Adtalem Global Education Inc
NYSE:ATGE
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Adtalem Global Education Inc
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Good afternoon. My name is Gabriel, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Adtalem Second Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
Maureen Resac, you may begin your conference.
Thank you and good afternoon. With me today from Adtalem's leadership team are Lisa Wardell, Chairman and CEO; and Mike Randolfi, Senior Vice President and Chief Financial Officer. 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, in the most recent Annual Report on Form 10-K for the fiscal year ended June 30, 2019 filed with the SEC on August 28, 2019 and are other filings with the SEC.
Any forward-looking statement made by us is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether written or oral that may be made from time to time whether as a result of new information future developments or otherwise.
During today's call our commentary will refer to non-GAAP financial measures, which are intended to supplement, though not substitute, our most directly comparable GAAP measures. Our press release which contains the GAAP financial and other quantitative information to be discussed today, as well as a reconciliation of non-GAAP to GAAP measures is available on our website.
Please note that all financial comparisons made during today's call are in comparison to the prior year period unless otherwise stated. It is also important to note that our second quarter results and guidance reflect the application of discontinued operations for our former Business & Law segment as a result of the pending divestiture of Adtalem Brazil which made up the entire segment. Telephone and webcast replays of today's call are available for 30 days. To access the replays, please refer to today's press release.
And with that, I'll now turn the call over to Lisa.
Good afternoon and thank you for joining us. Before I discuss the results, I would like to welcome Maureen to our organization. Maureen recently joined Adtalem as Vice President of Treasury and Investor Relations and we are excited to have her on the team. We delivered solid performance in the second quarter, reflecting both continued investment in our portfolio, as well as our ongoing focus on execution.
Overall, we grew revenue 4.8% with growth across both verticals. And we maintained our focus on profitability as we balanced increased investment in marketing and recruiting with diligent management of corporate costs to deliver second quarter revenue and EPS within our expectations. Given our second quarter results and enrollment momentum, we believe we're well on track to reach our performance goals for the year. And as a result, we are reaffirming our revenue and EPS guidance for fiscal 2020.
Now, let me walk you through the highlights of each of our segments. Our long term investments in marketing and recruiting strategies within the medical and healthcare vertical are beginning to deliver results as we grow up both revenue and enrollments during the quarter. Chamberlain University delivered solid results, posted increases in both new and total student enrollments for the November 2019 session.
Of note, the November enrollment period is automatic only and made up primarily of the RN to BSN program, which drove overall enrollment growth. This represents a year over year new start growth in RN to BSN enrollment, and is the direct result of the initiatives we put in place to improve our competitive positioning.
More specifically, on our last quarterly call, we discussed our initiatives to optimize our investment in marketing and recruiting as well as our new pricing and messaging initiatives to better align our advertisers pricing with what students actually pay in order to attract more students and bolster the top line growth.
Chamberlain also offer launched a strong new branding campaign, Step Forward, which is shown strong performance with disciplined investments. We're beginning to see the early benefit of all of these efforts, and I'm confident the initiatives we implemented will continue to make a positive impact as the year progresses.
In addition to the approved trajectory of the RN to BSN programs, our other programs also performed well. Our graduate programs delivered revenue growth during the quarter as the DNP program in particular delivered strong results, and our on campus BSN program also continued to grow during the quarter. The San Antonio campus is open and operating at capacity for its first session.
Chamberlain has also restructured its workforce solutions team to better understand the needs of hospital systems and healthcare providers as they seek more comprehensive answers to their anticipated healthcare workforce needs. As we increase our program offerings and post academic student outcomes that allow for caps to be lifted and greater capacity, we're able to sell critical shortages for employer partners.
During the quarter, we continue to work to further institutional partnerships at Ross University School of Medicine. To that end, we announced our partnership with Oakwood University in the October, which marked the eighth such agreement between Ross Med and a minority serving institution, which is part of our continued commitment to addressing physician diversity and medical training assets. This quarter we have over 20 students from our HBCU HSI school partnerships enrolled with RUSM with a growing pipeline of prospective applicants.
This quarter Ross Med held its new student white coat ceremony with students from 17 different countries represented, highlighting the school's increasingly global reach. We had an impressive residency match rating at Ross Med of 92%, which is a key driver and prospective student increase. At Ross University School of Veterinary Medicine, we launched a new graduate certificate in One Health, the interdisciplinary approach to understanding the interconnectivity between the health of humans, animals and the environment. This online program utilizes courses from RUSM and Chamberlain, leveraging the assets of two additional added power institutions to provide an opportunity for students to gain expertise in public housing and public health.
In addition, Ross Vet formed a disaster research working groups to elevate the understanding, knowledge and capacity to prepare for and respond to disasters, both recently and globally. Our RUSM became the first veterinary school accepted as an affiliate organization of the World Association for Disaster and Emergency Medicine, joining AUCs Caribbean Center for Disaster Medicine to use a One Health focus on a global scale to the safety and security of people, animals and the environment.
Ross Vet also hosted the largest West Indies veterinary conference to-date, bringing veterinary professionals from around the world to St. Kitts to share the latest research and new trends in the field of Veterinary Medicine, underscoring Ross Vet's leadership position in the global veterinary community. At the American University of the Caribbean School of Medicine, we have continued to progress our international partnerships during the quarter. Today, we are seeing overall progress in the school's partnership with the University of Central Lancashire School of Medicine. I was proud to attend a ribbon cutting ceremony there in October, which marked the official launch of our joint programs, aimed at educating medical students from around the world.
AUCs Caribbean center for disaster medicine continues to grow partnering with the Caribbean Disaster Emergency Management Agency to improve healthcare preparedness in the region. The Caribbean Center for Disaster Medicine's upcoming conference will include keynote addresses from two prominent experts in the field of disaster medicine. Former U.S. Surgeon General, Dr. Richard Carmona; and World Association of Disaster and Emergency Medicine President, Dr. Greg Ciottone will speak at the conference, which will focus on the physical and mental impact of mass disasters.
AUC also hold an excellent mash rate of 91% that allows it to remain a compelling choice for medical school applicants. Finally, leveraging the capabilities of each institution, Chamberlain and AUC announced a partnership with the National Institute for Professional Advancement, NIPA, in November. As partners, they will develop an associate-level nursing degree program and Sint Maarten, the first of its kind for the nation and a significant step toward meeting the healthcare needs of the Caribbean region.
In summary, our medical and healthcare vertical is performing well and we are confident of continued growth potential. We have a robust strategy in place and have made great strides and increasing our partnerships and programs, as well as demonstrating our ability to leverage the significant assets and expertise across our institutions, which provides us with a competitive advantage and ultimately benefits our students.
Turning to our financial services segment, we delivered strong, high-single-digit revenue growth which includes the addition of OnCourse Learning as it ramps up post integration. OnCourse continues to serve the needs of the banking credit union sector broadly for frontline compliance training. And now with broader product offerings between OnCourse and ACAMS, we have begun to capitalize on the substantial cross-selling opportunities in this market as well.
In addition, the organizations recently launched their first co-developed product and online course centered around human trafficking awareness. OnCourse is also seeing positive growth in its mortgage education segment, where it continues to be a category leader to the favorable market conditions. ACAMS revenue was impacted during the second quarter due to the shift of the Las Vegas conference to the first quarter in 2020 while it took place in the second quarter of 2019, resulting in an unfavorable comparison.
Excluding the impact of this conference, ACAMS revenue grew during the quarter. Membership in ACAMS is us up 10% year-over-year and now exceeds 77,000 members worldwide. We continued to be bullish regarding ACAMS near-and long-term growth prospects. In January, ACAMS officially launched its Certified Global Sanctions Specialist certification exam. Pre-sales leading up to the launch was strong and we expect this new program to contribute to ACAMS revenue growth later this fiscal year.
In addition, through a new testing center offering, ACAM has significantly expanded its reach and ability to serve more of its certification exam customers by tripling the number of available testing locations to more than 5,000 locations globally. In January, ACAMS formed a partnership with MasterCard International. Under the five-year agreement, MasterCard in partnership with ACAMS is introducing MasterCard ACAMS risk assessment, a comprehensive risk assessment tool offered as a SaaS solution to help financial institutions assess their AML risk.
MasterCard ACAMS risk assessment will provide financial institutions worldwide with a standardized means of measuring, understanding and explaining their money laundering risks as they relate to MasterCard products, countries of operation and customer portfolio. This new offering, which is expected to launch later this calendar year, allows ACAMS to further position itself, not only as a best-in-class membership organization, but also as a workforce solution provider and employer partner for multinational companies with complex compliance needs.
Becker revenue declined on a year-over-year basis, primarily due to the divestiture of the Becker courses for healthcare students during the prior quarter. Despite this, Becker had success during the quarter in its core accounting business, which continues to see strong momentum based on recent product and marketing enhancements to its CPA product offering, along with several enterprise renewals amongst its largest customers and strong double digit growth in its continuing professional education or CPE product line. This momentum should serve the business well as it heads into the latter half of fiscal year 2020.
Overall, I'm encouraged by the progress we're making in financial services to build sustainable long-term growth. We are building a strong foundation for our programs which will support continued expansion in this vertical. At our Investor Day last May, our leadership team laid out a strategy that centered our evolution to become a leading workforce solutions provider. This transformation, while ambitious, allow that talent to accelerate growth, enhance our operational effectiveness, and invest in academic quality and superior student outcomes.
I'm proud to say that during the first half of the fiscal year, we have aligned around this enterprise strategy without losing our students first mission and our second quarter results are beginning to deliver on our team's tremendous efforts. That said, we are not done yet. We remain focused on the core tenants of our strategy.
First, embracing our education mission; second, broadening our customer base and building upon our core strengths to drive value creation across our verticals; third, enhancing our solutions for students and in particular employers looking for talent acquisition development and retention. Fourth, strengthening on new product development across the portfolio and setting the stage for long term organic growth; and finally, leveraging our corporate partnership capabilities to drive incremental revenue for all our business units.
As I have said in the past, superior academic student outcomes drive financial performance and that's always going to be the case for us. This new era for add talent has enabled our organization to be more agile, more sales focused, while at the same time maintaining our values and education mission. We are excited for what the future holds for the organization, our employees, our students, and our employer partners. We believe we are in an excellent position to unlock significant value creation opportunities for our shareholders going forward.
With that, let me turn the call over to Mike for a deeper look at our financials.
Thank you, Lisa, and good afternoon everyone. We ended the second quarter of fiscal 2020 with solid revenue growth that was in line with our expectations. As Lisa mentioned, we are already seeing the benefit of our strategic investments in marketing and student recruitment, which has supported growth in new enrollments and increase brand recognition. In addition, we also maintain earnings per share excluding special items, compared to the prior year by managing corporate costs to offset the investment in marketing and recruiting.
During the quarter, we grew revenue 4.8% to $266.2 million. This increase was driven by growth in both our medical and healthcare and financial services segments. Cost of educational services was $127.3 million in the second quarter, a 7.8% increase, about 30% of this increase is related to OnCourse Learning. About half of the remainder of the increase is related to housing at the Ross University School of Medicine in Barbados, and the other half is related to an increase in our bed debt reserve.
As we do each quarter, we assessed our allowance for doubtful accounts, which is reflected in our reserve. We're also working with a third party with the goal of strengthening our administration and collection practices. We believe these actions will help us improve our loan portfolio performance going forward.
Student services and administrative expenses were $96.6 million in the second quarter, compared with $89.3 million, an 8.3% increase. The increase was attributable to the inorganic cost added due to the OnCourse Learning acquisition and increase investments across our businesses in marketing and student recruiting to support enrollment and revenue growth in future periods.
We're already beginning to see early results from these efforts. Operating income from continuing operations, excluding special items was $42.3 million, compared with $46.6 million. Marketing investments made in the period, which are lowering current period earnings, are expected to benefit future periods. Net income from continuing operations, excluding special items was $30.9 million compared with $34.3 million. Diluted earnings per share from continuing operations excluding special items, was $0.57 comparable to the prior year.
Turning to our segment results, starting with Medical and Healthcare, revenue increased 3.6% to $220.2 million. Chamberlain revenue increase 2.7%. Second quarter Chamberlain new student enrollment increased 3.6%, while total student enrollment increased 1.2%, driven by improved marketing and recruiting programs, specifically RN to BSN strategic partnerships, and the successful first new class at our new San Antonio campus.
Revenue in the second quarter for the medical and veterinary schools increased 4.8%. Excluding special items, the medical and healthcare segment, operating income for the second quarter declined 12.5% to $41.6 million. The decrease in segment operating income is the result of the higher revenue being more than offset by investments in marketing and recruiting to drive future enrollment growth and increase in the bad debt reserve and corporate costs that were previously allocated to our former business and law segment.
Turning now to our financial services segment. Second quarter revenue increased 9.1% to $46 million. Second quarter revenue included $8.1 million from the OnCourse Learning acquisition. Excluding special items, operating income in the second quarter declined 41% to $5.7 million. The decrease in operating income is primarily the result of the shift of the ACAMS Las Vegas conference to the first quarter in 2020 versus it occurring in the second quarter in 2019, and corporate costs that were previously allocated to our former business in law segment.
To create an apples to apples comparison and thus normalizing for the OnCourse Learning acquisition and Becker healthcare disposition, the impact of the timing of the ACAMS conference and the change in corporate costs allocations, revenue in our financial services segment would have increased 7% and operating income excluding special items would be down slightly compared to prior year driven by investments which we expect will benefit the back half of fiscal 2020. You can see the apples to apples comparison for operating income on page 9 of our earnings slides.
Now turning to our balance sheet and cashflow.Net cash used in continuing operations for the second quarter total $57.6 million in line with our typical seasonal pattern for the second quarter and last year. Our capital expenditures for the second quarter total $9.9 million compared to $18.7 million. As a result, our free cash flow use in the second quarter was $67.5 million and on a trailing 12 month basis we generated free cash flow of $113 million.
We closed the second quarter with cash and cash equivalent of $67.3 million and outstanding bank borrowings of $425 million, which includes $125 million drawn on our revolver. As a reminder, our $67 million does not include approximately $74 million that will become available to us upon closing of the Brazil transaction. Note that we continue to expect the sale of our Brazil operations to close in the first half of fiscal year 2021 after regulatory approval is complete.
Upon close, we will receive net proceeds of approximately $400 million as we have hedged the currency exposure using a deal contingent forward contract. Share repurchases remain an integral part of our capital allocation strategy and our strong balance sheet continues to allow us to pursue this.
During the quarter, we repurchased approximately $1.8 million shares at an average price of $34.05 cents for a total of $59.8 million. Our Board of Directors We recently authorized an additional $300 million share repurchase program, which with the amount remaining under the current authorization as of December 31, 2019 brings our total share repurchase authorization to $382 million through December 31, 2021
Moving on to our full year 2020 outlook, we are reiterating the full year guidance of 5% to 7% revenue growth and 7% to 9% EPS growth. In terms of teams of cadence of the remainder of the year, we expect slightly higher year-over-year revenue and EPS growth in the third quarter than the second quarter.
As we look towards the rest of the year, we remain focused on operational execution, continued investment in our core situations and companies and returning capital to shareholders, all while maintaining our financial strength and flexibility.
With that, I will now turn the call over to the operator for Q&A.
[Operator Instructions] The first question will come from the line of Alex Paris with Barrington Research.
This is Chris Howe sitting in for Alex. Just some questions here as it relates to marketing. You've provided an update last quarter, but can you just talk about some of the marketing dynamics in the quarter that proved out to be successful for you, as it relates to Medical and Healthcare? And also, I remember you had mentioned about ACAMS, the different things that you're doing there as far as the user experience.
Yes, certainly. So starting with the Medical and Healthcare side, obviously, we talked a bit about Chamberlain, last year, last quarter, particularly the online offerings. This was an online only enrollment period. So, easy to see the comparison there in terms of that RN and BSN and the new student enrollment being driven there. So that was a combination of some marketing in the digital social media-paid search area, so that we could really get the right pricing message across to our potential students, which we were able to do.
And then just driving general brand awareness for Chamberlain and the Step Forward program, which we mentioned very disciplined investments there to try the brand and to learn in and around the markets where we also have the on campus site and that is proven to lift our online programs also. So a bit in Chamberlin, as it relates to medical school, particularly on the Ross Med side, we have been investing there.
As we mentioned last quarter, we were up against not really being able to tell the story around or wishes was going to be our faculty or our campus et cetera. Now, obviously, with January, the main school year will be in Barbados, so last January was our first session there. We've really been able to put some more investment into both digital marketing as well as the overall site and that is paying off quite well.
As it relates to Becker and ACAMS, we continue to invest the financial services side. We continue to invest in the Becker rebrands. Particularly on the CPE side, I believe it on side that in a flat market, we were able to achieve the CTA review enrollments that the students that we set out to do. And part of that is making sure that we've got our view see marketing there and the incremental marketing cost being attached to the ROI.
As Mike mentioned and explain on the last call. And then as it relates to ACAMS, lack of the investment, they are really around sales and recruiting from a member organization perspective. Our memberships obviously are up over 15%. So I'm doing a lot of work with the chapters as just a brand awareness and thought leadership on the ACAMS side as it relates to that investment.
One last remaining question and then I'll hop back in the queue. Just as it relates to guidance and perhaps your outlook in the next fiscal year. What are some -- I guess from a bird's eye perspective, some different avenues or inflections for growth that you see within the portfolio given that the portfolio has been right-sized and is looking good at the moment.
So one is obviously our confidence in terms of enrollment momentum for the back half of the year as provided annual guidance and then enrollments within the period that they happen but our confidence in our guidance and reaffirming that guidance obviously means that we have the visibility on the med health care side into enrollments for the back half of the year.
So that's one and that's not unexpected. We were talking about that obviously in Q1. And some of those marketing investments are paying off as we look at both enrollment and conversion, as well as persistence, particularly if Chamberlain that has been a real focus for us also is paying off well as we align that with our scores and other student outcomes and sort of services for students to make sure that we are giving them what they need to remain in school. So that's on the med health care side.
On the ACAMs or financial services side but particularly in ACAMs, if you think about it, you'll recall we had the global certification, section certification was just launched in January. So the outcome that you see is really the presales into the Q3, we'll see those sales coming through as that that certification is launched. Again, the first one we've done in 16 years and this is only currently in English. So as we roll out the other languages because it was launched in 81 countries, we're seeing strong demand for other languages, particularly in the Europe. European region that give us confidence that we'll be able to continue that momentum. Mike anything to add.
Your next question comes from the line of Jeff Mueller of Baird. Please go ahead.
RN to BSN was I guess feeling like Waiting for Godot for a while. So good to see that turn. I guess just as you look at the leading indicators. Does it seem like a sustainable turn or is there anything unusual in this period? And then as it relates to pricing, I think there was a comment about the right pricing message. I think that's about list pricing, but just remind us the net pricing for the new intakes RN to BSN students. Is there any reduction in net price that we need to be considering?
Jeff, so to answer the first part of the question, we all know that one session does not trend make. That being said, what we said we were going to do, which was have our pricing be much more apples-to-apples comparison with our competitors as students went online and sort of comparison job has been working. And so we rolled that out and it's much more as I said last quarter a communication around pricing and making sure that they understand what they're actually playing versus the way that we were doing it before, which was much more of a list price. And then, as you know, 70% of those students are coming through our basically workforce employer partners and therefore, they were getting that volume discount. And so we've been much clearer we rolled it out to 40 to 60 initially to make sure that that did not impact negatively from a volume perspective on a number of students and that went well. And so we've been able to build that and we anticipated that the momentum will continue through the back half of the year.
And then Mike recognized newer CFO in the role, but the bad debt expense, it's the higher expenses than in the last couple of quarters. It sounds like maybe you brought in some outside help. I guess the expense this quarter, is this kind of like -- is there a cleanup component to that it should now normalize so you did review maybe there were some things you needed to do to clean up or just any comment on the risk that this higher bad debt expense continues beyond this quarter?
So, I would say every quarter we go and we evaluate the collectability of our accounts receivable and note receivable. And we set the reserve incorporating all the facts and circumstances available at the time. This particular quarter over the last quarter, we have instituted some meaningful changes. One, we have put the program under new leadership, and we significantly supplemented the resources associated with the collections around our loan program.
And so with that during the quarter, we significantly increased our collection efforts. And what I would say is that the increased collection efforts and touch points with borrowers provided additional insight with regards to the underlying performance. So those additional insights coupled with the data and analytics that we would typically assess, informed the reserve. Now what I would say is as we've looked at it between the new leadership and leveraging insights from third parties that bring really good external perspective, we believe we have a path to make meaningful improvements in the administration and collection practices around our loan program.
And so with that, we're optimistic in terms of our ability to make improvements in how that program is managed. At the same time, we are also limiting the growth in new borrowers at this time within the program. So overall, Jeff, we believe we're in the right direction here.
And then this may have been answered -- Chris’s question was unclear to me. The medical and vet schools where you stepped up the marketing spend. Just how are response rates looking and is this something we should see as soon as the January intake? A know it can kind of be a longer lead marketing time for those institutions. So just any kind of early indicators on how bad the response from the spend is trending?
So if you look at the marketing step up within the quarter in total between marketing and recruiting, we're spending about $6 million more in this past quarter than we did at the same time last year. About 40% of that is in the medical and healthcare space. And I would say within the medical and healthcare space, it's steered disproportionately to those Chamberlain and you do see some of the benefits in this quarter with improvements from an RN to BSN perspective. And the remainder is really steered towards Ross and obviously as we focus on recovery post the hurricane period.
What I would tell you is, between the two Chamberlain and Chamberlain has the lion share of his, Chamberlain tends to have a shorter payback period than our medical school. So most of what we invest, we expect particularly on the Chamberlain side to see a return within the next six to 12 months. And that's all reflected within our guidance. And it also supports our thoughts around our phasing throughout the year, particularly as we move into the fourth quarter where we expect to see significant improvements overall within our portfolio in the fourth quarter of this year.
And so as you recall that we actually stepped up this marketing thing beginning in Q4 of fiscal '19. So you share we talk a lot about kind of that longer sale cycle. So when you think about med vet in the back half of this year, obviously, we still have two sessions and we have lots and lots of visibility is the first one and certainly visibility into that mid section. And our confidence in the guidance is obviously driven by what we're seeing there that you see in Ross med.
Your next question will come from the line of Corey Greendale with First Analysis. Please go ahead.
First quick clarification question, Mike your commentary around the guidance at the very end of your remarks. Did you say you expect potentially very modest growth in or starting better growth in revenue and EPS in Q3, than in Q2?
So for clarity just to repeat what was in the spoken remarks, we expect in the third quarter for revenue growth and EPS growth in the third quarter to be slightly higher than the rate of revenue growth and EPS growth in the second quarter. And let me just add a little bit of context there and just to provide a little bit of highlight.
The third quarter for us will be -- still comprise significant amount of investment from marketing and recruiting perspective. And a matter of fact in terms of absolute dollars in the third quarter, we would expect to spend roughly $3 million to $4 million more in marketing and recruiting in the third quarter than the second quarter, that's obviously contemplated there. Now when we move from the third quarter to the fourth quarter, we would expect those marketing expenses to start to taper down. And certainly on a year to year basis, we would see much smaller increases in marketing and recruiting expenditures in the fourth quarter, than the third quarter.
That may somewhat answer my question, which is going to be if EPS was down in Q1 flat in Q2, up just a bit in Q3, to get 7% to 9% EPS growth for the year. You're talking like 30% plus EPS growth in the fourth quarter. Am I doing that right and is that consistent with what you're expecting?
Yes, that is the right map and that is consistent with what we're expecting. And what I would highlight as we've gone through our year, first, we've made active decisions to invest in the earlier quarters in the year to support growth later in the year. And that's applied within all of our businesses. And if we look through our businesses, whether it be Chamberlain where we continue to believe we have opportunities throughout our portfolio, through our online programs and on site, through our medical schools where we anticipate seeing greater recovery to our best schools where we're seeing strong underlying demand to ACAMs where we have a really, really strong pipeline going into the back part of the year and to Becker where we are going deeper into the continuing education space.
We feel really good about the potential for the top business coupled with as we move into the fourth quarter. The year-over-year pressure from marketing, we would expect to subside in a fairly -- in a meaningful way. So we won't see the same increases in marketing expense year-over-year. At the same time, we're also being very mindful from a cost efficiency and effectiveness perspective overall.
I would just add, obviously, the plan and we've known this since the beginning of the years is back loaded. But the difference between fiscal '19 and fiscal '20 is that we had that plan back loaded without doing as much or investments in the front half of the year. So we have done some, but not enough that we needed to drive the growth, particularly in some of these areas. ACAMs be a perfect example, Becker also where we have new programs, new products, some a little bit of Chamberlain and just did not drive or have the awareness or have those processes and roll out.
So if you think about Q3 some of the things that we're doing started already that we're doing now and ACAM as an example is we’re really investing in sort of the experienced sale solution selling people on prophecies. So frankly as Mike said, the pipeline is really robust, but we need to be able to give them the more comprehensive solutions, which we're doing now as we think about sanctions and all together in a more holistic way.
And then also serving a lot of these multinational clients right with solutions that are multi language, multi rollout, different levels within the organization, frontline banking employee as an example, just things that we had not done before. So we're seeing the momentum and the pipeline that makes us confident in the back half of the year. Even though we know for those of you who have been with us for a while, that was challenging fiscal '19.
I think, I'm going to totally put words in your mouth and then please correct me when I do. On ACAMs, in particular, it sounds like the sort of the core pre business that you had is essentially that the addressable market size is you're sort of bumping up against the limits of that in order to expand the market you're doing some other things in terms of new credentials, adding languages, that sort of thing and the belief is given the demand that you see there those market expansion activities should drive accelerated growth. Is that an incorrect putting words in your mouth or how would you frame it?
I'll take some of those words. So absolutely, I'll pick the ones that work. So absolutely, we are expanded literally based on our customers’ demands and needs. They are coming to us with what other products and pieces that they want. This is how the sanction certification came up. So remember, we're a education and mission driven organization. So when you think about ACAM, it is a membership organization, their goal in life is to fight financial crime, which is why it fits so well into the ad talent portfolio like we like to be doing great things for communities.
But what that also means is we've got to bring this commercial perspective up and we also want to grow what is it our customers are asking us for and needing, so we're doing that. But I will correct you that that underlying market, even though AML is a very prompt part of governance risk and compliance my goodness, it is growing and it is in demand and it is the industry that we need to be in. So I think it's a bit of both, which allows us to think about a broader and more robust growth rate for the back half of the year.
Next question will come from the line of Jeff Silber of BMO Capital Markets. Please go ahead.
Just wanted to shift gears to regulatory question and I do apologize about this. I know we're going through an election year who knows what's going to happen, let's assume that there might be some changes under the next administration and we go back to gainful employment. The structure of your Ross veterinary program, I think that was the issue last time. Would Ross veterinary programs all comply with gainful employment as it was outlined under the Obama administration? I don't know if you've been keeping up on that. Is there any guidance you can give us some that that would be great?
We have been keeping up on that. So I would say a couple of things. One is that as the gainful employments new rule making comes into effect here and having comments, et cetera, et cetera all of which we're participating in. You will recall that what we said was we're not against -- obviously, our goal is for everybody to be gainfully employed. We just don't like the unintended consequences to where that is, right now is that graduate programs would not be included the way that they were as we looked at that in the 2008, 2009 cycle.
That being said, obviously as you said, we don't know -- well, right now we don't even know who wins the caucus let alone what's going to happen in the election. And so what we've done at Ross vet is a couple of different things. One, we have increased our starting salaries. So if you think about when we started this journey, 2000, ’10, ‘11-ish, maybe a little bit later, our average starting salary was around $85,000 for -- that's coming out Ross vet. We've worked with our employer partners, primarily Banfield pet hospitals now owned by Mars Healthcare that amount north of 116,000 average starting salary so we're working with that and then also working with the students as it relates to their post graduate.
The issue with that is that they don't have a residency per se, the way that medical school does and we've been working with law makers and really been proactive, and make sure that they understand that this sort of courtship period for veterinarians should graduate schools be included, really should be handled the same way that the residency for its position would be. So we are very aligned and comfortable with where that stands in the regulatory sector but frankly, we don't see that when you look at less than one veterinarian applicants for each open job. We don't see that being an area of focus. But if it is, we'll be ready.
And then if I can shift gears to the financial services, I know we're not talking about this for year '21 yet. But just from a timing perspective, I know, this past quarter there was an issue in terms of the shift to the ACAMs conference. Next year fiscal '21, what quarter will that be held in?
The same was so that we can have a comparable year over year comp. Definitely, that was sort of a three day thing and someone picked a date and it -- will keep it where it needs to be, uh, for our cops here. But preferences are growing so that's the most important thing as we look at both membership or attendance, I should say, but also sponsorship so very excited about that going into '21.
Next question comes from line of Greg Pendy with Sidoti.
Just I guess, can you give us big picture just given the campus relocations at some of the medical schools, where enrolments are versus peak capacity? And then just a second question, just from a timing perspective. I'm assuming that the hedge you guys put on should roll off or pair off and you expect the proceeds. Is that roughly still first quarter of next year? Thanks.
So I'll start with the second. Yes, so we’re looking at the first half of 2021 still fall timeframe. Obviously, it's a regulatory approval that needs to happen, but we don't see any issues with that timing. And then secondly on the capacity, it depends on the school. So Ross vet, we are quite close to full capacity and have had those classes growing. Although, we have the ability to grow capacity there but certainly, the capacity that we have remaining couple of hundred students across the medical schools is something that we're actively working on to fill in a couple of different ways. AUC has a UK now small, but program for UK for basic sciences and math and now in the second cohort and HLC has capacity in St. Maarten and then of course Ross Med and Barbados, we have the couple of smaller classes as became into that location and campus. And we anticipate that we'll be able to work on both of those schools, which we've been saying that is one of the ways that is very not easy, but certainly a clear path for us in terms of our value proposition for the students, what they get out of those and therefore that’s why a lot of our marketing dollars are going to that particular set of institutions.
We have no further questions for today. I’m turning the call back over to the Maureen Resac for closing remarks.
Thank you. And we thank everyone for joining the call today. If anyone has a specific question, please call me directly. Thank you for joining.
This concludes today's conference call. You may now disconnect.