Joan Walter - DeVry Education Group Inc. Lisa W. Wardell - DeVry Education Group Inc. Patrick J. Unzicker - DeVry Education Group Inc..

Jeffrey Marc Silber - BMO Capital Markets (United States) Peter P. Appert - Piper Jaffray & Co..

Greetings, and welcome to the DeVry Education Group Third Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Joan Walter. Thank you.

Please go ahead..

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

I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of DeVry Education Group that involve 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 in Form 10-K for fiscal 2016 filed with the SEC and available on our website at www.devryeducationgroup.com. DeVry Group disclaims any obligation to update any forward-looking statements made during the call.

During today's call, we may refer to non-GAAP financial measures, which are intended to supplement, though not substitute for our most directly comparable GAAP measures.

Our press release, which contains the financial and other quantitative information to be discussed today, as well as a reconciliation of non-GAAP to GAAP measures, is also available on our website. Telephone and webcast replays of today's call are available until, May 19th. To access the replay, please refer to today's release for that information.

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

Thank you, Joan. Good afternoon, everyone, and thank you for joining us on today's call. This is a notable earnings call for me as it marks one-year, since I assumed the CEO position in May of 2016. We have accomplished a great deal in a short period of time, and we're well positioned for the future.

I told you that we were going to have a heightened student-centric focus, and we released our voluntary Student Commitments last fall. I told you that we were going to stabilize revenues and increase operating income and EPS and we are making good progress toward our goal.

We slowed the rate of revenue decline versus last year, we've increased operating income by almost 11% and earnings per share by $0.24, excluding special charges year-over-year through Q3. I told you that we were focused on cost efficiencies and we have reduced home office cost by 6.8% since this time last fiscal year.

And finally, I told you that we would resolve our key regulatory issues, and we have addressed those issues and have moved forward with a proactive approach to regulatory matters in government relation. This is allowing us to reshape the national dialog regarding the for-profit Education industry in general, and DeVry Education Group specifically.

We've made considerable progress in executing our strategic plan in the past 12 months. There's no doubt that DeVry Group is a more focused and linear organization operating with a sense of urgency and a heightened sense of accountability and I'm excited about the year ahead as we look to build on our progress to date.

Turning to our third quarter results, our performance reflects our progress in executing our strategy to diversify our revenue exposure to attractive in-demand programs globally, strengthen our program offerings and approaches to serving our students, deliver consistent organic revenue growth and increase efficiency and position us for future operating leverage across the organization.

We enhanced our ability to deliver solid cash flow, while strategically managing our capital allocation. This has included investments aimed at strengthening our programs in promising growth sectors, while increasing the return of capital to our owners.

Our third quarter financial results were in line with our expectations, as we delivered EPS, excluding special items of $0.70 per share. We remain on track to grow earnings for the full year in the mid-teen range. We're achieving that earnings growth by being laser focused on our core priorities.

First and foremost, we're continuing to foster a heightened culture of student-centric focus and academic excellence across each of our institutions. We measure success by student persistence, completion and placement.

We're developing and delivering programs that are aimed at making our graduates stronger job candidates, more qualified residency candidates and expert professionals in their chosen field.

And we're increasingly enhancing access to these programs through a more flexible system that spans in classroom and online learning as we adjust to our students' busy schedules and the need for a hybrid online and on-site learning model.

As part of our set of student commitments announced last year, we're making progress in reducing DeVry Group's exposure to Title IV funding. We remain on track in meeting our goal of limiting the revenue that each of our institutions derived from federal funding to 85% or lower by the end of the fiscal year.

Second, we're continuing to take steps aimed at stabilizing our revenue, increasing operating income and EPS, and growing the intrinsic value of DeVry Group.

Earlier this year, we began to transition our organization to a portfolio management system aimed at elevating accountability across all our operating areas and improving our return on invested capital.

Our portfolio management approach entails that in clear financial performance targets, based on market data of comparable companies for each of our institutions and evaluating them against those goals. We remain focused on stabilizing our revenue by returning to consistent enrollment growth across our institutions.

We'll do this by focusing on achieving our core mission, which is aimed at better utilizing our resources to address the needs of today's students and employers with the goal of filling the global workforce skills gaps that are prevalent in our society.

The realignment of our reporting segments to four core segment, which Patrick will discuss in detail, reflects our current strategic direction and where we intend to invest and grow organically moving forward. We're also changing the name and branding of our parent organization to better reflect who we are today and where we're headed in the future.

DeVry Education Group operates in a very different macro environment than in the past, and we have a revised focus, segment profile, operating philosophy and growth plan, which will be reflected in our new corporate branding.

Third, we're continuing to move forward in leveraging our organizational synergies, and broadening efficiency initiatives across our enterprise. We conducted a compressive evaluation of our operations aimed at ensuring we do business in an efficient manner in all areas.

Our review identified several opportunities that will allow us to operate smarter, not only be more profitable but also provide a better student experience. Our efficiency initiatives we're implementing are intended to be ongoing and are centered on driving best practices across our organization.

During the quarter, we again reduced costs at our home office with overhead spending decreasing 8% year-over-year, excluding special items. We also reduced costs at DeVry University, DeVry Brazil and Carrington.

Cost in the Medical and Healthcare and Professional Education segments increased slightly, but those increases reflect our investment in growth institutions and companies in order to further differentiate our products from those of our competitors.

And fourth, we remain committed to working directly with a range of stakeholders, including the Administration and Congress to implement regulatory initiatives to strengthen our industry. This is a time of great change in Washington, and we are optimistic that we can be a proactive and authentic voice for DeVry Education Group and for the industry.

I believe we're moving in the right direction and we have the right plan and team in place. We look forward to sharing more detail and insight on our strategic plan at our Investor Day on May 24 in Chicago. We strongly encourage you to attend or listen to the corresponding live webcast.

We continue to receive valuable feedback from fellow owners, and Investor Day will allow us to provide an in-depth overview of our institutions and the strategies we're pursuing to return DeVry Group to sustainable organic growth, while maximizing operating leverage in our business model.

Now, let me review each of our segments beginning with Medical and Healthcare, which is our largest contributor to revenue and earnings. We continue to see healthy and growing demand for a wide range of medical professionals globally and we believe our program offerings are very much in sync with the skill-sets that employers need.

Chamberlain once again delivered solid operating results during the third quarter. New student starts were up nearly 12% in the March session and total enrollment was up more than 7%.

Demand for Chamberlain's programs remained strong because of its excellent reputation, which is a result of consistently delivering programs that graduate well-trained professionals. Chamberlain is an attractive choice for incoming students who wish to enter the growing nursing market.

The Bureau of Labor Statistics projects that 525,000 replacement nurses will be needed by 2022. As a result, Chamberlain is well-positioned to grow for the foreseeable future, and we plan to fully harness the opportunity by strategically investing in new programs in markets where we see the most demand.

Underscoring the strength of the Chamberlain brand and reputation, we've recently announced the establishment of Chamberlain University and the launch of a Master of Public Health, or MPH degree within our new College of Health Professions.

Chamberlain University is the beginning of Chamberlain having two colleges, Nursing and Health Sciences, under one Chamberlain umbrella. This development provides opportunity for us to expand Chamberlain's academic offerings, the MPH degree is just the beginning, and to build on the success of our pre- and post-licensure nursing degree program.

The MPH program enhances Chamberlain's continued focus on providing health and wellness education and improving healthcare policy. We're now accepting applications for the MPH degree program and classes will start in July of 2017.

The College of Health Professions will also add two certificate programs in global health and public health in the near future, pending final approval. We're excited about the broadening of Chamberlain's offerings and the expansion potential it will bring over the long-term.

This is exactly the right strategic positioning to differentiate us from an increasingly competitive market and to allow us to continue to expand in graduate offerings where we excel in terms of academic quality and personalized student services.

In of our medical and veterinary schools, we're making good progress on stabilizing new student enrollments.

While our medical and veterinary schools posted decreased revenue in line with our expectations, I remain committed to my earlier statements that the issues with enrollment are operational and executional in nature and the trends that we are seeing make us quite confident that we understand the causation of the enrollment decline and have a solid plan in place to return the schools to positive enrollment growth.

As many of you know, returning our medical schools to growth is one of our top priorities. These schools are well-respected institutions in the medical community, consistently graduating well-prepared and talented medical professionals who serve in hospital, clinics and private practices globally.

We are seeing signs of improvement from our refocused marketing enrollment efforts. We're generating increased interest from new students and continue to expect to report tangible progress in enrollment growth for the September classes.

We're also making progress in our senior leadership transition at our medical schools, with the recent appointment of Dr. William Owen as Dean and Chancellor of Ross University School of Medicine. Most recently, Dr.

Owen served as Dean of Medical Sciences for AUC and was formerly the Chancellor and Senior Vice President of Health Affairs at the University of Tennessee, where he was responsible for the College of Medicine and its five other health professional colleges.

He also served as President of the University of Medicine and Dentistry of New Jersey, the health education and medical component of Rutgers University.

Ross Med, Ross Vet and AUC School of Medicine are all well-positioned to deliver consistent organic growth in the future, and we remain optimistic that we will continue to inform the national dialog on the need for primary care physicians and Doctors of Veterinary Medicine to serve the lesser served communities in our country.

In our Professional Education segment, the Becker team continues to focus on further strengthening its well-established brand that serves high demand profession. The Becker team is focused on growing revenues domestically and internationally towards continuing professional education programs and through ACAMS.

The Becker and ACAMS teams are continuing to introduce ACAMS programs to the Becker customer base and vice-versa through offering spanning accounting, fraud prevention, risk assessment and anti-money laundering detection and enforcement.

ACAMS is also continuing to expand its presence in Europe and Asia with particular strength among financial institutions and governments who are focused on improving their anti-money laundering capabilities. The integration of ACAMS is on track and we're meeting our benchmarks for operational synergies. Becker recently appointed Dr.

Charles Faselis as the Director of Clinical Skills and Training. Dr. Faselis is the Chief of Staff at the Washington D.C. Veterans Affairs Medical Center and Professor of Medicine at George Washington University School of Medicine and author of more than 100 publications and two books.

In Internal Medicine, he has been instrumental in enhancing Becker's USMLE Step 2 Clinical Skills program offering. Our Technology and Business segment, which is comprised of our schools in Brazil is poised to grow both organically and through acquisitions as we determine the best opportunities to further pursue globalization.

DeVry Education of Brazil continues to achieve healthy persistence levels and student satisfaction scores, but new enrollment growth remains challenged and was down during the quarter due to the reduced availability of funding via the CS program as well as ongoing macroeconomic pressure in Brazil.

We're taking steps to adjust pricings for select programs, while also reducing our cost to better align our expense structure with enrollment and revenue trend. We're also rolling out a range of in-demand programs that have received approval to launch of 20 new programs in the year ahead.

We're seeing the traction from our efforts to introduce a select number of Ibmec's courses at over 200 Damasio location and we're continuing to attract healthy interest among students looking to study for the bar exam.

In May, we will begin classes at our new Ibmec campus in São Paulo, which will expand our access to a broader student population in the primary economic center of the country.

Overall, we continue to believe in a long-term growth potential of our Brazil-based schools, given their strong and established brands, an experienced management team known for acquisition, integration and execution and the projected growth of the Brazilian population versus the current low growth enrollment ratio nationwide.

During the third quarter, in the US Traditional Postsecondary segment, we continue to execute our strategy to transition DeVry University into a leaner and more efficient institution focused on delivering a range of shorter stackable program.

These degree, certificate and boot camp offerings which span the technology, healthcare and business fields are being offered through more flexible access channels with a goal of better fitting into our student schedules and allowing them to strengthen in-demand skills, while retaining their employment.

Our intention is to ensure that DeVry University's students graduate with not only an expertise in their chosen major, but with the skills that will position them as highly valued employees, recognized for using technology to solve problems.

It remains early in the launch of the new program offerings, but we are heartened by the initial interest we've received to-date and we're continuing to see a narrowing of student enrollment decreases. Programs launched over the past 24 months now comprise almost 30% of our new student enrollments.

In March, new enrollments were flat in our technology and engineering programs, which we believe reflects the early impact of our DeVry Tech Path initiative.

The rollout of this program during a period where schools like ITT have shut down has provided us with the opportunities to fill a clear need in the market, and we're well positioned to help students who require an alternative pack to obtaining skills in the technology and engineering-related fields.

As we execute our plan and rollout of additional programs, we've remained committed to maintaining positive economics at DeVry University. During the third quarter, Carrington begin to see encouraging signs with regard to new enrollment.

This is a result of our new student-centric focus and on more effectively differentiating the WASC accredited school from the many other institutions that are facing challenges. Carrington is moving forward in launching shorter stackable programs in select markets, while expanding established programs in markets where there is clear demand.

This includes the launch of our new phlebotomy certification program in select markets as well as the expansion of our Physical Therapy Technician Program and the re-launch of our online Health Information Technology program.

During the quarter, we successfully worked with select states to raise the caps on the number of new students within our vocational and registered nursing programs to address market demand. We're planning to expand registered nursing at five additional locations over the next three years.

We're also seeking opportunities in the allied health market, where we can help students whose schools have closed.

We believe that leadership changes we made during the past year are leading to improved financial results and in fact, the consolidation of marketing enrollment at the school under new leadership is leading to a substantial uptick in online increase, which bodes well for future enrollments.

We remain focused on reducing cost and driving operating efficiencies following the recent streamlining of our management teams from 18 campus teams to 4 regional teams.

Overall, the Carrington team is focused on supporting high quality in-demand program through an efficient infrastructure, which should support operating leverage at the school as enrollments return to growth. Now, before I provide my closing remarks, I would like to turn the call over to Patrick for the financial review..

Well, thank you, Lisa, and good afternoon, everyone. We're pleased to report third quarter results in line with our plan. We continue to make notable progress in driving expense discipline in operating efficiencies across our enterprise, which has supported our ability to deliver improving financial results and solid cash flows.

In turn, we've utilized our cash flows to invest in the academic quality and targeted expansion of our programs, while further strengthening our balance sheet and enhancing returns to our shareholders through our expanded share repurchase program.

As Lisa noted, we see continued opportunity to drive greater efficiency across our operations, which will position us for increased operating leverage as we began to deliver consistent organic revenue growth.

We are increasingly optimistic about our longer-term outlook, given our exposure to a number of growing in-demand sectors globally, spanning healthcare, professional education and technology. We've realigned our reporting segments to reflect our current strategy.

This new reporting structure will provide our owners with greater transparency as we invest our capital in those areas that offer the most growth potential. Specifically, we see our future growth coming from three primary verticals.

Medical and Healthcare, which is characterized by clear supply-demand imbalances globally, where we have a strong history of serving a diverse student population.

This reporting segment includes Chamberlain University, American University of the Caribbean School of Medicine, Ross University School of Medicine and Ross University School of Veterinary Medicine. Our Professional Education vertical will allow us to further diversify our payer mix and leverages the strength of our strong brands and capabilities.

This reporting segment includes Becker and ACAMS. In Technology and Business, this will provide us with numerous opportunities to deliver both traditional degree-granting programs and more modular shorter-term offerings, all aimed at closing the sizable skills gap that is impacting multiple sectors.

This reporting segment includes DeVry Education of Brazil. And finally, we're reporting a fourth segment, U.S. Traditional Postsecondary, which will include the results of DeVry University and Carrington College. Now turning to the specifics of the quarter. Total DeVry Group revenue was down 4.7% year-over-year at $452 million.

Growth at Chamberlain, DeVry Education of Brazil and our Professional Education segment was offset by the continued decline and enrollment at DeVry University and Carrington and prior weakness in enrollment at our medical schools. Total costs, excluding special items for the third quarter, were $397 million, decreasing 4.2% from last year.

Total pre-tax special items in the third quarter amounted to $7.8 million, primarily from restructuring charges at DeVry University, Carrington and our home office. Operating income decreased by 8%, excluding special items, in line with our expectations.

Net income, excluding special items, was $45 million during the third quarter, which resulted in earnings per share, excluding special items, of $0.70, slightly down from the year-ago quarter and in line with our plan. Our effective tax rate, excluding special items, was 17.6% for the third quarter.

Now, I'd like to review our segment performance, starting with Medical and Healthcare. Revenue of $208 million was down 1% in the third quarter as a result of declining enrollments at the medical schools.

Segment operating income, excluding special items, declined by 11.5% over the prior year due to revenue declines within our medical schools and expenses to support growth at Chamberlain. Chamberlain revenue grew 2.4% for the quarter. For March, new students increased nearly 12% and total students grew nicely at 7%.

We saw strength in enrollment growth from our RN to BSN degree completion program and Master of Science in Nursing degree with the Family Nurse Practitioner specialty track. Now looking to the remainder of the fiscal year, we expect mid single-digit new student enrollment growth at Chamberlain.

Revenue at our medical and veterinary schools decreased 5.7% during the third quarter due to declining enrollments. Turning to our Professional Education segment, revenue increased nearly 26% during the quarter, driven by the acquisition of ACAMS.

In our Technology and Business segment, revenue of $62 million increased nearly 29% in the quarter, primarily driven from the benefit of currency. Without this currency effect, revenue would have grown 5.3% in the quarter. The segment's operating income was $5.4 million during the quarter compared to a loss of $1.6 million in the prior year.

And finally, in our U.S. Traditional Postsecondary segment, revenue of $153 million was down nearly 21% in the quarter as a result of declining enrollments at DeVry University and Carrington. The segment operating income was breakeven for the quarter, which was down about $1.7 million from the prior year.

Revenue at DeVry University declined 24% to $119 million during the quarter, driven by continued enrollment declines. In March, undergraduate new student enrollments decreased 14.3%, while total students declined 20.9%. We narrowed the rate of decline as we differentiate our programs offerings and focus on the diversity of our payer mix.

We continue to reposition DeVry University to becoming leaner, more profitable institution. In the third quarter, excluding special items, we recovered 89% of expenses for every dollar of lost revenue for a total reduction of cost of $33 million.

We remain diligent in reducing expenses and expect to continue to achieve a very high rate of recovery in excess of 90% for the full fiscal year. Carrington revenue declined 8.3% during the quarter. New students declined 8.1% and total students decreased by 16.1%.

Looking ahead, we are encouraged by the initiatives that Carrington team is implementing and are looking to return to new student enrollment growth in fiscal year 2018. For the fourth quarter of fiscal 2017, we expect total DeVry Group revenue to be down 3% to 4% year-over-year.

Continued revenue growth, particularly at Chamberlain, DeVry Education of Brazil and positive contributions from the ACAMS acquisition will be offset by the declining revenue to DeVry University, Carrington and our medical schools.

Fourth quarter operating costs before special items are expected to decline 4% to 5% versus the prior year as a result of cost reductions at DeVry University, Carrington and home office, offset somewhat by ACAMS.

We expect to incur additional restructuring charges in the fourth quarter of approximately $10 million to $15 million, as we continue to right-size operations to better align with enrollment levels. In fiscal year 2017, we expect our effective income tax rate from operations to be in the 20% to 21% range before special items.

Now turning to our balance sheet and financial position, cash flow from operations for the nine months of fiscal 2017 was $169 million, which was negatively impacted by the FTC cash settlements. Our cash and cash equivalents were $210 million at March 31, while outstanding bank borrowings were $120 million.

We utilized our strong cash flow to reduce our debt by $105 million during the quarter. Our net accounts receivable was $166 million, down 2.6% from the prior year due to declining revenue at DeVry University and Carrington and the timing of cash receipts. Our bad debt as a percentage of revenue remained low at 2.6% compared to 2% last year.

Capital spending for the first nine months was $32.5 million compared to $51 million in the prior year. We're targeting capital spending for fiscal year 2017 to be in the range of $55 million to $60 million, driven primarily by investments in our Medical and Healthcare and Technology and Business segments.

During the third quarter, we returned $14 million to our owners through repurchasing approximately 428,000 shares during the third quarter at an average price of $33.08. This represented a 75% increase in the amount of capital returned to our owners as compared to the second quarter of fiscal year 2017.

The pace of repurchases is supported by our belief that the intrinsic value of DeVry Group shares is higher than our current market valuation. Now let me turn the call back over to Lisa..

Thanks, Patrick. In summary, we remain focused on executing the key priorities I outlined at the beginning of this current fiscal year. We've made progress in improving the underlying economics of our operations through our ongoing efforts to drive operating efficiencies.

These efforts have led to solid cash flow, which we've used to strategically invest in our growth initiatives, while increasing the return of capital to our owners through our share repurchase program.

We're encouraged by the early traction we see for our new programs aimed at serving attractive in-demand verticals, but we still have work to do in terms of setting the stage for return to enrollment and organic revenue growth.

Our success will be determined by our progress and further strengthening the value proposition we deliver to our students and achieving improved persistence, completion and postgraduate employment.

These efforts combined with our emphasis on building accountability, efficiency and budgeting discipline are all aimed at maximizing our potential and delivering increased value to our owners. And with that, let me turn the call over to the operator for the Q&A session..

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Jeff Silber of BMO Capital Markets. Please proceed with your question..

Thank you so much. In comparing your results to your guidance on the top line, it was a little bit short of expectations.

I'm just curious, you had mentioned that the quarter was roughly in line with our expectations, but where is the disconnect there?.

So very good question. We were a little bit softer than where we wanted to be on revenue. We did manage our expense base to make up for that. And from a operating income and an earnings perspective, we were very much in line with our expectations and our internal plans..

So where was the revenue shortfall compared to your expectations, which division?.

We had a little bit of more softness in Becker CPA as well as the core business in Brazil..

Okay, great. And then just a follow-up question. You guys have done a phenomenal job reducing cost. Throughout the prepared remarks, I heard that tapered all over and over again.

But how much more cost can be reduced in some of your poor performing areas without really impacting the business?.

Sure. Yeah, Jeff. I know that we've addressed this on a couple of calls now and part of this is, we really are finding more efficient ways for us to do business.

So we still do have some runway and obviously, a lot of that has to do with – as we look at fixed cost versus variable cost, right? So we've really done a good job off of (32:31) cost of variable over a certain length of time, right, but we've done a really good job in making sure that we can align our expenses, particularly in DeVry University and Carrington as we know that we're going to be both managing decline in enrollment purposely as we repurpose our programs and – stop some programs as well as declines that we may not want to have, but understand there as the market dictates.

And so we've done, I think, a good job and continue to look at how we can manage to variable costs and making sure that we are in line with our enrollment and what we see as enrollment going forward without in anyway taking away quality from the student services and the student experience. So we do have some more to go.

We believe that we're quite in line in terms of making sure that we maintain those positive economics in DeVry University and as well as with Carrington.

And with Carrington, we've really had, I did mention it in the remarks, but we've had a change in our actual leadership structure, really going from 18 different leadership teams on a per campus basis to four regionals, and that is working well and has allowed us some flexibility in the expense there..

All right. Great. Thanks so much..

Sure..

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

Thank you. Good afternoon. Lisa, the Chamberlain strength is very impressive. You've cited, I think, both the Family Nurse Practitioner and the RN to BSN program. I think there's a lot of nervousness among investors about competition in the RN/BSN market.

So can you talk more specifically about what you're seeing there in terms of momentum in that business and your feeling about competitive dynamic?.

Sure, absolutely. And yeah, we were pleased with the results there in the RN to BSN, obviously as an online program. There is an ability for competitors and it's also something that we really have to differentiate as we think about brand as well as academic quality and service delivery in the online mode.

We have found that focusing in and around where we have a campus presence is a real moat and barrier to entry, because it allows people to really – even though the programs are online, it allows them to associate and see that there's a physical building even though that is not where they are actually taking their instructions.

So we have made some operational, in terms of marketing and admissions and enrollment, changes and really focused on how we drive those inquiries and differentiate our product as we're talking to prospective students, and we're seeing those trends this time as well as into the future.

No question that there's competition in that market, but we are really putting that moat around us from a competitive perspective and that is going quite well..

Can you remind me – Lisa, you've got a handful of new locations I think coming in the nursing programs.

When and where are those open?.

Yeah, so we will have FY 2018 openings, I know, FY – going into our New Jersey. And I'm sorry -.

Just over the course of next two years, we'd like to open five to six..

But we have three..

And we've recently received approval to open in New Orleans for Asher. And then we're looking at some other exciting opportunities along the East Coast in large metropolitan markets as well as the Southwest..

I mean, how significant is that to start growth in fiscal 2018? Is it meaningful?.

No, not meaningful in 2018 for the RN to BSN, but it'll become more meaningful in 2020. But we're very pleased with the momentum that we have in our post-licensure programs as well as regaining some good momentum in our current 20 campuses that we have now..

Right.

And also, one of the things that I did mention in the prepared remarks, but it's worth mentioning again, as we think about our growth in the longer term is, of course, the College of Health Sciences, Chamberlain now being Chamberlain University, and launching our MPH program, which we begin instruction in July 1, which is a graduate online offering.

And we are really excited about offering. We see a lot of potential growth in that area. So, continuing to differentiate as we look at graduate and other program offerings..

And then on DMI, Lisa, I would assume at this point you've got enough visibility in terms of inquires in the process to have a pretty good sense of how the May, June start might look, any color on that?.

Yeah, I mean, so you probably know that I'm not accepting any awards for patience personally. So I share your frustration, no one has nominated me for that. But as we had mentioned in the last call, there is a bit of a waterfall in structure to this.

And we have managed to – what do we need to do really around marketing and really tracking our increase in application to get those trends the right way. I think the time that we're going to see this projected in our starts is really in that September class.

We are in line where we think our expectations and what we've indicated for May, as we see that trends the right way and I think we're really going to see that positively as we go into the September class..

Thank you. One last thing.

On the Brazil weakness, you mentioned a few other things you're doing to try to address that, I mean to the extent that the headwinds are really more environmental and market-driven, can you sustain positive economics in Brazil?.

Yes. We are confident that we can, for a number of different reasons. And there are challenges, but obviously, our competitors are facing those same challenges. We are evaluating around some of our pricing, our scholarships, et cetera.

The team is super nimble over there, as it relates to expense management and frankly just moving pretty fast as the market moves that they are very good at that.

And then as we layer on to that, a lot of our diversification with the more recent acquisitions with Ibmec, Damasio et cetera, they're really finding new way for us to deliver high-quality content that we have that's already within this system and taken that out in other places and other areas, so we're really confident and bullish on Brazil..

And just to add to this, Peter, the team has been really focused on cost structure to make us more competitive from a pricing perspective et cetera.

And even with so much challenging time, we're going to delivering – we expect to deliver very nice earnings growth and you can see that now in its own standalone segment, but on a year-to-date basis and full year, we're very optimistic..

Great. Thank you..

Thanks, Peter..

[Operating Instructions] If there are no further questions, I would like to turn the call back over to Ms. Joan Walter for closing comments..

Thank you, Darren. We'd like to thank everyone for your questions today and remind you that our next results call is scheduled for August 17, when we announce our fiscal 2017 fourth quarter results. Thank you for your continued support of DeVry Education Group..

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