Legacy Education Q1 Earnings Call Highlights

Key Points

• Revenue increased 3.1% to $20 million, but operating income fell to $0.9 million from $2.7 million. A $687,500 estimated legal settlement and higher spending on staffing, facilities and development weighed on results; excluding the settlement, diluted earnings would have been $0.10 per share.
• Student enrollment rose 5.4% year over year to 3,684, despite new starts falling 9.9% to 1,006. The company said 105 healthcare-program starts shifted into the second quarter because of approval and scheduling delays, and all 105 subsequently occurred.
• Legacy is preparing to open its first campus outside California in Houston, pending regulatory and accreditation approvals, and expects to begin operating before year-end if approvals arrive on schedule. It also plans new programs in California and is conducting due diligence on another acquisition target.

Legacy Education NYSEAMERICAN: LGCY reported higher revenue and a record student population for its fiscal first quarter, but earnings fell as the company invested in staffing and facilities and recorded an estimated legal settlement.

Revenue rose 3.1% to $20 million for the quarter ended September 30, 2026, from $19.4 million a year earlier. Operating income declined to $0.9 million from $2.7 million, while net income was $0.9 million, or $0.06 per diluted share.

Chief Executive Officer LeeAnn Rohmann said the company increased spending by more than $1 million on faculty and staff, facilities and program development. Annual audit and legal expenses also rose, and an unprojected $687,500 estimated legal settlement contributed to the earnings decline.

Excluding the estimated settlement, operating income would have been $1.6 million and diluted earnings would have been $0.10 per share, Chief Financial Officer Brandon Pope said. On that basis, operating margin was 7.8%, compared with 13.9% a year earlier. Adjusted EBITDA fell to $2.1 million from $3.1 million, and the adjusted EBITDA margin declined to 10.4% from 15.9%.

Enrollment Rises Despite Fewer New Starts

Legacy ended September with 3,684 students, up 5.4% from a year earlier and 9.1% from June 30. New student starts totaled 1,006, down 9.9% year over year, including 897 starts in programs eligible for federal Title IV student aid, which declined 5.6%.

Rohmann said 105 MRI and cardiac sonography starts shifted into the second quarter because of approval delays and the scheduling calendar for associate degree programs. Had those starts occurred in the first quarter, Title IV starts would have risen approximately 5.5% year over year, she said. During the question-and-answer session, Rohmann confirmed that all 105 starts had occurred.

Cash-pay programs accounted for more than half of the year-over-year decline in total starts but only 1.3% of first-quarter revenue, Rohmann said. Title IV programs generate an average of $24,000 in annual revenue per start, while cash-pay programs generate an average of $3,000 over the full program, according to the CEO.

Ultrasound technician, sterile processing and surgical technology programs generated 338 new starts, nearly double the 172 recorded a year earlier. Rohmann also said changes to vocational nursing admissions and curriculum had reduced starts by 264 compared with original expectations over the past three quarters, but vocational nursing attrition improved 42% over the past 18 months.

Across Legacy, 144 of 168 first-time candidates passed the NCLEX-PN nursing licensure exam in the 12 months ended September 30, a rate of 85.7%. The companywide student attrition rate across programs was 1.5% per month, Rohmann said.

Houston Opening Awaits Approvals

Legacy is preparing to open its first campus outside California in Houston, where it signed a lease for approximately 28,200 square feet in September. Rohmann said the Texas Workforce Commission and accreditor ACCET had completed visits, and the company expected related approvals by the end of November. Subject to those approvals, Legacy anticipates opening before the end of the calendar year.

Asked about the enrollment ramp, Rohmann agreed with an analyst’s characterization that the campus could have 300 students enrolled by July 1, while noting that the timing depends on approvals. She said the company could see activity by the end of December, though that timing would be challenging depending on when it receives approval to open fully.

At Contra Costa Medical Career College, Legacy plans to launch cardiac sonography, MRI and veterinary assistant programs in the second half of fiscal 2027. Rohmann said the U.S. Department of Education approved the change of ownership and control and issued a provisional program participation agreement through September 2029 without a letter of credit or growth restrictions.

Legacy has also identified another acquisition target and is deep in due diligence, Rohmann said. She declined to commit to a timeline for a definitive agreement, describing the remaining work as primarily regulatory rather than a question of price.

Expenses Increase as Company Adds Capacity

Educational services expense rose to $11.7 million from $10.3 million, reflecting higher staffing and occupancy costs, among other items. General and administrative expense increased to $7.2 million from $6.1 million, including the estimated settlement and higher professional fees. A $400,000 reduction in advertising expense partly offset those increases, Pope said.

Rohmann said Legacy began paying occupancy costs for a second phase of space in Wildomar on July 1, but city permits and approvals delayed its use for instruction. The company expects to spread those costs across more students as additional cohorts use the space.

Legacy ended the quarter with $21.7 million in cash and approximately $34 million in working capital. Operating activities used $900,000 in cash during the quarter, compared with $1.1 million a year earlier. Rohmann said the company’s priorities for the rest of fiscal 2027 include growing starts while maintaining admissions standards, launching approved programs and aligning spending with enrollment and cash generation.

About Legacy Education (NYSEAMERICAN:LGCY)

Legacy Education, Inc. is a postsecondary education company that provides career-focused training and degree programs. Its offerings are concentrated in healthcare and other vocational fields, with programs designed to prepare students for employment in areas such as nursing, medical assisting, dental assisting, business, legal services and related occupations. The company operates educational institutions including North-West College and Glendale Career College in California, as well as Nevada Career Institute in Nevada.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.