic to get the entire amount out? No, because there's a number of loss scale shared systems platforms, but we do see a pretty significant opportunity within that $30 million.

Corey Greendale -- First Analysis -- Analyst

Okay and in terms of the impact of the timing shift at ACAMS in the conference, can you help us quantify the impact of that shift Q1 to Q2?

Patrick Unzicker -- Chief Financial Officer

Sure, that's a very big conference, it's our Las Vegas conference and from a top line perspective, it's about $4 million in revenue. So meaningful enough we wanted to call it out from a modeling perspective.

Corey Greendale -- First Analysis -- Analyst

Okay, one more for you Pat and then maybe one for Lisa. On the -- the end of quarter debt and cash, was that just like you draw down the debt for one day because of the finance responsibility ratios or what is that?

Patrick Unzicker -- Chief Financial Officer

No, we don't do that. Our end of quarter debt, the $300 million, that's the long-term debt as a result of our financing, we did the refinancing, so we have a $300 million line of credit, which there are no drawings on aside from the standby letter of credit that we have and then we have the $300 million seven-year note that we closed on in mid-April.

Corey Greendale -- First Analysis -- Analyst

Okay. Sorry if that was a bad question. Lisa, my question for you is two-fold I guess. First of all, on Chamberlain, it's kind of doing what you've talked about mid-single digit total growth, the new student was below that. So what -- does something have to change there or how confident until you can get like, maintain the total growth at mid-single digits?

Lisa Wardell -- President and Chief Executive Officer

Yes, we are very confident, we certainly saw that -- certainly see that. Obviously we are diversifying around mix, but we are seeing exactly what we want to see in our campuses, the Ochsner classes were full, are full and are trending to be oversubscribed. That mile is working well across all of our campuses, we're seeing the right mix of growth to get us to that long-term plan. So we do not have concerns there in terms of our markets or the supply demand.

Corey Greendale -- First Analysis -- Analyst

And on Brazil, I hear you on the overarching message what's going on there. Can you help set expectations a little bit like when you report the next enrollment period like what sort of decline in new students should we expect to see?

Lisa Wardell -- President and Chief Executive Officer

We're not planning decline in new students. I guess I was getting out of ahead of the question, if you look -- as you look at the results this quarter, you can see we had a little softness there and we're a little less on distance learning than we anticipated, but we are expecting new student increases next quarter -- sorry. I'm glad you asked me that.

Patrick Unzicker -- Chief Financial Officer

And that's also the new student increase of about 3.7% in March, what we're meaning there is that was below our expectations, albeit still growth.

Lisa Wardell -- President and Chief Executive Officer

Correct.

Corey Greendale -- First Analysis -- Analyst

Okay. Well, I appreciate the clarification. Thank you.

Operator

Our next question comes from the line of Peter Appert with Piper Jaffray. Please proceed with your question.

Peter Appert -- Piper Jaffray -- Analyst

Hi, thanks. So Lisa, just sticking with nursing for a second, it's a fairly noticeable deceleration in terms of the start numbers you've seen over the last couple of quarters. Maybe just call out what has driven that?

Patrick Unzicker -- Chief Financial Officer

Can you repeat -- sorry, repeat the question, Peter.

Peter Appert -- Piper Jaffray -- Analyst

The deceleration in starts, you've gone from, I think it was from 6 to 4 to 1 over the last couple of quarters. I'm just trying to better understand what's contributed to that slowdown?

Patrick Unzicker -- Chief Financial Officer

A slight modest decline in RN to BSN, but not above or not really much from what we've seen. Just based on a couple of items, our masters programs slowed a bit, but based on the visibility we have for the September class gives us confidence in our longer term perspective of Chamberlain delivering mid-single digit new student enrollment growth in 2019.

Peter Appert -- Piper Jaffray -- Analyst

Okay. And how about, Pat, in terms of average revenue per student or pricing. Can you talk about how you're thinking about that for nursing?

Patrick Unzicker -- Chief Financial Officer

Sure, so as we think about Chamberlain for 2019, we do continue to be competitive with respect to our overall pricing in RN to BSN. As we get a larger mix of post-licensure students, those do come in at a slightly lower revenue per student, but not seeing much of a meaningful impact from 2018 to 2019 in terms of a trend perspective.

Lisa Wardell -- President and Chief Executive Officer

And Peter, I would just add to that we're seeing some good movement as it relates to our -- the caps in several of the campuses we're getting really good results from an NCLEX perspective. So as an example, in Las Vegas, we are going from 300, we now are 400 student-cap, which will give us some increase there, there is the demand there North Brunswick. We now have -- do not have a cap, so we're at about 580, 588, something like that students and in the long-term we can see going north of 600, 650 there as we expand there. So there's several campuses where we have not been able to increase those new students where we're now able to from a State Board of Nursing perspective.

Peter Appert -- Piper Jaffray -- Analyst

Got it. Understood. Thank you. And then on Brazil, can you remind me, Pat or Lisa, how big the FIES is as a percent of enrollments or revenues? And how big a factor is that in terms of the (Multiple Speakers).

Lisa Wardell -- President and Chief Executive Officer

Yes, so for us it's about 20% of our students. So as the program has come under pressure and students have received less lending and or timing of the receipts of those FIES, monies that has affected us not to the extent that, that if we were, was larger in our portfolio, but those are students that we don't discount that pay full price. And so as we think about, because we really want to shift our mix right to students, so that the FIES, when there are changes in that government program, they don't affect us as much. So we'd like to see it go down, but as that happens, we have to use more discounting strategy and therefore have a larger amount of students to make that up in volume, which I think the team has a really good handle on right now as we move into this next quarter. So again, it's about 20% of the receipts, but we'd like to see that decreasing rather than increasing, which means just a change in how we're looking at pricing and increasing conversion.

Peter Appert -- Piper Jaffray -- Analyst

Right. Okay. And then just with regard to the Ross business, a lot of changes and disruptions here in the last year. Can you give us any color on how that's impacted if at all the inquiry volume and the application volume you've seen?

Lisa Wardell -- President and Chief Executive Officer

Yes, it -- either not at all or in a positive way as we announced Barbados, it's obviously early, it's just been a couple of weeks, but it's actually been pretty phenomenal. I can say that because, this is the team, this is not me, but we have seen increased inquiries conversion. Obviously, our enrollment numbers are growing, you can see in the results there and with the announcement and that is with students frankly actually not knowing where that semester is going to take place, they just want to go to medical school. So now that we have announced Barbados and we have some just really great facilities where we will all be as one campus. So this takes away the need for the dual campus structure, which puts pressure obviously on faculty and staff et cetera. Now that we've announced that, that will be in Barbados, we're really excited to see how that will look and the infrastructure will allow for more growth should we get additional students, which was much more difficult in Dominica.

Peter Appert -- Piper Jaffray -- Analyst

Great. And then lastly Lisa, I mean sort of ironic that DVU and Carrington are both doing frankly considerably better from an enrollment perspective.

Lisa Wardell -- President and Chief Executive Officer

I knew someone was going to ask that, Peter.

Peter Appert -- Piper Jaffray -- Analyst

Yes, so I'm actually wondering, if -- well, there are a couple of things. Number one, the DVU closure seems like it's just taken longer than expected relative to when HLC met, I mean is there any -- so the questions are; one, you're confidence that it's actually going to close and two, is there any possibility that the financial terms could change in a way that's more advantageous to you in the context of these numbers seemingly being quite a bit better?

Lisa Wardell -- President and Chief Executive Officer

Yes, we are very confident that it's going to close, in fact the numbers being better obviously are helpful in terms of our relationship with the buyer and we don't have any concerns with sort of the process, it's running really smoothly with IBAT and HLC et cetera. So, we don't see any financial terms changing at all in that process.

Peter Appert -- Piper Jaffray -- Analyst

Okay. Thank you.

Lisa Wardell -- President and Chief Executive Officer

And I would mention just one thing, Peter, just to clarify, Carrington did have an extra start, you're seeing an extra start for Carrington although both Carrington and DVU are up. And from my perspective, that's a good thing because you don't want something in your portfolio or more importantly part of your legacy as an educator and a provider of academic quality that you're selling at a time that's not good for the institution. So we're actually quite pleased with that.

Peter Appert -- Piper Jaffray -- Analyst

Great. Thank you. And then Pat, are you putting out or have you put out or will you put out today the pro forma numbers for fiscal '18 ex-Carrington?

Patrick Unzicker -- Chief Financial Officer

So in the release today, you'll see on a quarterly basis for the current quarter prior year year-to-date and then you'll see in the K when we file in about a week and a half the full setting.

Peter Appert -- Piper Jaffray -- Analyst

But we won't get the quarters until you file the K?

Patrick Unzicker -- Chief Financial Officer

Correct.

Peter Appert -- Piper Jaffray -- Analyst

Okay, thank you.

Operator

Our next question comes from the line of Jeff Miller with Robert W. Baird. Please proceed with your question.

Nick Nikitas -- Robert W. Baird -- Analyst

Yes, thanks, this is Nick Nikitas on for Jeff. Just going back to the full year outlook, just want to confirm, so the flat year-over-year EPS outlook that's first the number that's revised for the Carrington disco ops, but is the insurance deductible headwind from '18 that's still in the fiscal '18 number?

Patrick Unzicker -- Chief Financial Officer

That's correct, yes. Right on both.

Nick Nikitas -- Robert W. Baird -- Analyst

Okay and then, is this kind of the way -- this quarter the interest expense, I know you had the higher debt load, but it seemed like the rate was higher than what it has typically been? Is there anything that's front-end loaded or one-time in the Q4 interest number?

Patrick Unzicker -- Chief Financial Officer

Exactly. So as a result of our refinancing, we refinanced about a year and a half earlier, so prior to the expiration of our current credit agreement. So it was a write-off of the unamortized fees of the previous agreement and that was about $1.5 million.

Nick Nikitas -- Robert W. Baird -- Analyst

Okay. Great, thanks. And then just looking at the Ross, the transfer and the CapEx that seems like it had some one-time I think it was $25 million to $30 million in fiscal '19. Is that just a one year impact or will a portion continue as you guys further build out facilities there?

Patrick Unzicker -- Chief Financial Officer

Over a longer period of time as we see a very strategic reason and as that university grows, will there be additional CapEx or could there be additional CapEx, yes, but this $25 million to $30 million will provide very adequate and great facilities --

Lisa Wardell -- President and Chief Executive Officer

State-of-the-art.

Patrick Unzicker -- Chief Financial Officer

State-of-the-art for our students for what we need with some room to grow.

Lisa Wardell -- President and Chief Executive Officer

Yes. (Multiple Speakers)

Nick Nikitas -- Robert W. Baird -- Analyst

Thanks for taking the questions.

Operator

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

Jeff Silber -- BMO Capital Markets -- Analyst

Thanks so much. I'm sorry, I just wanted to clarify something you had mentioned regarding your outlook for the year. So if I look at your press release, it says that earnings from continuing operations before special items are expected to be in line with the prior year. You're talking about earnings per share and not the actual operating income number correct?

Patrick Unzicker -- Chief Financial Officer

Correct, earnings per share.

Jeff Silber -- BMO Capital Markets -- Analyst

Got it and so operating income in theory should be up on a year-over-year basis but offset by the increase in tax rate?

Patrick Unzicker -- Chief Financial Officer

Correct.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay, great. Thank you for that. And then I know you're not going to be putting up the quarterly numbers into your Q, but unfortunately, we have to release our forecast before that comes out. Is it possible to at least get fiscal first quarter '18 [ph] revenue and fiscal first quarter operating costs so we can see the base that you're using for your outlook?

Patrick Unzicker -- Chief Financial Officer

Yes, well, we should be able to get that to you. We'll follow up after the call.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay, fantastic. Thanks so much.

Operator

Ladies and gentlemen, this does conclude our question-and-answer session. And I would like to turn the call back over to Lisa Wardell for closing remarks.

Lisa Wardell -- President and Chief Executive Officer

Yes, I would just like to say thank you all for your support of Adtalem Global Education this fiscal year and we are looking forward to fiscal '19. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 42 minutes

Call participants:

Beth Coronelli -- Investor Relations

Lisa Wardell -- President and Chief Executive Officer

Patrick Unzicker -- Chief Financial Officer

Jeff Silber -- BMO Capital Markets -- Analyst

Corey Greendale -- First Analysis -- Analyst

Peter Appert -- Piper Jaffray -- Analyst

Nick Nikitas -- Robert W. Baird -- Analyst

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