Legacy Education Inc. Q3 FY2026 Earnings Call - Record Revenue Growth and Disciplinary Scaling in Healthcare Education

Operator: Good day, and welcome to the Legacy Education Inc.’s third quarter fiscal 2026 earnings conference call. Today’s call is being recorded and broadcast live. It will also be archived on the Legacy Education website for future reference. To kick off the call, I will turn it over to Nicole Joseph, Senior Vice President of Legacy Education Inc.

Nicole Joseph, Senior Vice President, Legacy Education Inc.: Thank you and hello, everyone. Legacy Education has issued a news release reporting its financial results and corporate developments for the third quarter and nine months ended March 31, 2026. The release is available in the investor relations section of our corporate website at legacyed.com. With us today on the call are LeeAnn Rohmann, Chief Executive Officer, and Brandon Pope, Chief Financial Officer. On today’s earnings call, statements made by Legacy’s management regarding the company’s business, which are not historical facts, may be forward-looking statements as identified in federal security laws. The words may, will, expect, believe, anticipate, project, plan, intend, estimate, and continue, as well as similar expressions, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance.

The company cautions you that these statements reflect current expectations about the company’s future performance or events and are subject to a number of uncertainties, risks, and other influences, many of which are beyond the company’s control, that may influence the accuracy of the statements and projections upon which the statements are based. Factors that may affect the company’s results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements are based on the information available at the time those statements are made and management’s good faith belief as of the time with respect to future events.

All forward-looking statements are qualified in their entirety by this cautionary statement, and Legacy undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date thereof. I will now hand the call over to LeeAnn Rohmann, CEO of Legacy Education. LeeAnn, to you.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Thank you, Nicole, and good afternoon, everyone. Welcome to Legacy Education’s 3rd quarter fiscal 2026 earnings call. I’m joined today by our Chief Financial Officer, Brandon Pope. Q3 was another strong record-breaking quarter for Legacy Education. I want to frame today’s call around 3 key messages. We continue to grow profitably in a healthcare education market supported by workforce demand. We are demonstrating operating leverage in our core academic delivery model. We are using our balance sheet and profitability to build capacity for the next phase of growth. Put simply, Legacy is not only growing, Legacy is scaling. We are building a larger, stronger, more disciplined healthcare education platform designed to support students, employers, communities, and shareholders over the long term. Legacy Education operates in one of the strongest and most durable sectors in the U.S. economy.

Healthcare workforce shortages remain structural across nursing, imaging, sonography, surgical technology, sterile processing, and other medical support fields. These shortages are being driven by long-term trends, demographic shifts, an aging population, increasing healthcare utilization, expanded access to care, and rising clinical complexity. As I’ve previously stated, technology and AI can support healthcare professionals, but healthcare still depends on skilled people delivering care, judgment, compassion, and hands-on expertise. The reality reinforces the long-term value of high-quality healthcare education and workforce training. Legacy is positioned directly in that need, training students for essential high-demand careers and building a scalable platform to support that demand. For the quarter ended March 31st, 2026, revenue increased 15% to $21.4 million, compared to $18.6 million in the prior year quarter.

This growth was driven primarily by expanded program offerings, improved retention, and stronger execution across our existing campus platform. With Contra Costa Medical Career College now fully integrated into the prior year comparison base, Q3 demonstrates Legacy’s ability to generate organic growth from a larger, more mature operating platform. Adjusted EBITDA increased to $4.4 million compared to $3.9 million last year. Net income increased to $3 million compared to $2.8 million last year. Diluted earnings per share increased to $0.22 compared to $0.21 in the prior year period. Importantly, Q3 reflects continued sequential progress. Revenue increased from $19.2 million in Q2 to $21.4 million in Q3. For the first nine months of fiscal 2026, revenue increased to $60 million compared to $46.2 million last year, an increase of nearly 30%.

While the year-over-year growth rate in Q3 reflects comparisons against a larger operating base, the underlying trajectory remains strong. A larger platform continuing to grow profitably, improve leverage, and build capacity for the next phase. In Q2, we outlined priorities around program expansion, technology-enabled delivery, retention, Contra Costa’s full integration, and disciplined expansion. Q3 reflects continued execution against those priorities. During the quarter, we converted program expansion into measurable enrollment opportunities. We added surgical tech cohorts across CCC, which is in Salinas, and HDMC campuses of Lancaster and Temecula, generating 26 enrollments. We added sterile processing across HDMC campuses and the ICH Pasadena campus, generating 49 enrollments. Due to delayed state approvals, it shortened our marketing runway, giving us only a couple of weeks to enroll students, which didn’t allow to fully fill these classes this quarter.

We are also preparing CCC Salinas for the additional cardiac sonography and MRI program expansion in Q4. We expanded facility capacity in Lancaster by adding 6,000 square feet. In Temecula, we secured a total of 53,000 square feet of a facility. This is expected to be assumed in stages. 5,000 square feet now, 31,000 square feet will come in June, and 17,000 square feet will come in January 2028. These investments are designed to support current and future programs and enrollment growth. Together, these actions show disciplined execution and strengthen the operational infrastructure required to support a larger healthcare education platform. One of the most important indicators in Q3 was the improvement in educational services expenses as a % of revenue.

Educational services expense improved from 51.7% of revenue compared to 54.4% in the prior year quarter, representing a 270 basis points of improvement. This is a meaningful evidence that the model is scaling. It shows that as we grow, we can generate leverage in our core academic delivery functions while continuing to invest in faculty support, curriculum consistency, labs, student services, and academic quality. At the same time, healthcare education requires capacity building before revenue is fully realized. Faculty, curriculum, labs, the equipment, compliance approvals, technology systems, facilities, and clinical partnerships must be in place before programs and branches can scale effectively. This is why this quarter’s growth-related spend was tied to branch readiness, selective acquisition evaluation, program infrastructure, training materials, software systems, marketing support for future student starts, compliance readiness, and facility phased expansion. These are not simply overhead costs.

They are investments designed to support future enrollment growth, program expansion, branch development, and long-term shareholder value creation. Because we are funding this capacity from current profitability and balance sheet strength, the growth strategy remains disciplined. Branch expansion represents one of the important organic growth opportunities in front of Legacy. During Q3, we identified our next branch location. We signed a letter of intent for a facility and are finalizing the applications with the applicable state and federal regulatory agencies. While this process remains subject to required approvals, this is an important milestone in Legacy’s next phase of growth. Our approach remains disciplined. We’re focused on markets with clear workforce demand, strong student opportunity, appropriate program alignment, regulatory feasibility, and potential for meaningful long-term financial contribution.

Q3’s progress demonstrates that Legacy is moving from planning to execution on organic expansion from a position of strength with profitability, liquidity, low leverage, and an operating platform capable of supporting disciplined growth. Our tech and touch approach remains practical and focused. The use of technology where it improves visibility, consistency, and early intervention while keeping faculty engagement and hands-on instruction at the center of healthcare education. During Q3, we continued advancing targeted academic tools, curriculum consistency, faculty development, and student support practices that help strengthen retention and outcomes. The goal is not technology for its own sake. The goal is more consistent and scalable academic models. Retention remains one of the clearest indicators of student engagement, academic quality, faculty support, and operating discipline. Legacy already operates with a strong retention profile, and during the quarter, we saw even further improvement in overall attrition trends.

Retention is an important proof point that Legacy Education is building a platform capable of supporting students through completion, employment, and long-term institutional value creation. As we continue to operate with a compliance-first mindset, our accreditations and Title IV participation remain fully intact. In Q3, our Integrity College of Health in Pasadena received a 6-year reaccreditation grant, the maximum period awarded by our accreditor, ABHES. We recently announced a 5-year reaccreditation grant renewal for Contra Costa Medical Career College through our accreditor, ADHCET. These outcomes reflect the strength of our academic delivery, student outcomes, institutional compliance, and continuous improvement culture. The regulatory environment in career education continues to evolve, and we remain actively engaged in monitoring Department of Education developments and broader sector policy activities. These higher standards favor institutions that are well-capitalized, outcomes-focused, compliance-oriented, and capable of executing consistently across multiple campuses and programs.

Importantly, our strategy aligns with where the industry is moving. We also continue evaluating selective acquisition opportunities that align with our healthcare-focused platform. Our objective is to not simply buy revenue, it is to acquire institutions or programs where Legacy can improve execution, strengthen outcomes, expand capabilities, and create a long-term value over time. As of March 31, 2026, cash and equivalents were $21.7 million. Stockholders’ equity increased to $49.5 million, and debt levels continue to remain minimal. We believe profitability, low leverage, available capital, and disciplined execution are competitive advantages. We are using our financial strength to create capacity for future growth. With that, I’ll turn the call over to Brandon Pope for a more detailed review of our financial performance. Brandon?

Brandon Pope, Chief Financial Officer, Legacy Education Inc.: Thank you, LeeAnn. Legacy Education delivered another strong quarter with continued revenue growth, increased profitability, improved educational services leverage, and disciplined operating execution while funding future growth initiatives. Let’s review our third quarter fiscal 2026 results. Revenue increased 15% to $21.4 million from $18.6 million last year, supported by a 1,078 new student starts driven by expanded program offerings, improved retention, which resulted in a 9.4% increase in student population to 3,550 from 3,245. EBITDA increased 8% to $4.1 million from $3.8 million last year. Adjusted EBITDA increased 12.6% to $4.4 million from $3.9 million last year. Adjusted EBITDA margin was 20.6%.

Our effective tax rate was 28.7% compared to 28.6% last year. Net income increased 7.5% to $3 million from $2.8 million last year. Diluted EPS increased 4.8% to $0.22 from $0.21 last year. Turning to third quarter operating expenses, educational services expense totaled $11 million or 51.7% of revenue compared to $10.1 million or 54.4% of revenue last year. The 270 base support improvement was primarily due to operating efficiencies and compensation, offset by increases in externship fees and non-cash compensation. General and administrative expenses were $6.2 million or 28.8% of revenue compared to $4.6 million or 24.9% of revenue last year.

The increase as a percentage of revenue was primarily due to marketing investments supporting current and future student starts, bad debt expense associated with higher revenue enrollment levels, and infrastructure investments related to program growth, branch readiness, compliance, software systems, and operational scalability. Bad debt expense remained consistent at 5% of revenue. Overall, third quarter reflects continued demand in our programs, improved retention across the platform, and disciplined operating performance as we continue scaling the business. Looking at our nine-month ended fiscal 2026 results, revenue increased 29.7% to $60 million from $46.2 million last year, driven by a 12.7% increase in new student starts to 2,788 from 2,473 last year. EBITDA increased 16.1% to $9.6 million from $8.3 million last year.

Adjusted EBITDA increased 22.3% to $10.5 million from $8.6 million last year. Our effective tax rate was consistent at 28.1%. Net income increased 15.1% to $7.3 million from $6.3 million last year, and diluted earnings per share increased to $0.52 compared to $0.51 last year. Now turning to our 9 months operating expenses. Educational services expense totaled $31.7 million or 52.8% of revenue compared to $24.8 million or 53.7% of revenue last year. The decrease as a percentage of revenue was primarily attributable to operating efficiencies and compensation and facility costs, partially offset by increases externship fees and non-cash compensation.

General and administrative expenses are $18.4 million or 30.7% of revenue compared to $12.9 million or 28% of revenue last year. The increase as a percentage of revenue was primarily attributable to increased professional fees, marketing, bad debt expense, and growth-related investments supporting program expansion, branch readiness, compliance infrastructure, software systems, and operational scalability. These results continue to demonstrate the strength of the platform and our ability to grow while maintaining profitability and funding the infrastructure needed for future growth. Let’s turn to the balance sheet. As of March 31st, 2026, we have a strong balance sheet with $21.7 million in cash and working capital of $30.9 million and low debt of only $600,000.

Our accounts receivable reserve as a percentage of accounts receivable increased slightly to 12.2% from 11.5% last quarter. This reflects the timing of quarterly accounts receivable write-offs as we implemented a quarterly analysis this year compared to an annual allowance analysis last year. Operating cash flow remained positive at $2.9 million and reflects the timing of Title Four disbursement and income tax payments within the quarter. We believe our strong liquidity position, low leverage, and continued profitability provide meaningful flexibility as we fund future growth initiatives. This balance sheet gives us optionality. It allows us to support organic growth, invest in new program and branch development, evaluate selective acquisitions, and maintain resilience in a regulated and evolving operating environment. We remain focused on disciplined capital allocation and long-term shareholder value creation. With that, I’ll turn it back to LeighAnn.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Thank you, Brandon. As we look ahead, we believe Legacy is entering its next stage as a scalable healthcare education platform. Over the past several years, we have built the foundation, campus scale, program breadth, acquisition integration capability, compliance infrastructure, and public company discipline. Now we’re focused on converting that foundation into the next stage of growth through organic new programs, branch expansion, improved retention, operating leverage, technology-enabled academic delivery, and selective acquisition opportunities. Our strategy remains clear: responsible growth, strategic scale, compliance discipline, student outcomes, and long-term shareholder value. Importantly, we are pursuing the strategy while continuing to deliver revenue growth, earnings growth, improved educational services leverage, strong liquidity, low leverage, and disciplined financial execution. We are not sacrificing profitability to grow. We are using profitability to build a larger, stronger, more scalable healthcare education platform.

Legacy sits at the intersection of healthcare workforce demand, career-focused education, operational scalability, and disciplined execution. We believe that combination creates a meaningful long-term opportunity supported by durable demand and a balance sheet that allows us to invest from strength. With that, I will turn it over to the operator to open the line for questions. Operator?

Operator: Thank you. With that, we will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 to remove yourself from the queue. For any participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Jeffrey Cohen from Ladenburg Thalmann. Please proceed with your question.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Good afternoon, LeeAnn and Brandon. Thanks for taking our questions. A couple from our end. Firstly, talk a little bit more about M&A and also organic growth as far as taking on additional square footage. Talk about locations both, perhaps in the state of California and maybe any, color or flavor beyond California.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Hey, Jeff, great to hear from you. You know, I’m gonna try to remember all of this. You might have to jump back in, branch expansion is that we have been talking about, which has been part of our plan from both branch level as well as acquisitions. We are now teed up in terms of our branch expansion. I wanna wait for the approvals that I believe we’re close to, it will be outside of California. We’re excited about what we went through in terms of the opportunities for the programs that we offer in the states that we’re looking for that would be ready to receive us and ready for the growth.

As it relates to the acquisition opportunities, we are well into looking at a few that we are hopeful that we’re gonna maintain. I’m maintaining my bullish spirit that we’re close and that these will complement well with regard to what we are looking at, and it’s so robust and rich out there. Did you mention the programs and organic growth?

Jeffrey Cohen, Analyst, Ladenburg Thalmann: No. I was gonna jump to my second question.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Okay.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Can you talk about, on one hand, the pipeline and the demand from students for Legacy Education and student starts and how that funnel looks like? On the other end, could you talk about employers’ demand for students, placement data, outcomes, et cetera? Thank you.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Absolutely. The Legacy programs that we currently offer, again, we remain incredibly competitive in the area of, you know, our, our medical support programs, which are our short programs. We have just put up all of our outcomes for the year, and our outcomes are strong with regard to placing in each of the communities that we serve, and those programs are still in demand. As you look at our longer programs, our most recent in the imaging and in particular nursing and the recent Surg Tech and Sterile Processing, we remain incredibly competitive. Our communities are looking for these programs because we don’t have a lot of other institutions that are teaching Surg Tech, Sterile Processing, Cardiac Sonography.

These programs that we have added are high in demand and the employers are seeking us, and we are actually already partnered with them to receive our students in the externship component of their programs.

Jeffrey Cohen, Analyst, Ladenburg Thalmann: Super. That’s very helpful. Thanks very much for taking our questions. Nice quarter.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Thank you, Jeff.

Operator: Thank you. Our next question comes from the line of Mike Grondahl with Northland Securities. Please proceed with your question.

Mike Grondahl, Analyst, Northland Securities: Thank you, LeeAnn and Brandon. I wanted to drill down a little bit on the expansion at Lancaster and Temecula. Could you say again what the square footage was, but then also give us an indication of the ramp in enrollment and maybe, you know, what is the total capacity at each one for new students?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Sure. Let me break that down for it. Lancaster, currently in 26,000 square feet, and we added 6,000 more square feet there. We added that 6,000 square feet. We’ve already ramped it up, and we have moved our imaging programs over into that additional 6,000 square feet in Lancaster. Temecula, we are currently sitting in 16,000 square feet, and this is where we have looked at where our future, you know, by 2028, that we will look to put all of the Temecula students into 53,000 square feet, but we wanna do it in a phased-in approach. We took 5,000 square foot now because as we added surg tech and sterile processing here, we moved our nursing students over into the 5,000 square feet in Temecula.

As we ramp up these programs, that we are currently offering, that’s where we’ll take on the additional 30,000 square feet to start moving programs over there. We’ll do that up through June so that there’s no disruption and there’s no delay with regard to enrolling for any of these programs. You know, taking on the cost for that too, we’re doing over a phased-in approach. The capacity of these campuses right now, both Lancaster and Temecula, are some of our larger campuses, and we have well over 800 plus students in Lancaster and just over 800 students in Temecula. This expansion will allow us to comfortably take ourselves up well into, you know, the 1,000 to, you know, close to 1,200-1,500 additional students.

Mike Grondahl, Analyst, Northland Securities: Would you say that, I’m gonna say it generally, 800 at each location to say 1,000 to 1,200, is that over the next 1 to 2 years? How do you see that playing out?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: That’s over the next 1-2 years, given the new programs that we would be adding and then the ramp up for those new programs that we would be adding, that’s where we would see it coming into the next 12-24 months.

Mike Grondahl, Analyst, Northland Securities: Got it. Then I know the new branch location is an LOI. What type of capacity is there and how would you see enrollment ramping?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Excellent. Excellent question. Enrollment ramping is the approvals that we currently have in the Central Coast College campus, is where we would be able to take those programs, and we will be approved over there for all of them except for the additional requirements that are gonna be required for nursing. We will have a phased and kind of longer term that we will be able to get nursing ramped up. We will have, you know, close to 17 programs that we will be able to roll out as soon as we open the doors there. In terms of the square footage, we are looking at 25,000 square feet.

Mike Grondahl, Analyst, Northland Securities: Okay.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Approximately.

Mike Grondahl, Analyst, Northland Securities: That’s a lot. That new branch, if everything plays out as you envision, does that also support 600-800 students over a couple years?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Yes. Yes. There’s opportunity for us to be able to expand in the location that we’ve identified, to be able to get it upwards to adding additional square footage right at the same facility.

Mike Grondahl, Analyst, Northland Securities: Got it. That’s helpful. Then maybe lastly, you mentioned this surgical tech and sterile processing programs that you rolled out at a couple campuses. Are those continuing to ramp in June? I guess, what kind of capacity is left there? You mentioned 26 students and then 49 enrolling in the sterile processing. Is there quite a bit of capacity left?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Yes, there’s capacity left. For us, you know, because of the fact that we didn’t anticipate the state approvals to take the longer period of time for us to get the state approvals, it just shortened our marketing runway. As we see our leads flow up, you know, we’re positioned. We already have the faculty. We have the capacity, and we can add the students. We just needed more time to be able to get those classes filled than we had. You can’t start-

Mike Grondahl, Analyst, Northland Securities: Got it. You have the state approvals now, correct?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Yes. We have the state approvals now, and that’s where you see that we got the 26 enrollments and then in the in the sterile processing, we have the 60 enrollments.

Mike Grondahl, Analyst, Northland Securities: Got it. It’s continuing to ramp up this quarter in June?

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Yes. Yes.

Mike Grondahl, Analyst, Northland Securities: Okay.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Also, as you know in my comments that, for Q4, we are also then for, in Salinas, rolling out the MRI and the cardiac sonography.

Mike Grondahl, Analyst, Northland Securities: Got it. Thank you. That’s all for me.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Operator?

Operator: Yep. No further questions at this time. I’ll pass it back to you, LeeAnn, for closing remarks.

LeeAnn Rohmann, Chief Executive Officer, Legacy Education Inc.: Thank you. Q3 reflects continued progress, disciplined execution, and confidence in our long-term strategy. We delivered growth and profitability while funding the infrastructure that supports Legacy’s next phase. We are proving that Legacy is not only growing, Legacy is scaling with discipline. We remain focused in empowering students, supporting employers, advancing healthcare education, and creating sustained value for shareholders. To our employees and faculty, thank you, thank you, thank you for your dedication to our students and our mission. To our students, thank you for trusting Legacy Education with your career goals. To our shareholders, thank you, thank you, thank you for your continued confidence and support. We appreciate your continued interest in Legacy Education and look forward to updating you next quarter. Operator, back to you.

Operator: Thank you. With that, ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful rest of your day.