Adtalem Global Education Inc (ATGE) Q4 2021 Earnings Call Transcript

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Adtalem Global Education Inc (ATGE 0.36%)
Q4 2021 Earnings Call
Aug 19, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Adtalem Global Education Fourth Quarter Fiscal Year 2021 Earnings Call. [Operator Instructions]

I will now turn the conference over to our host, John Kristoff, Vice President of Communications and Investor Relations. Thank you. You may begin.

John Kristoff -- Vice President, Investor Relations

Thank you. I'd like to remind you that this conference call will contain forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, with respect to the future performance and financial condition of Adtalem Global Education that involve risks and uncertainties. Actual results may differ materially from those projected or implied by these forward-looking statements. Potential risks, uncertainties and other factors that could cause results to differ are described more fully in Item 1A Risk Factors of our most recent Annual Report on Form 10-K filed with the SEC and our other filings with the SEC. Any forward-looking statement made by us is based only on the information currently available to us and speaks only as of the date on which it was made. We undertake no obligation to publicly update any forward-looking statement whether written or verbal that may be made from time to time whether due to new information, future developments or otherwise, except as required by law.

During today's call, our commentary will refer to non-GAAP financial measures, which are intended to supplement, though not substitute for our most direct comparable GAAP measures. Our press release, which contains the GAAP financial and other quantitative information to be discussed today as well as reconciliation of GAAP to non-GAAP measures is available on our website. Please note that all financial results and comparisons made during today's call are on a continuing operations basis, exclude special items and are in comparison to the prior year period, unless otherwise stated.

Telephone and webcast replays of today's call are available for 30 days. To access the replays please refer to today's press release. We'll begin today's presentation with prepared remarks from Lisa Wardell, Adtalem's Chairman and Chief Executive Officer; Bob Phelan, Interim Chief Financial Officer; and Steve Beard, Chief Operating Officer. Following the prepared remarks, we will have a question-and-answer session.

And with that, I'll now turn the call over to Lisa.

Lisa W. Wardell -- Chairman and Chief Executive Officer

Thank you, John. Thank you all for joining us on our fourth quarter and full year 2021 earnings call. Fiscal 2021 was a year of significant progress at Adtalem as we continue to strengthen our position as a leading workforce solutions provider. This year, we further extended our mission to be the market leader in healthcare education, helping employers address the critical workforce shortages and talent gaps that exist in the medical and healthcare sectors, while continuing to expand access to education within diverse communities. With the completion of the Walden acquisition, we are even better positioned going forward to address the increasing demand for healthcare workers and we are uniquely positioned to help underserved communities.

Before we get into the results for the quarter and fiscal year, I wanted to briefly outline our agenda for today's call. I'll start off by discussing our results for the fiscal year and quarter, our decision to begin exploring strategic alternatives for our Financial Services segment and the ongoing CEO transition. I'll then hand over to Bob to discuss our results in greater detail. Steve will then conclude by discussing the successful close of the Walden transaction, which we announced on August 12 and perspective on future growth under his leadership of the incoming CEO.

The path of the COVID-19 virus and the broader macroeconomic environment remain unpredictable and the alarming rise in the new cases and hospitalizations related to the Delta variant magnify the increasing need for skilled healthcare workers particularly in underserved communities. We are energized that Adtalem will be able to play an even greater role in solving these worker shortages through the increased scale and differentiated capabilities made possible by our acquisition of Walden.

Now turning to our results for the quarter and the fiscal year. Starting with the fourth quarter. We had a solid finish to the year as our strategy continued to deliver results. Our strong financial performance was driven by increasing demand for our programs and offerings, strong student outcomes across our Institutions and Program and previous investments in marketing. Financial Services delivered particularly strong performance with nearly 18% revenue growth in the quarter as the leadership changes and prior investments continue to drive improved operating performance. Our full year performance was in line with our outlook, despite lingering COVID-19 headwinds. Our Healthcare institutions performed well as strong student outcomes continue to drive demand for the programs. New student enrollment at our Medical and Veterinary institutions, for example, grew 12% in the May session.

Starting with the Medical and Healthcare segment, at Chamberlain, new student enrollment increased approximately 4% in the May session with growth in total student enrollment of about 5%, driven by growth in our campus based BSN and doctor level programs. We continue to see strength in total enrollment across our campuses including even weekend and hybrid options. We also had the cap on our New Orleans program lifted, while our new Brunswick campus had their cap increased. In May, Chamberlain and LCMC Health established a program to address LCMC's workforce needs. This innovative Call-to-Care Scholars Program is the first of its kind nursing program that addresses the need for more nurses by expanding access for RNs to obtain a BSN degree. Through a forgivable loan program LCMC Health will fund 100% of tuition costs for up to 90 BSN students per year through this alliance with Chamberlain, in exchange for those students committing to work for LCMC Health for up to three years after completing graduation and passing the OnCourse exam. And just last week we signed an agreement with Emory Healthcare in Atlanta, one of our most innovative and forward thinking partners. Emory is working to address the enormous nurse staffing challenges across the country and is committed to supporting their experienced registered nurses achieve a BSN. Emory chose to partner with Chamberlain based on the depth and quality of its RN to BSN program and the superior student outcomes that Chamberlain continues to demonstrate in all of its nursing programs. These partnerships are perfect examples of our Workforce Solutions Provider strategy in action.

In our medical and veterinary schools May session, new student enrollment increased 12%, the highest May session new students are starting in over six years. Total student enrollment declined 1% as we continue to work through the pandemic induced backlog of students waiting to begin clinicals in Q4. I also want to say I'm very proud of the more than 1,000 Ross Med and AUC students who graduated in May, an incredible achievement in the face of the pandemic. First time residency match rates at Ross Med and AUC were both 91%. Historically Ross Med and AUC graduates have entered primary care with the physician shortage is predict -- projected to be most severe at twice the rate of their US medical school graduate counterparts and that trend continued for our 2021 graduates.

To round out the Medical and Healthcare segment, Ross Med's May session new enrollment was in line with last year's strong May session, reflecting continued interest in the veterinary profession and returns on previous investments in student support and marketing. We believe that the strong demand from veterinarians will continue post pandemic.

Turning to our Financial Services segment. Strong revenue growth continued in Q4. Our ability to capture demand generated by strong secular trends delivered double-digit revenue growth. We're also establishing prominent growth factors to enable expansion and diversification into new markets. Investments in new offerings are positioning the segment for long-term growth. With respect to each of our individual programs, ACAMS, the premier anti-financial crimes organization continued to see strong demand in the fourth quarter. Non-conference revenue increased 19% in the quarter driven by demand for compliance certification. In Q4, year-over-year conference revenue was substantially higher as ACAMS held its first in-person conference since the start of the pandemic. The Australia Conference in June was the inaugural event in the region and successfully hosted nearly 260 in-person attendees. The next planned in-person event is the Las Vegas Conference scheduled for the end of September for both in-person and virtual participants. The pandemic remains a dynamic situation and we will continue to monitor it closely.

The favorable mortgage environment continued in the fourth quarter and OnCourse Learning leveraged its leading position to drive strong mortgage pre-licensing sales results. Continuing education sales also grew as businesses are retaining a high number of mortgage loan offices to meet refinance and new purchase mortgage needs. OCL is well positioned to drive long-term growth as we continue to build new relationships and expand existing ones. Becker continues its leading position in the CPA test preparation market. Becker CPA test preparation sales grew slightly in the quarter as hiring them on large CPA firms and our institutional clients improved. Becker is poised to capture future CPA review demand as the test taker market returns to pre-COVID levels. Becker's continuing education offerings performed well and remain a source of future growth attracting B2B and B2C customers.

In July we named Josh Braunstein as President and Managing Director of Becker in addition to is role as President of OCL. Josh was the interim leader at Becker, and he will continue to scale and leverage the two organizations core competencies and strengths to help drive continued growth.

On August 4, we announced that we are beginning to explore strategic alternatives for our Financial Services segment. This decision is consistent with our long-standing commitment to delivering long-term shareholder value and is a natural progression of our efforts to focus the portfolio on the healthcare industry. Each of the brands within our Financial Services portfolio are the leaders in their respective markets. Together they comprise a premium platform in an industry with attractive tailwinds as the regulatory and compliance burdens on the financial services industry proliferate, driving increased demand for the unique solutions that these businesses offer.

As we said at the time of the announcement. no timetable has been established for the completion of the strategic review. And as the Adtalem Board approves, specific action or otherwise concludes the strategic review, we will disclose further developments to our stakeholders.

I want to take this opportunity to reiterate my thanks to the entire Financial Services team whose hard work and dedication have created a highly attractive set of businesses, enabling us to take this path. I am extraordinarily proud of the teams at ACAMS, OCL and Becker. Alongside the Financial Services news, we also announced on August 4 that Steve Beard will succeed me as the CEO. And I will transition to the role of Executive Chairman of our Board of Directors, effective September 8. It has been a great honor serving as the CEO of Adtalem over the last five years. During that time we have redefined the company's identity, built a diverse inclusive and mission-driven culture, streamlined our portfolio of institutions and brands, delivered strong returns and value to our shareholders and repositioned the company to become a pure play healthcare educator through our successful acquisition of Walden University, which we'll discuss in further detail later in the call.

Delivering superior academic outcomes has been a primary focus for Adtalem throughout my five-year tenure as CEO. And I am immensely proud of everything we've achieved. This year first time residency match rates at Ross Med and AUC were both 91%, more than 70% of our 2019-2020 medical graduates chose to enter critical roles in the primary care across all 50 US states and Puerto Rico and at Chamberlain, we have received -- we have first time NCLEX pass rates of over 91%. These outcomes demonstrate that our dedication has paid off and we remain committed to building a pipeline of highly qualified talent to solve complex issues in the healthcare industry. Adtalem is in a position of strength and it's set up for long-term growth.

Following a solid end to the year, I am so excited about the future of Adtalem under Steve's leadership. Many of you have witnessed Steve's operational and strategic expertise over the last four years in the various positions he's held at Adtalem, first serving as our General Counsel and then as our Chief Operating Officer. Steve's leadership has been instrumental as we divested non-core assets such as Adtalem Brazil, DeVry University and Carrington College. Repositioned our financial services companies for long-term profitable growth, attracted key leadership talent to the company and energized and aligned the team around our enterprise strategy. Under Steve's leadership of the Financial Services segment, the brands have enhanced their market leadership positions diversified and expanded their product portfolios and customer basis and recruited world-class talent and leverage best-in-class capabilities across the segment, resulting in double-digit revenue growth and expanded operating margins,

Steve also spearheaded our successful acquisition of Walden and drove the integration planning process marking a pivotal step in expanding our scale as a leading workforce solutions provider. Navigating leadership transitions is a core competency of a highly effective Board and I am gratified that a well designed and well executed succession plan has presented the opportunity to promote an internal successor who has been instrumental to the strategic direction and execution of Adtalem for the last four years. I'm looking forward to continuing to partner with Steve, my fellow directors and our leadership team to continue driving results and superior student outcomes.

Now I'd like to turn over to Bob to discuss our results in further detail, after which Steve will provide some thoughts on recent announcements and the year ahead.

Bob Phelan -- Interim Chief Financial Officer

Thank you, Lisa, and hello everyone. We delivered fiscal year 2021 revenue growth in the middle of the range of our prior full-year outlook and EPS growth, near the top of that range. Fiscal 2021 revenue increased 5.7% to $1.1 billion, driven by growth in both Medical and Healthcare and Financial Services. Diluted earnings per share from continuing operations excluding special items for the fiscal year 2021 was $2.98, a 30.7% increase from the prior year. In the fourth quarter, revenue increased 7.9% to $280.4 million and strong demand across our businesses driven by the strength of our student outcomes and our investments in marketing and new offerings.

Cost of educational services was $125.6 million in the fourth quarter, an increase of 8.3% compared with the prior year. Student services and administrative expense was $107.9 million in the fourth quarter, a 4.1% increase when compared with the prior year. Consolidated operating income excluding special items in the fourth quarter increased 17.1% to $46.9 million, primarily driven by increased revenue and operating leverage across the business.

Net income from continuing operations excluding special items was $35.1 million, a 14.9% increase compared with the prior year and diluted earnings per share from continuing operations excluding special items was $0.70 compared to $0.58, a 20.7% year-over-year increase.

Now turning to our segment results for the quarter. In Medical and Healthcare, revenue for the vertical was $223.5 million, a 5.7% increase compared with the prior year. Revenue in Chamberlain in the fourth quarter increased 5.3%, compared with the prior year period, driven by continued growth in new student enrollment. New and total student enrollment increased 3.6% and 4.6% respectively for the May session. Revenue for the Medical and Vet schools in the fourth quarter increased 6.3%, compared with the prior year, primarily driven by new student enrollment growth. New student Med and Vet enrollment in the May session grew 12.3%, while total enrollment in the session decreased 1.2%. As Lisa mentioned, total enrollment was negatively impacted by the clinical placement headwinds we view as transitory. Medical and Healthcare segment operating income excluding special items for the fourth quarter was $41.3 million, a 3.4% increase. The increase was driven by higher revenue in the segment, partially offset by higher operating costs.

Turning now to our Financial Services segment. Fourth quarter revenue was $56.9 million, an increase of 17.8% compared with the prior year, driven by revenue growth at ACAMS and OnCourse Learning and Becker. ACAMS revenue increased as the non-conference certification offerings continued to perform well and conference revenue began to show a recovery. OnCourse Learning's continued focus on execution in a favorable mortgage market and strength in its continuing education business drove increased revenue in the quarter. Becker's revenue increase was driven by growth in its continuing education program offerings and an increase in CPA exam prep. Fourth quarter operating income excluding special items in the Financial Services segment increased 29.8% to $11 million.

Turning now to our balance sheet. We ended the fiscal year with cash and cash equivalents of $494.6 million and outstanding bank borrowings under our existing Term Loan B of $291 million. We repurchased 481,000 shares in the fourth quarter for a total of $18.4 million. In fiscal year 2021, we repurchased 2.9 million shares for a total of $100 million. As of June 30, 2021, we had 49.3 million shares outstanding.

Turning to cash flow in the fourth quarter. Net cash provided by continuing operations was $56 million. Our capital expenditures for the quarter totaled $13.8 million. As a result, free cash flow in the fourth quarter was $42.1 million. As a reminder, we define free cash flow as cash provided by continuing operations less capital expenditures. For the full fiscal year, net cash provided by continuing operations was $223.2 million, capital expenditures totaled $48.7 million resulting in a free cash flow of $174.5 million, compared with the free cash flow of $105.4 million in the prior period. As discussed -- as previously discussed, we continue to expect significant free cash flow growth in the coming years. Post Walden integration, we would expect the Adtalem to generate over $300 million of free cash flow on an annual basis. The strong free cash flow generation supports our commitment to delever the balance sheet to below 2 times net leverage within 24 months.

Moving on to our outlook. With the close of the Walden acquisition we will present our future financials on an adjusted basis. For the full fiscal year 2022, we expect revenue to be within the range of $1.685 billion and $1.735 billion and adjusted diluted earnings per share of $4.20 to $4.45 from continuing operations excluding special items.

With that I will now turn the call over to Steve.

Stephen W. Beard -- Chief Operating Officer

Thanks, Bob. I'm honored to serve as Adtalem's next CEO and to lead the organization during such an exciting and pivotal time. Over the last four years, Lisa and I have worked closely together, as she led the company's repositioning to a leading workforce solutions provider, with the scale to help solve complex challenges for our employer partners. Any one who works with Lisa, know she is deeply committed to high performance and positive social impact. Her leadership has resulted in superior student outcomes and significant value creation for our shareholders, leaving us well positioned for long-term growth.

On behalf of the entire Adtalem family, I want to thank Lisa for her extraordinary contributions to our collective mission. Whatever success we enjoy in the future, rest fully and entirely on the strength of the foundation she's built. Thank you, Lisa. I look forward to partnering with you as Chairman of the Adtalem Board.

Last Thursday, we announced the successful close of our acquisition of Walden University, positioning Adtalem as a leading healthcare educator, providing more license positions than any other school in the United States and having the largest undergraduate and graduate nursing enrollment in the United States. This transaction is a pivotal step in expanding our scale as a workforce solutions provider and enables us to better address critical workforce shortages and in equities that exist in the Healthcare sector. As you know, there continues to be strong demand for healthcare practice and healthcare support professionals, with demand currently exceeding supply by 44% and 9% respectively. With the concentration of online graduate level health and behavioral sciences programs that are highly complementary to our core curriculum, Walden significantly expands our national healthcare education footprint and will further enable us to reimagine the future of healthcare education.

Walden immediately strengthens our core nursing offering and allows us to expand into attractive high demand adjacencies, including the social and behavioral sciences, while also extending the customer life cycle from pre-licensure programs to graduate and advanced degrees. All of this will have a direct benefit to our employer partners, make us more competitive and ultimately generate significant long-term shareholder value. Walden, is a high-quality asset with market leading programs and innovative business model and dynamic leadership. We're pleased to have completed the acquisition in the first quarter of fiscal 2022 as planned.

Turning to our financial expectations for Walden. We're excited about the incredible opportunities for revenue and margin expansion. We remain extremely confident in achieving at least $60 million in annual run rate cost synergies. Moreover, we expect to realize half of those run rate savings within the first year. Post integration, we believe we will generate more than $300 million of free cash flow annually. And significant adjusted earnings per share accretion of $1.15 in the first 12 months and $2.35 by year four. Our integration of Walden kicked off immediately after close and we're delighted to welcome more than 6,000 new Walden colleagues to Adtalem. We're also pleased to officially welcome Paula Singer, who will continue to serve as Walden's President, managing strategy and operations for the University.

In closing, I am bullish on Adtalem's future and excited about our next phase of growth. With our acquisition of Walden now complete, we are establishing a market leading position in the rapidly growing healthcare sector, and we do so while continuing to deliver superior academic outcomes for our students, outcomes that propel the kind of successful career journeys that change lives and lift communities. Our role in helping to meet the significant demand for diverse and qualified healthcare professionals, is one of the more compelling attributes of our strategy. These talent shortages, worsened by the pandemic create a tremendous market opportunity for qualified graduates in the health and behavioral sciences professions. We are extremely gratified to be able to play an increasingly important role in meeting this market demand. And do so at a time when global health has never been more important.

And with that, I'll turn the call over to the operator for Q&A.

Questions and Answers:

Operator

Thank you. And ladies and gentlemen, at this time, we'll be conducting our question-and-answer session. [Operator Instructions] Our first question comes from Jeff Silber with BMO Capital Markets. Please state your question.

Jeff Silber -- BMO Capital Markets -- Analyst

Thanks so much. And Lisa, I want to wish you all the luck in the world and thank you for everything and Steve, best of luck to you as well in your new role. It seems you talked on the call. I'm sorry about that. You talked a bit on the call about some of the clinical issues that you've been facing in some of the programs and you're hoping that they're just transitory. Can you give a little bit more color what's been happening with that and when do you think they will become non-transitory?

Lisa W. Wardell -- Chairman and Chief Executive Officer

Yes, absolutely. Let me start by saying this is in the medical schools. So those clinicals for medical students at AUC and Ross who are -- who just finished their basic sciences, so not on the other -- that side of that Med Health. So as we talked about last quarter, there was a backlog, simply because obviously there were hospitals that were taking clinical patients through COVID and sort of getting to a place where clinical could be in place. Certainly we then had a backlog of students and then of course we got students coming through as enrollments have increased, and so it's really getting through that backlog into those hospital systems, which now have -- for the most part figured out mostly in April surge area, figured out how to do both, because of course it's helpful for them to have the -- frankly those plenty [Phonetic] students in there and working, etc. And so if you think about it, now we've got some, we prioritize those students who were waiting, right. We've got more students coming to the queue, but we see that over the next couple of quarters being able to level out.

One of the things that the team has been able to do is actually expand our clinical partnerships through this whole process, because of course, we were having to sort of move regionally as COVID surged. I'm sure there'll be more of that with the Delta variant and sort of the risk there. So in the medium and long-term Jeff, this is going to be beneficial for us because it really does expand the number of slots that we have across the network of our clinical operation. In the short-term, we've got to get those newer students through step one and into clinicals, some of them taking longer to get there and then those students who are in the backlog into clinicals. So another couple of quarters I think, last quarter we said, this was going to be something that was going to rectify in FY '22. We got a bit of that done this past Q4 and we'll see more of that as we go into FY '22.

Jeff Silber -- BMO Capital Markets -- Analyst

Thank you.

Operator

And our next question comes from Jeff Meuler with Baird. Please state your question.

Jeff Meuler -- Baird -- Analyst

Yes. Thank you and congratulations to both of you. So just on the starting point on the guidance, just trying to understand like what the Adtalem growth is? So you said, if the transaction closed at the end of the quarter, I think it would have been an $0.86 contribution, if it -- on a 12-month basis, it's $1.15. So I guess, do we split the difference or just anything that you can say about what kind of Adtalem growth is assumed in the guidance?

Bob Phelan -- Interim Chief Financial Officer

Yes, I think the best answer is to split that difference, and you wind up at about $1 in terms of the incremental EPS accretion at that point.

Jeff Meuler -- Baird -- Analyst

Okay. So can you give us any sense of, you have, I guess three different pieces. You have [Indecipherable], Adtalem Medical and Health, you have acquired Walden. And then I guess the Divestco [Phonetic] financial services is still on the guidance. Can you give us any sense of what kind of growth you're expecting for different parts of the business, especially since that part of what's in guidance is expected no longer be in the company by the end of the year?

Stephen W. Beard -- Chief Operating Officer

Yes, I think at this point, what I would say is that our guidance is relatively consistent with what we've done with guidance in the past, which is in the 5% to 7% range, whether you're talking about the Adtalem -- previous Adtalem or Adtalem was Walden. So that's the way I would look at that range, on a low and high end.

Lisa W. Wardell -- Chairman and Chief Executive Officer

And just to jump in a little bit on the Financial Services side, obviously, they had a great quarter and certainly for both we don't break them out, but certainly ACAMS and OCL looking at double-digit growth in those organizations and Becker also grew. So we expect that trajectory to continue into FY '22.

Jeff Meuler -- Baird -- Analyst

Okay, and then just given your response sort of the last question that it sounds like the clinical headwinds should lessen and your -- as you said in the prepared remarks, you're getting back to some in-person conferences. The COVID estimated impact was a $0.50 EPS headwind in 2021. What are you assuming in the 2022 guidance? Just wondering how much of the kind of Adtalem growth in the guidance is coming from a lessening of COVID headwinds versus maybe more core growth?

Lisa W. Wardell -- Chairman and Chief Executive Officer

Yes, I'll let Bob jump in on the EPS piece, but let me just say from sort of those risks and the continuing COVID, you can sort of see in Med Health that the total students, we're lessening that gap as I said at the clinical get still. But we do have to continue to monitor. Couple of things, right. One on the ACAMS conference that we had a successful in-person in Australia. We are scheduled to do so in Vegas and you'll recall that Jeff that that September conference is a big, when we also have that's going to be hybrid. So we have options both ways. But we will need to continue to look at that. And just in general, across nursing enrollment, right. To-date, we've really been able to navigate that. And in fact, the demand has been quite strong, but we all know right that nursing, the profession, in general, right, just like all healthcare workers is seeing some strategic things like that. So, that's how I think about sort of the overall risks from a qualitative perspective and I'll let Bob jump in on the guidance.

Bob Phelan -- Interim Chief Financial Officer

On the guidance, I guess, what I would say is, as part of the reason on the low end that we're actually at $4.20, because if you just did the calculation you come up slightly higher than that, but with the variation due to not knowing where we're going to be with COVID, we wanted to provide a little bit more of a wider range there on the guidance, and that's both on the low-end as well as the high-end.

Jeff Meuler -- Baird -- Analyst

Okay and then just one last one from me. Not sure if it's best for Steve really or maybe if you both want to chime in, but I guess why is now the right time for a CEO transition while you have a large divestiture pending and a large acquisition closing. It seems like a lot to -- and you have a Interim CFO for the time being. So it seems like a lot going on to time CEO transition. That's it from me. Thank you.

Lisa W. Wardell -- Chairman and Chief Executive Officer

Got it. So I will start and I'll let Steve jump in. So for me, this is actually a perfect time and I think about my time in this season in this role, a little over five years now. So if you think about the portfolio where it started, how we thought about streamlining that portfolio and where we wanted that focus for the organization to be as we gravitated and in fact really proved out our right to win on the Med Health care side, it made sense to pursue this transition. As you know, with this transition -- I mean transaction as well as most transactions in this space, we are 10 months to really do two things: one, prepare for the synergies and two, to prepare for what does the future look like and who is best served to take the fund that next piece of the journey. And as I said internally here at Adtalem, Steve had been a partner in this journey for almost a little over actually four years now. So he is not coming into the seat without a great understanding both of our mission and where we need to really focus from an academic outcome perspective that's important both for our internal stakeholders, but also external, I mean, that's why we're here and why we come here every day, but he also understands the challenges across the institution and what we really need to do to drive synergies. And so, from my perspective, this really derisks this entire transition, because I am not going anywhere, I am going to be in that Executive Chairman role. I'm going to be working with the team and with the Board to make sure not only that this transaction and integration is successful, but also to continue to tell our story as it relates to what we're really trying to do a change in the healthcare education industry. That's my [Indecipherable]. I'll let Steve jump in.

Stephen W. Beard -- Chief Operating Officer

Not a lot I can add to that except to reiterate that both sides of the leadership transition are really intended to ensure continuity and no lost momentum over time. So as Lisa pointed out, I've been involved in all of these critical activities from their inception very, very immensed in the near-term activity, whether it's related to integration with Walden, whether it's related to the divestiture of Finserv assets, whether it's related to what we are attempting to do with this coming fiscal year from a performance perspective. So I'm grateful for the opportunity. I'm equally grateful to have Lisa as a partner as the Chair of our Board, that's a critical role as we go through these activities and you can believe I'm not letting her off the hook anytime soon.

Jeff Meuler -- Baird -- Analyst

Sound good, thank you.

Operator

Thank you. Our next question comes from Alex Paris with Barrington Research. Please state your question. Alex Paris, your line is open. Please unmute yourself.

Alex Paris -- Barrington Research -- Analyst

Yes, sorry I was on mute. I apologize. Congratulations on the strong finish to the year and special congratulations to Steve and Lisa. Steve on the promotion and Lisa on your numerous accomplishments during your tenure. It's been great working with you.

Lisa W. Wardell -- Chairman and Chief Executive Officer

Thanks Alex.

Alex Paris -- Barrington Research -- Analyst

So, similar question to the last, why is now the right time for Financial Services strategic review to start with.

Lisa W. Wardell -- Chairman and Chief Executive Officer

Yes, great question. So I will start off and I'll let Steve jump in. So we have always said that as we think about the portfolio, we want to make sure that we are focused on those areas where we can really drive momentum across the entire portfolio. Obviously when we signed the transaction to acquire Walden University, we really had shifted the center of gravity of the organization to Medical and Healthcare, that certainly doesn't mean that we believe the financial services, don't have a mission always said right, that we are helping people remain relevant in their current roles and have a career journey and not just a job and we do that on both side. But in terms of timing, this is a time where these businesses are on a great growth trajectory, where a lot of the investments that we've made and talked about with you all quarter-over-quarter in and quarter out, have -- are starting to really come to fruition here whether it's marketing, technology, etc. And we also have the right leadership and teams in those organizations now, which as you all know, we went through those transitions over the last year or two.

So from our perspective, this is the right time for us to determine a home that can really focus on them and the Financial Services programs and offerings that they have.

Stephen W. Beard -- Chief Operating Officer

Yes, I would concur with all of that, the overall trajectory of the Finserv businesses is one that we're quite proud of at this point. We feel really good about the leadership that are in place. We think that we've got better visibility in choosing the forward momentum of those businesses. COVID notwithstanding and given the investments we've made in the -- was down core healthcare business, we think it's a great time to try to realize that value for our shareholders and invite home for those businesses, where they can continue to grow and continue to be the beneficiary of investments to grow consistent with their trajectory. So we're excited about that. Since the announcement, we've gotten lots of inbound interest. We think these are highly attractive assets that are going to track ton of interest, from high quality tutors. So we're excited about that process and we believe it will end in a way that is highly valuable to our owners.

Alex Paris -- Barrington Research -- Analyst

Great. Well, thanks for that additional color. A question about Walden. At the time of the acquisition announcement last September, you gave trailing 12 months revenue and adjusted EBITDA. Can you do that now on a trailing 12 month basis or will you do that now?

Stephen W. Beard -- Chief Operating Officer

Now that's -- I mean, that's something we have not disclosed at this point. So I would just say we don't update at this time.

Alex Paris -- Barrington Research -- Analyst

All right. And then is any of the assumptions changed? You had posted expectations for free cash flow in year one through four and adjusted EPS contribution year one through four, it sounds like that hasn't changed at all?

Lisa W. Wardell -- Chairman and Chief Executive Officer

That's correct. The only thing where we've said we're seeing at the beginning of this was, we obviously will have not the full 12 months in this fiscal year. Just a month and a half, but if you right-size the EPS on that, absolutely, it's -- nothing has changed.

Alex Paris -- Barrington Research -- Analyst

Okay, great. And then the last question and I'll let you go is, I think you said $60 million with the synergies. I just didn't jet it down quick enough. Is it half in fiscal '22 and then the full $60 million in fiscal '23 and beyond. Is that what you said?

Stephen W. Beard -- Chief Operating Officer

That's correct. I mean, there obviously we expect to receive the full $60 million within the first two years of the transaction. We expect to realize half of that in the first year. We don't necessarily expect to realize that on a ratable basis across the year, given we just taken possession of the asset. So we expect that to be back-end loaded in year one, but we are committed to delivering the $60 million within 24 months at close.

Alex Paris -- Barrington Research -- Analyst

Great. And then what's the expectation for the one-time costs associated with those synergies?

Bob Phelan -- Interim Chief Financial Officer

The estimate was -- it was, we've already incurred roughly $15 million. We estimate another $30 million for the current year. And then there will be roughly another $15 million in fiscal '23.

Stephen W. Beard -- Chief Operating Officer

$60 million in aggregate.

Alex Paris -- Barrington Research -- Analyst

Okay. So $60 million in synergies and at a one to one kind of cost basis?

Stephen W. Beard -- Chief Operating Officer

One-time $60 million cost for a $60 million run rate synergies.

Lisa W. Wardell -- Chairman and Chief Executive Officer

Annually.

Stephen W. Beard -- Chief Operating Officer

Annually.

Bob Phelan -- Interim Chief Financial Officer

Annually.

Alex Paris -- Barrington Research -- Analyst

Right, annually. Got it. All right. That sounds great. Thanks again. I appreciate the additional color.

Stephen W. Beard -- Chief Operating Officer

Of course, thank you.

Operator

Our next question comes from Gregory Pendy with Sidoti. Please state your question.

Gregory Pendy -- Sidoti -- Analyst

Hi guys, thanks for taking my question. Just one quick one. I mean, just in light of the annual guidance, you said on the prior question, it's not going to happen ratably. Can you give us a little bit of color on how to think about the cadence as it is back half loaded as you sort of build to that $30 million in synergies just that we have from a quarterly standpoint a way to think about it?

Bob Phelan -- Interim Chief Financial Officer

I think there is a number of things, one is what Steve just went through in terms of the fact that the $30 million of synergies would be back-end loaded, really for the first year. So that's one point, but also what Lisa had talked about is with the clinicals, that's another thing that we would be, again looking at a little bit more back-end loaded in terms of getting that back. And then the other thing I should point out is just the fact that we're closing in August on the Walden transaction is that, we've only got a half of a quarter for that. So really once again you're going to see lower numbers in the first quarter relative to that and more in the second, third and fourth.

Lisa W. Wardell -- Chairman and Chief Executive Officer

Greg only thing I would add to that is, sorry, the only thing I would add to that is, we're confident in those numbers, because we are hitting the ground running because we've had 10 months basically, for better or for worse, we had 10 months waiting for regulatory approvals, etc, to really put the planning process in place. So it's not so much when you have the plan. It's just that, as Bob said, we will only have about half of Q1.

Gregory Pendy -- Sidoti -- Analyst

Okay, great. And then just one last final one. If I'm not mistaken, in the past, maybe few years ago, you sold your test prep business for veterinary and if I am correct, can you talk a little bit about the valuation that you received for that as we kind of think about Financial Services and Becker?

Lisa W. Wardell -- Chairman and Chief Executive Officer

Yes, I think you're referring to the Becker Health test prep which was a [Indecipherable] part of that business conference. Coming out in revenues. We can get that for you Greg on the individual call, but not comparable to this type of comparison.

Gregory Pendy -- Sidoti -- Analyst

Got it. Okay, fair point. Okay, thanks a lot.

Operator

[Operator Instructions] Our next question comes from Jeff Silber with BMO Capital Markets. Please state your question.

Jeff Silber -- BMO Capital Markets -- Analyst

I'm sorry, I got cut off earlier. Don't know if this was asked, but you did talk about the Walden impact for 2022. You mentioned that you only have half a quarter's worth this year and how the synergies are going to be back-end loaded. Beyond those two, can we talk about the cadence of the Walden business by quarter? Are there any peaks and valleys that we should be aware of on a seasonal basis?

Lisa W. Wardell -- Chairman and Chief Executive Officer

Yes. So I think in some respects it's a bit like Chamberlain. So it's all about the session. So I may have example there. Q3 or Q1 they had a session in August. They will not have another session or before our Q1 they will not have another session until we get into Q2 for some of their programs. Some of their programs are more interval. So as we start reporting Walden as part of our ordinary course and you'll see that we'll highlight than you'll recall, for example, in July, we have that online only session at Chamberlain. So, it changes the numbers. We'll make sure that we get that to you. So that you don't have to dig for it as we add them to the reporting.

Jeff Silber -- BMO Capital Markets -- Analyst

Are you going to be reporting Walden as a separate segment as well?

Stephen W. Beard -- Chief Operating Officer

I think we have to work on determining how we're going to report segment at this point, that's something that's still in the works at this time.

Bob Phelan -- Interim Chief Financial Officer

The work is underway.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay. But hope but we'll get enrollment data and hopefully revenue and EBITDA data from Walden separately, even if it's not a separate segment.

Lisa W. Wardell -- Chairman and Chief Executive Officer

I think that we will be able to help you understand the trends. But as we do today, right in Chamberlain and Walden, just as we do as we talk about that etc. Have no fee of that. Okay, appreciate that.

Jeff Silber -- BMO Capital Markets -- Analyst

Okay, thanks so much. Appreciate that and best of luck again.

Operator

Thank you. That concludes our question-and-answer session. I'll now turn it back to John Kristoff for closing remarks.

John Kristoff -- Vice President, Investor Relations

All right, thank you everyone for joining us. And as always if you have additional questions sorry. Lisa had closing comments.

Lisa W. Wardell -- Chairman and Chief Executive Officer

I just was going to so thank you to everybody who has bridged supportive of us certainly during my tenure and I have to say, during this last year, the team here at Adtalem reminds that every day and now seem to be Walden team also, we've had a lot of interaction with them. It reminds us every day, why we come here and why we do what we do and that this is really a social mission company and for all of you who are listening to this call, I just so appreciate the support that you've shown me and I'm really excited about partnering with Steve and watching him in this role, and I know that he will be supportive to him. So thank you to all of you for joining our call today.

John Kristoff -- Vice President, Investor Relations

Thanks, Lisa. That concludes our call. Thank you, everyone.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

John Kristoff -- Vice President, Investor Relations

Lisa W. Wardell -- Chairman and Chief Executive Officer

Bob Phelan -- Interim Chief Financial Officer

Stephen W. Beard -- Chief Operating Officer

Jeff Silber -- BMO Capital Markets -- Analyst

Jeff Meuler -- Baird -- Analyst

Alex Paris -- Barrington Research -- Analyst

Gregory Pendy -- Sidoti -- Analyst

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