Covista Inc.: Form 10-Q for the period ended Sep 30, 2026

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read with and is qualified in its entirety by the Consolidated Financial Statements and the notes thereto included in this report. It should also be read in conjunction with our consolidated financial statements and the related MD&A included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2026 (the “2026 Form 10-K”). Readers of this report should also refer to the Cautionary Disclosure Regarding Forward-Looking Statements, Item 1A. “Risk Factors,” and the Financial Aid and Legislative and Regulatory Requirements disclosures set forth in Item 1. “Business” of the 2026 Form 10-K, all of which are incorporated herein by this reference. Covista reports on a fiscal year period ending on June 30. Therefore, this Quarterly Report for the quarterly period ended September 30, 2026 is for our first quarter of fiscal year 2027.

Throughout this MD&A, we sometimes use information derived from the Consolidated Financial Statements and the notes thereto but not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these items are considered “non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules. See the “Non-GAAP Financial Measures and Reconciliations” section for the reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures.

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

Segments

We present three reportable segments as follows:

Chamberlain – This segment includes the operations of Chamberlain, which offers degree and certificate programs in the nursing and health professions postsecondary education industry.

Walden – This segment includes the operations of Walden, which offers degree and certificate programs, including those in nursing, education, counseling, business, information technology, psychology, public health, social work and human services, public administration and public policy, and criminal justice.

Medical and Veterinary – This segment includes the operations of AUC, RUSM, and RUSVM, collectively referred to as the “medical and veterinary schools,” which offer degree and certificate programs in the medical and veterinary postsecondary education industry.

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

First Quarter Highlights

Financial and operational highlights for the first quarter of fiscal year 2027 include:

• Covista revenue increased 10.7%, or $49.2 million, to $511.5 million in the first quarter of fiscal year 2027 compared to the prior year period driven by increased revenue across all segments.
• Net income increased 9.0%, or $5.6 million, to $67.4 million in the first quarter of fiscal year 2027 compared to the prior year period. This increase was primarily driven by an increase in revenue, partially offset by an increase in marketing expense, labor and other costs to support increased enrollment, provision for credit losses, strategic advisory costs, investments to support growth initiatives, and provision for income taxes, as well as a loss from discontinued operations.
• Diluted earnings per share increased 16.8%, or $0.28, to $1.95, in the first quarter of fiscal year 2027 compared to the prior year period driven by the increase in net income and lower diluted shares due to share repurchases.
• Adjusted net income increased 16.8%, or $10.9 million, to $75.8 million in the first quarter of fiscal year 2027 compared to the prior year period. This increase was primarily driven by an increase in revenue, partially offset by an increase in marketing expense, labor and other costs to support increased enrollment, provision for credit losses, investments to support growth initiatives, and provision for income taxes.
• Diluted adjusted earnings per share increased 25.1%, or $0.44, to $2.19 in the first quarter of fiscal year 2027 compared to the prior year period driven by the increase in adjusted net income and lower diluted shares due to share repurchases.
• For the July 2026 and September 2026 sessions, total student enrollment at Chamberlain increased 2.7% and 1.3%, respectively, compared to the same sessions last year.
• As of September 30, 2026, total student enrollment at Walden increased 12.8% compared to September 30, 2025.
• For the September 2026 semester, total student enrollment at the medical and veterinary schools increased 3.5% compared to the same semester last year.
• Covista repurchased a total of 658,088 shares of its common stock under its share repurchase programs at an average cost of $127.63 per share during the first quarter of fiscal year 2027. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors.

Results of Operations

Revenue

The following table presents revenue by segment detailing the changes from the prior year period (in thousands):

Chamberlain

Chamberlain Student Enrollment:

Chamberlain revenue increased 7.4%, or $13.2 million, to $192.4 million in the first quarter of fiscal year 2027 compared to the prior year period, driven by higher enrollment, average student courseload, and tuition rates. Enrollment increased in pre-licensure nursing programs; however, enrollment has declined in post-licensure nursing programs. Chamberlain is achieving pre-licensure growth by optimizing investments in student enrollment and experience while leveraging scale through a national footprint with in-person and online curriculum delivery modalities. Management is focused on optimizing marketing and enrollment operations to address post-licensure enrollment.

Tuition Rates:

Tuition rates in the current fiscal year increased compared to the prior fiscal year for the Bachelor of Science in Nursing (“BSN”) onsite and online degree, Master of Science in Nursing (“MSN”), Master of Social Work (“MSW”) and Master of Public Health (“MPH”) online degree programs. The average increase across all of these programs was approximately 3.4% from the prior year.

Walden

Walden Student Enrollment:

26

Walden total student enrollment represents those students attending instructional sessions as of the dates identified above. Walden revenue increased 14.1%, or $26.7 million, to $216.7 million in the first quarter of fiscal year 2027 compared to the prior year period, driven by an increase in enrollment and higher tuition rates. Walden’s improved enrollment has been accelerated by investments in student experience and brand along with providing flexibility to working adults through part-time and Tempo Learning® competency-based programs.

Tuition Rates:

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

Medical and Veterinary

Medical and Veterinary Student Enrollment:

Medical and Veterinary revenue increased 10.0%, or $9.3 million, to $102.5 million in the first quarter of fiscal year 2027 compared to the prior year period, driven by an increase in enrollment and higher tuition rates. Management continues to focus on increasing enrollment and driving operational effectiveness, specifically around academic support and enrollment experience.

Tuition Rates:

• Effective for semesters beginning in September 2026, tuition rates and administrative fees for the basic sciences and clinical rotation portions of AUC’s medical program increased 2.0% from the prior academic year.
• Effective for semesters beginning in September 2026, tuition rates and administrative fees for the basic sciences and clinical rotation portions of RUSM’s medical program increased 2.0% from the prior academic year.
• Effective for semesters beginning in September 2026, tuition rates for the pre-clinical and clinical curriculum of RUSVM’s veterinary program increased 1.5% from the prior academic year.

Cost of Educational Services

The cost of educational services expense category includes expenses related to the cost of faculty and staff who support educational operations, facilities, adjunct faculty, supplies, housing, bookstore, other educational materials, student education-related support activities, and provision for credit losses. The following table presents information regarding cost of educational services (in thousands):

Consolidated cost of educational services increased 10.0%, or $20.0 million, to $220.8 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in labor and other costs to support increased enrollment and an increase in provision for credit losses. As a percentage of revenue, consolidated cost of educational services remained consistent at 43.2% in the first quarter of fiscal year 2027 compared to 43.4% in the prior year period. As a result, consolidated gross profit margin remained consistent at 56.8% in the first quarter of fiscal year 2027 compared to 56.6% in the prior year period.

Chamberlain

Segment cost of educational services increased 12.1%, or $10.1 million, to $93.3 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in provision for credit losses, labor, rent, facilities, and technology costs. As a percentage of revenue, segment cost of educational services was 48.5% and 46.4% in the first quarter of fiscal year 2027 and 2026, respectively. The increase in the percentage was the result of the increase in cost of educational services, partially offset by revenue growth. As a result of the investments to support enrollment and revenue growth, gross profit margin decreased to 51.5% in the first quarter of fiscal year 2027 compared to 53.6% in the prior year period.

Walden

Segment cost of educational services increased 14.4%, or $9.3 million, to $74.1 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in provision for credit losses, labor, and technology costs. As a percentage of revenue, segment cost of educational services remained consistent at 34.2% in the first quarter of fiscal year 2027 compared to 34.1% in the prior year period. As a result, gross profit margin remained consistent at 65.8% in the first quarter of fiscal year 2027 compared to 65.9% in the prior year period.

Medical and Veterinary

Segment cost of educational services increased 1.1%, or $0.6 million, to $53.4 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in labor and technology costs, partially offset by a decrease in clinical rotation costs. As a percentage of revenue, segment cost of educational services was 52.1% and 56.7% in the first quarter of fiscal year 2027 and 2026, respectively. The decrease in the percentage was the result of revenue growth, partially offset by the increase in cost of educational services. As a result of the revenue growth, gross profit margin increased to 47.9% in the first quarter of fiscal year 2027 compared to 43.3% in the prior year period.

Student Services and Administrative Expense

The student services and administrative expense category includes expenses related to student admissions, marketing and advertising, general and administrative, and amortization of acquired intangible assets. The following table presents information regarding student services and administrative expense (in thousands):

Consolidated student services and administrative expense increased 9.6%, or $16.9 million, to $192.6 million in the first quarter of fiscal year 2027 compared to the prior year period. After excluding amortization of acquired intangible assets, strategic advisory costs, and debt modification costs, consolidated student services and administrative expense increased 7.4%, or $13.0 million, in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in marketing expense and investments to support growth initiatives. As a percentage of revenue, consolidated student services and administrative expense was 37.6% and 38.0% in the first quarter of fiscal year 2027 and 2026, respectively. The decrease in the percentage was the result of revenue growth, partially offset by the increase in student services and administrative expense.

Chamberlain

Segment student services and administrative expense increased 2.8%, or $2.0 million, to $72.4 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in marketing expense. As a percentage of revenue, segment student services and administrative expense was 37.6% and 39.3% in the first quarter of fiscal year 2027 and 2026, respectively. The decrease in the percentage was the result of revenue growth, partially offset by the increase in student services and administrative expense.

Walden

Segment student services and administrative expense increased 9.8%, or $7.0 million, to $79.0 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in marketing expense and investments to support growth initiatives. As a percentage of revenue, segment student services and administrative expense was 36.4% and 37.9% in the first quarter of fiscal year 2027 and 2026, respectively. The decrease in the percentage was the result of revenue growth, partially offset by the increase in student services and administrative expense.

Medical and Veterinary

Segment student services and administrative expense increased 14.0%, or $3.3 million, to $26.8 million in the first quarter of fiscal year 2027 compared to the prior year period. This cost increase was primarily driven by an increase in professional services. As a percentage of revenue, segment student services and administrative expense was 26.2% and 25.3% in the first quarter of fiscal year 2027 and 2026, respectively. The increase in the percentage was the result of the increase in student services and administrative expense, partially offset by revenue growth.

Restructuring Expense

Restructuring expense was $0.2 million and $0.3 million in the first quarter of fiscal year 2027 and 2026, respectively. We continue to incur restructuring charges or reversals related to exited leased space from previous restructuring activities and workforce reductions.

Operating Income

The following table presents a reconciliation of operating income to adjusted operating income (in thousands):

(1) Consolidated results include Home Office activities not allocated to segments.

Consolidated operating income increased 14.7%, or $12.6 million, to $98.0 million in the first quarter of fiscal year 2027 compared to the prior year period. Consolidated operating margin increased in the first quarter of fiscal year 2027 to 19.2% compared to 18.5% in the prior year period. The operating income and margin increase in the first quarter of fiscal year 2027 was primarily driven by an increase in revenue, partially offset by an increase in marketing expense, labor and other costs to support increased enrollment, provision for credit losses, strategic advisory costs, and investments to support growth initiatives.

Consolidated adjusted operating income increased 18.1%, or $16.3 million, to $106.6 million in the first quarter of fiscal year 2027 compared to the prior year period. Consolidated adjusted operating margin increased in the first quarter of fiscal year 2027 to 20.8% compared to 19.5% in the prior year period. The adjusted operating income and margin increase in the first quarter of fiscal year 2027 was primarily driven by an increase in revenue, partially offset by an increase in marketing expense, labor and other costs to support increased enrollment, provision for credit losses, and investments to support growth initiatives.

Chamberlain and Medical and Veterinary operate physical campus locations and therefore incur costs associated with maintaining and operating those campuses. In contrast, Walden primarily delivers education through an online model and does not incur campus-related operating costs. As a result, the operating margins of Chamberlain and Medical and Veterinary historically have been lower than those of Walden.

Chamberlain

Segment adjusted operating income increased 4.4%, or $1.1 million, to $26.7 million in the first quarter of fiscal year 2027 compared to the prior year period. The adjusted operating income increase in the first quarter of fiscal year 2027 was primarily driven by an increase in revenue, partially offset by an increase in marketing expense, provision for credit losses, labor, rent, facilities, and technology costs. Segment adjusted operating margin decreased in the first quarter of fiscal year 2027 to 13.9% compared to 14.3% in the prior year period. The adjusted operating income margin decrease in the first quarter of fiscal year 2027 was primarily driven by an increase in marketing expense, provision for credit losses, labor, rent, facilities, and technology costs, partially offset by an increase in revenue.

Walden

Segment adjusted operating income increased 16.0%, or $9.0 million, to $65.0 million in the first quarter of fiscal year 2027 compared to the prior year period. Segment adjusted operating margin increased in the first quarter of fiscal year 2027 to 30.0% compared to 29.5% in the prior year period. The adjusted operating income and margin increase in the first quarter of fiscal year 2027 was primarily driven by an increase in revenue, partially offset by an increase in marketing expense, provision for credit losses, labor, technology costs, and investments to support growth initiatives.

Medical and Veterinary

Segment adjusted operating income increased 32.7%, or $5.5 million, to $22.3 million in the first quarter of fiscal year 2027 compared to the prior year period. Segment adjusted operating margin increased in the first quarter of fiscal year 2027 to 21.7% compared to 18.0% in the prior year period. The adjusted operating income and margin increase in the first quarter of fiscal year 2027 was primarily driven by an increase in revenue and a decrease in clinical rotation costs, partially offset by an increase in professional services, technology costs, and labor.

Interest Expense

Interest expense was $9.9 million and $11.1 million in the first quarter of fiscal year 2027 and 2026, respectively. This decrease was primarily driven by decreased borrowings and a lower interest rate on our Term Loan B.

Other Income, Net

Other income, net was $1.4 million and $2.5 million in the first quarter of fiscal year 2027 and 2026, respectively. This decrease was primarily driven by an investment loss in the current year period compared to an investment gain in the prior year period.

Provision for Income Taxes

Our effective income tax rate from continuing operations can differ from the 21% U.S. federal statutory rate due to several factors, including U.S. tax on foreign earnings, limitation of tax benefits on certain executive compensation, the rate of tax applied by state and local jurisdictions, the rate of tax applied to earnings outside the U.S., tax incentives, tax credits related to research and development expenditures, changes in unrecognized tax benefits, and tax benefits on stock-based compensation.

Our effective tax rate from continuing operations was 20.1% and 20.6% in the first quarter of fiscal year 2027 and 2026, respectively. The effective tax rate for the first quarter of fiscal year 2027 decreased compared to the prior year period primarily due to an increase in U.S. tax benefits on foreign-derived income, partially offset by a decrease in tax benefits on stock-based compensation.

Discontinued Operations

We continue to have activity associated with ongoing litigation and settlements related to prior divestitures, which is classified within discontinued operations. We had a loss from discontinued operations of $4.1 million in the first quarter of fiscal year 2027 and income from discontinued operations of $0.8 million in the first quarter of fiscal year 2026.

Liquidity and Capital Resources

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

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

Covista’s consolidated cash and cash equivalents balance of $222.2 million and $406.3 million as of September 30, 2026 and June 30, 2026, respectively, included cash and cash equivalents held at Covista’s international operations of $53.0 million and $58.3 million as of September 30, 2026 and June 30, 2026, respectively, which is available to Covista for general corporate purposes.

Cash Flow Summary

Operating Activities

Net cash provided by operating activities from continuing operations in the three months ended September 30, 2026 decreased $16.4 million to $114.3 million, compared to $130.6 million in the prior year period. This decrease was primarily driven by a $51.0 million increase in payments to employees and vendors, partially offset by a $16.1 million increase in cash collected from students and a $13.9 million increase in lease incentives received.

Investing Activities

Net cash used in investing activities in the three months ended September 30, 2026 and 2025 was $37.6 million and $16.0 million, respectively, and was driven by capital expenditures. Capital expenditures for fiscal year 2027 primarily consisted of new campus development at Chamberlain and information technology investments.

Financing Activities

Net cash used in financing activities in the three months ended September 30, 2026 was $259.6 million, primarily driven by repayments under long-term debt obligations of $163.0 million, share repurchases of $81.0 million, and employee taxes paid on withholding shares of $16.2 million. Net cash used in financing activities in the three months ended September 30, 2025 was $49.5 million, primarily driven by employee taxes paid on withholding shares of $39.1 million.

On December 15, 2025, we announced that the Board of Directors (the “Board”) authorized Covista’s sixteenth share repurchase program, which allows Covista to repurchase up to $750.0 million of its common stock through December 15, 2028. As of September 30, 2026, $577.8 million of authorized share repurchases remained under the sixteenth share repurchase program. The timing and amount of any future repurchases will be determined based on an evaluation of market conditions and other factors. See Note 14 “Share Repurchases” to the Consolidated Financial Statements for additional information on our share repurchase programs.

Material Cash Requirements

Long-Term Debt – As of September 30, 2026, under the Credit Facility, Covista had an outstanding principal amount on its Term Loan B of $510.0 million, which matures on March 2, 2033 and requires quarterly principal payments. See Note 13 “Debt” to the Consolidated Financial Statements for additional information on our Credit Facility.

As of September 30, 2026, Covista had $202.6 million of surety-backed letters of credit outstanding in favor of the U.S. Department of Education. See “Off-Balance Sheet Arrangements” in Note 13 “Debt” to the Consolidated Financial Statements for additional information.

As of September 30, 2026, Covista had $85.0 million of surety bonds to satisfy certain state regulatory requirements for licensure.

In the event of unexpected market conditions or negative economic changes that could negatively affect Covista’s earnings and/or operating cash flow, our Credit Facility includes a $500.0 million Revolver with available capacity of $500.0 million as of September 30, 2026.

Operating Lease Obligations – We have operating lease obligations for the minimum payments required under various lease agreements which are recorded on the Consolidated Balance Sheets. See Note 11 “Leases” to the Consolidated Financial Statements for additional information on our lease obligations.

We believe our cash flows from operations, and our existing cash balances, combined with availability under our credit facility and access to the debt markets, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, capital spending, and anticipated stock repurchases for a period that includes the next twelve months as well as the next several years. However, our ability to maintain sufficient liquidity may be affected by numerous factors, many of which are outside our control.

We have engaged in and continue to engage in the review and planning of strategies to refinance or otherwise optimize our capital structure, which may include issuing debt, equity or other securities, or entering into new credit facilities. This review and planning could result in our pursuing one or more significant corporate transactions. There can be no assurance as to when or whether we will determine to pursue any such transaction, whether any such transaction will be successful, or the effects the failure to undertake any such transaction may have on our business, including our ability to achieve our operational, strategic, and financial goals.

Critical Accounting Estimates

There have been no material changes in our critical accounting estimates as disclosed in our 2026 Form 10-K.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements.

Cautionary Disclosure Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact, which includes statements regarding Covista’s future growth. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “future,” “believe,” “project,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “may,” “will,” “would,” “could,” “can,” “continue,” “preliminary,” “potential,” “range,” and similar terms. These forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those described in the statements. Important factors that could cause actual results to differ materially from the expectations expressed or implied by our forward-looking statements are disclosed in Item 1A. “Risk Factors,” of our 2026 Form 10-K and that might be contained in this Quarterly Report on Form 10-Q, all of which should be read in conjunction with the forward-looking statements in this Quarterly Report on Form 10-Q. You should evaluate forward-looking statements in the context of these risks and uncertainties and are cautioned to not place undue reliance on such forward-looking statements. We caution you that these factors may not contain all of the factors that are important to you. We cannot assure you that we will realize the results, performance or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. All forward-looking statements are based on information available to us as of the date any such statements are made, and Covista assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized, except as required by law.

Non-GAAP Financial Measures and Reconciliations

We believe that certain non-GAAP financial measures provide investors with useful supplemental information regarding the underlying business trends and performance of Covista’s ongoing operations as seen through the eyes of management and are useful for period-over-period comparisons. We use these supplemental non-GAAP financial measures internally in our assessment of performance and budgeting process. However, these non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The following are non-GAAP financial measures used in this Quarterly Report on Form 10-Q:

Adjusted net income (most comparable GAAP measure: net income) – Measure of Covista’s net income adjusted for restructuring expense, amortization of acquired intangible assets, strategic advisory costs, loss on debt extinguishment, debt modification costs, U.S. tax benefit due to an increase in foreign-derived income, and loss (income) from discontinued operations.

Adjusted earnings per share (most comparable GAAP measure: diluted earnings per share) – Measure of Covista’s diluted earnings per share adjusted for restructuring expense, amortization of acquired intangible assets, strategic advisory costs, loss on debt extinguishment, debt modification costs, U.S. tax benefit due to an increase in foreign-derived income, and loss (income) from discontinued operations.

Adjusted operating income (most comparable GAAP measure: operating income) – Measure of Covista’s operating income adjusted for restructuring expense, amortization of acquired intangible assets, strategic advisory costs, and debt modification costs.

Adjusted EBITDA (most comparable GAAP measure: net income) – Measure of Covista’s net income adjusted for loss (income) from discontinued operations, interest expense, other income, net, provision for income taxes, depreciation, amortization of acquired intangible assets, amortization of cloud computing implementation assets, stock-based compensation, restructuring expense, strategic advisory costs, and debt modification costs. Provision for income taxes, interest expense, and other income, net are not recorded at the reportable segments, and therefore, the segment adjusted EBITDA reconciliations begin with adjusted operating income.

A description of special items in our non-GAAP financial measures described above are as follows:

• Restructuring expense primarily related to workforce reductions and prior real estate consolidations at Covista’s home office. We do not include normal, recurring, cash operating expenses in our restructuring expense.
• Amortization of acquired intangible assets.
• Amortization of cloud computing implementation assets.
• Strategic advisory costs related to expanding capabilities and bringing new capacities to market to further enhance our strategic position. We do not include normal, recurring, cash operating expenses in our strategic advisory costs.
• Loss on debt extinguishment related to the amendment of the Revolver.
• Debt modification costs related to refinancing our Term Loan B.
• U.S. tax benefit due to an increase in foreign-derived income.
• Loss (income) from discontinued operations includes activity from ongoing litigation costs and settlements related to prior divestitures.

The following tables provide a reconciliation from the most directly comparable GAAP measure to these non-GAAP financial measures. The operating income reconciliation is included in the results of operations section within this MD&A.

Net income reconciliation to adjusted net income (in thousands):

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

Diluted earnings per share reconciliation to adjusted earnings per share (shares in thousands):

(1) Represents the income tax impact of non-GAAP continuing operations adjustments that is recognized in our GAAP financial statements.

Reconciliation to adjusted EBITDA (in thousands):

(1) Consolidated results include Home Office activities not allocated to segments.

There have been no material changes in Covista’s market risk exposure during the first three months of fiscal year 2027 from those set forth in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” contained in our 2026 Form 10-K.

Evaluation of Disclosure Controls and Procedures

Based on an evaluation of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)) that was conducted under the supervision and with the participation of Covista’s management, including our Chief Executive Officer and Chief Financial Officer, our Chief Executive Officer and Chief Financial Officer concluded that Covista’s disclosure controls and procedures were effective as of September 30, 2026.

Changes in Internal Control over Financial Reporting

There were no changes during the first quarter of fiscal year 2027 in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

There have been no material changes to Covista’s risk factors from those set forth since Item 1A. “Risk Factors” contained in our 2026 Form 10-K.