Legacy Education Inc. (LGCY) Q2 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call indicates strong financial performance with revenue and net income growth, effective cost management, and strong liquidity. New program launches and strategic investments suggest future growth potential. The Q&A section revealed robust enrollment and program expansion, with positive sentiment from analysts. Despite some vague responses, the overall outlook remains optimistic. Additionally, the company is exploring M&A opportunities to expand its market reach. Considering these factors, the stock price is likely to see a positive movement over the next two weeks.

Key Financial Performance

Revenue (Q2 FY2026) $19.2 million, a 40.7% increase year-over-year. This growth was driven by a 49.4% increase in new student starts, reflecting strong enrollment and program expansion.

Adjusted EBITDA (Q2 FY2026) $3 million, a 61.6% increase year-over-year. The increase reflects both scale and effective cost management.

Net Income (Q2 FY2026) $2 million, a 46% increase year-over-year. This improvement was attributed to disciplined expense management and operational progress.

Ending Population (Q2 FY2026) 3,234, a 16.8% increase year-over-year. This was driven by strong enrollment, disciplined marketing execution, and the rollout of new programs.

Revenue (6 months ended December 31, 2025) $38.6 million, a 39.6% increase year-over-year. This growth was driven by a 37.2% increase in new student starts.

Adjusted EBITDA (6 months ended December 31, 2025) $6.1 million, a 30.3% increase year-over-year. The increase reflects scale and effective cost management.

Net Income (6 months ended December 31, 2025) $4.2 million, a 21.2% increase year-over-year. This was attributed to disciplined expense management and operational progress.

Educational Services Expense (Q2 FY2026) $10.3 million, 53.6% of revenue, compared to 54.9% last year. The 130-basis point improvement was due to operating efficiencies and compensation, offset by increases in externship fees and noncash compensation.

General and Administrative Expenses (Q2 FY2026) $6.1 million, 31.8% of revenue, compared to 31.9% last year. The slight improvement was due to operating efficiencies in professional fees and insurance, offset by increases in bad debt expense.

Cash Balance (Q2 FY2026) $21.1 million, with working capital exceeding $27 million and little debt at $600,000. This reflects strong liquidity and financial health.

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Operating Highlights

New Programs: Launched MRI program at Central Coast College Campus with 33 new starts. Cardiac sonography program to begin enrollment in the second half of the fiscal year. Accreditation approval received for the fourth sterile processing program, now enrolling on all 4 campuses. Surgical Technology program gaining momentum with first cohorts set to begin in the second half.

Hybrid Delivery Model: Introduced hybrid delivery model at Contra Costa Medical Career College for surgical technology and diagnostic medical sonography programs, enabling additional cohort starts.

Market Demand: Healthcare occupation sector projected to grow significantly from 2024 to 2034, with 1.9 million openings annually due to employment growth and replacement needs.

Expansion Plans: Actively pursuing regulatory approvals for registered nursing programs and targeted surgical program specialties. Evaluating acquisitions and organic expansion opportunities, including branch campuses and new programs.

Financial Performance: Revenue grew 40.7% year-over-year to $19.2 million in Q2. Adjusted EBITDA increased 61.6% to $3 million. Net income rose 46% to $2 million. Year-to-date revenue grew 39.6% to $38.6 million, with adjusted EBITDA up 30.3% to $6.1 million.

Campus Integration: Integration of Contra Costa Medical Career College completed, with enrollment reaching over 500 students. Integrity College of Health Campus in Pasadena received a 6-year reaccreditation grant.

Retention and Credentialing: Retention rates remained strong. Imaging programs held credentialing review sessions, leading to more students entering credentialing pathways and passing exams.

Growth Strategy: Focused on sustained enrollment growth, curriculum expansion, operational innovation, and measured expansion through acquisitions and new programs.

Leadership: Hired Joe Bartolome as Senior Vice President of Operations to oversee growth, branch expansions, acquisitions, and operational turnarounds.

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Risk or Challenges

Regulatory Compliance and Policy Changes: The company operates in a highly regulated industry, and consistent regulatory changes pose a risk. The company must maintain compliance with federal policies, accreditations, and Title IV approvals. Ongoing Department of Education rulemaking could potentially impact operations.

Operational Scaling and Integration: The company is pursuing growth through acquisitions and organic expansion, which requires seamless integration and operational readiness. Failure to integrate new campuses or programs effectively could disrupt operations and financial performance.

Dependence on Enrollment Growth: The company's financial performance heavily relies on sustained enrollment growth. Any decline in demand generation, marketing effectiveness, or referral channels could adversely impact revenue and profitability.

Economic and Workforce Challenges: The company is addressing urgent national labor needs in healthcare, including significant staffing shortages in nursing and other allied health roles. These workforce challenges could impact the company's ability to meet its strategic objectives.

Technological and Educational Delivery Risks: The company is implementing hybrid and technology-enabled educational models. Any failure in technology adoption, faculty preparedness, or maintaining consistent course quality could negatively affect student outcomes and retention.

Financial Management and Cost Control: The company is managing increased operating expenses, including professional fees, facilities, and bad debt expenses. Ineffective cost management could erode profitability despite revenue growth.

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Guidance & Outlook

Future Enrollment Growth: The company plans to sustain enrollment growth by optimizing digital performance and marketing, expanding high-conversion referral channels, strengthening employer relationships, and building deeper high school partnerships to create a reliable pipeline of career-motivated students.

Curriculum Expansion: Legacy Education is focused on deploying and ensuring operational readiness for four new allied health programs, pursuing additional regulatory approvals for registered nursing authorization across multiple campuses, and targeting surgical program specialties to meet strong market demand.

Operational Innovation: The company will continue advancing hybrid delivery and simulation-based models to enhance the student experience, support faculty with improved tools, and ensure consistent course design and visibility into student progress.

Expansion Strategy: Legacy Education is evaluating accretive acquisitions and organic expansion opportunities, including branch campuses and new programs aligned with its operating model. The company aims to announce its next acquisition deal within this fiscal year.

Compliance and Regulatory Readiness: The company is actively monitoring Department of Education rulemaking and ensuring compliance with regulatory changes. Legacy Education's strategy aligns with higher industry standards, focusing on delivering strong outcomes and training graduates for high-need healthcare roles.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you talk about the programs or areas that performed well or outperformed in the December quarter?

A:The December quarter saw robust performance with nearly 600 enrollments. Key contributors were additional cohorts in Contra Costa Medical Career College due to hybrid approval, benefiting the ultrasound/diagnostic medical sonography and surgical tech programs. Vocational nursing also contributed to increased enrollments. New programs like MRI launched, with more programs expected in Q3 and Q4 pending state approvals.

Q:What new programs are starting in Q1 and Q2, and what type of students can they support?

A:Programs started in Q1 and Q2 include Surge Tech in HDMC, sterile processing, and cardiac AAS programs. The MRI program in Central Coast also started. These programs typically support cohorts of 20-30 students initially, with recurring starts every 3-6 months.

Q:What is the outlook for acquisitions this year?

A:The company is confident in completing an acquisition before the end of the fiscal year, provided there are no surprises in the process.

Q:Are the M&A opportunities being considered outside of California?

A:Yes, the company is considering opportunities both inside and outside California, including single and multi-campus facilities, with a focus on adjacent states.

Q:Are students in hybrid programs holding part-time or full-time jobs?

A:Hybrid programs are full-time commitments. However, they offer flexibility, allowing students with part-time jobs to participate. Many students prefer the hybrid model for its combination of online theory and on-campus lab work.

Q:How does the back half of the year compare to the front half in terms of cadence?

A:While no specific outlook was provided, the company aligns with existing models and sees potential opportunities with new program rollouts in Q3 and Q4.

Q:Why was revenue higher per student this quarter compared to last year?

A:Revenue per student increased from $5,100 to $5,700 due to the absence of revenue in Q2 of the previous year despite having a student population. Additionally, higher-margin programs with more starts contributed to the increase.

Q:Review of Unclear Management Responses

A:Management avoided giving a specific outlook on the back half of the year, using vague language about aligning with models and potential opportunities from new program rollouts in Q3 and Q4.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

LGCY Transcript

Legacy Education Inc. (LGCY) Q2 2026 Earnings Call Transcript

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Legacy Education Inc. (LGCY) Q1 2026 Earnings Call Transcript

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The earnings call revealed strong financial performance with a 38.5% revenue growth and a 9.6% increase in EBITDA, despite margin decline due to strategic investments. The Q&A section highlighted a robust acquisition pipeline and strategic capacity planning. Although management was vague on certain details, overall sentiment was positive due to strong enrollment momentum, new program launches, and strategic partnerships. This suggests a likely positive stock price movement in the short term.

Legacy Education Inc. (LGCY) Q4 2025 Earnings Call Transcript

Positive9-25

The earnings call revealed strong financial performance with significant revenue and net income growth. Despite some concerns about enrollment dependence and economic uncertainties, management demonstrated operational efficiency and a robust balance sheet. The Q&A highlighted capacity expansions and new program launches, though management was cautious with forward guidance. Overall, the positive financial metrics and strategic expansions suggest a positive stock price movement.

Legacy Education Inc. (AMEX:LGCY) Q3 2025 Earnings Call Transcript

Positive5-17

The earnings call highlights strong financial performance with a 50.7% revenue increase and a 57.1% net income rise, driven by enrollment growth and program expansion. Despite competitive pressures and regulatory challenges, the company maintains a strong cash position and minimal debt. The Q&A session confirms strong program performance, particularly in nursing and imaging, although some uncertainty remains regarding future acquisitions and seasonality impacts. Overall, the positive financial results and strategic focus on growth initiatives suggest a likely positive stock price movement.

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