What Legacy Education (LGCY) Said on Its Q4 Earnings Call

Key Points

• Record fiscal 2026 results: Revenue rose 24.8% to $80.1 million, while adjusted EBITDA increased 24.1% to $13.6 million. Fourth-quarter operating margin expanded to 13%, with net income up 53.3% and diluted EPS rising to $0.13.
• Expansion plans are accelerating: Legacy plans to open its first non-California campus in Houston in November 2026, targeting 400–600 students within one to two years. The company is also adding capacity, launching new programs and evaluating acquisitions.
• Enrollment growth continued but timing affected recent starts: Fiscal-year new student starts increased 9% and ending enrollment rose 8.9%, though third- and fourth-quarter starts declined year over year due to program rollouts and nursing-entry changes. Management expects improvement as newer programs mature.

Legacy Education NYSEAMERICAN: LGCY reported record fiscal 2026 revenue and higher profitability, while outlining plans to expand programs, add capacity, enter the Texas market and evaluate acquisitions.

For the fiscal year ended June 30, 2026, revenue increased 24.8% to $80.1 million from $64.2 million a year earlier. Revenue from the company’s preexisting brands rose 16.5%, or $9.9 million, while $6 million of the annual increase reflected a full year of results from Contra Costa Medical Career College, compared with six months in fiscal 2025.

“Fiscal 2026 was a record year for Legacy Education,” Chief Executive Officer LeeAnn Rohmann said. She said the company’s results demonstrated both the scalability of its platform and its ability to invest in future growth while expanding earnings.

Fourth-Quarter Profitability and Margin Expansion

Fourth-quarter revenue rose 12% to $20.1 million, compared with $17.9 million in the prior-year quarter. Revenue from preexisting brands increased 11.3%, according to management.

Operating income for the quarter increased 31.3% to $2.6 million, while operating margin improved to 13% from 11.1%. Net income rose 53.3% to $1.9 million, and diluted earnings per share increased to $0.13 from $0.09.

Adjusted EBITDA increased 30.6% to $3.1 million in the fourth quarter, with adjusted EBITDA margin rising 220 basis points to 15.5%. CFO Brandon Pope said total costs and expenses increased 9.6%, below the company’s 12% revenue growth, supporting operating leverage during the quarter.

Educational services expense increased to $11.3 million, or 56% of revenue, from $9.4 million, or 52.6% of revenue, a year earlier. The increase reflected instructional payroll and staffing, books and supplies, externship costs, and facility and repair expenses. Pope said such expenses can precede revenue because personnel, labs, equipment, curriculum and related readiness requirements must be in place before regulated programs or branches launch.

For the full year, operating income increased 18.3% to $11.8 million, net income grew 21.3% to $9.1 million, and diluted EPS rose 11.9% to $0.66. Adjusted EBITDA increased 24.1% to $13.6 million, while adjusted EBITDA margin was 17%.

Student Growth and Enrollment Trends

New student starts rose 9% during fiscal 2026 to 3,483, while ending student population increased 8.9% to 3,377. Active student population across the company’s preexisting brands rose 8.1% to 2,869.

During the question-and-answer session, Northland Securities analyst Mike Grondahl noted that starts had declined 12% year over year in the third quarter and were down 4% in the fourth quarter. Rohmann said the company does not view leads as an issue and attributed the trend to timing associated with program rollouts, the ramp of Sterile Processing Technician offerings, and changes to vocational nursing entrance requirements.

Rohmann said the company expects Surgical Technology to begin at its third High Desert Medical College campus during the first quarter of fiscal 2027, subject to final operational readiness. She agreed with Grondahl’s assessment that September could resemble June before conditions improve as programs mature and enrollment calendars progress.

Houston Expansion and Program Pipeline

After fiscal year-end, Legacy executed a lease for 28,000 square feet in Houston for a planned Central Coast College branch. The company currently projects an opening in November 2026, subject to required regulatory and accreditation approvals.

The branch would be Legacy’s first campus outside California. Rohmann said the company expects to launch multiple programs simultaneously in Houston, excluding nursing and the certified nurse assistant program. In response to a question from Ladenburg Thalmann analyst Jeffrey Cohen, she said the company expects the Houston site could reach between 400 and 600 students after one to two years.

Rohmann added that the company sees potential for expansion elsewhere in Texas beyond Houston.

Elsewhere, High Desert Medical College’s Lancaster campus added 6,000 square feet, while the company is phasing in additional capacity in Temecula. Contra Costa Medical Career College received approvals for three additional programs: Associate of Applied Science degrees in Magnetic Resonance Imaging and Cardiac Sonography, along with a Veterinary Assistant Certificate. Management said launch timing will depend on operational readiness and applicable requirements.

Legacy is also evaluating acquisition opportunities that could expand its geographic footprint, program portfolio, student base and long-term earnings capacity. Rohmann said the company is actively reviewing opportunities but did not provide further details.

Balance Sheet Supports Investment Plans

Legacy ended fiscal 2026 with $22.7 million in cash and cash equivalents, compared with $20.3 million one year earlier. Working capital was $33.4 million, stockholders’ equity was $52.8 million, and debt remained minimal. The company said it had no revolving credit line or other debt facility.

Operating cash flow was $4 million for the year, reflecting working-capital timing and growth in accounts receivable as the student population expanded. Net accounts receivable totaled $19.9 million at year-end. Capital expenditures rose to $1.3 million from $844,000 in fiscal 2025, reflecting investments in equipment, technology, labs and facilities.

Pope said the company expects margins to continue increasing and anticipates that expansion would be more visible in the second half of fiscal 2027. Management said it plans to manage investment pacing based on approval timing, enrollment opportunities, operational readiness and expected long-term returns.

About Legacy Education (NYSEAMERICAN:LGCY)

Legacy Education, Inc is a postsecondary education company that provides career-focused training and educational programs designed to prepare students for employment in a range of occupational fields. Its offerings are intended to combine classroom instruction with practical, skills-based learning.

The company has historically operated career education institutions serving students in the United States. Its programs have included training related to healthcare and other professional or technical career paths, although the specific schools, programs and operating footprint may change over time.

Legacy Education was previously known as Legacy Education Alliance, Inc and adopted its current name as its business strategy evolved toward postsecondary career education.

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