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Legacy Education Inc. (LGCY)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 delivered strong top-line growth with Revenue of $19.4M (+38.5% YoY) and Diluted EPS of $0.16; Adjusted EBITDA was $3.09M with a 15.9% margin, reflecting upfront expansion and infrastructure costs .
  • Results beat Wall Street consensus: Revenue $19.4M vs $17.7M* and EPS $0.16 vs $0.15*; strength was driven by 31.6% higher new student starts (1,117) and a 37.7% larger student population (3,495) .
  • Management emphasized disciplined investments and sequential margin improvement expectations, citing increased A/R reserve ($178K) and a 26.5% effective tax rate due to option exercises .
  • Balance sheet remained robust ($20.6M cash, minimal debt ~$0.7M), supporting ongoing enrollment momentum, allied health expansion, and accretive M&A .

Note: *Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Strong demand drove YoY growth: Revenue +38.5% to $19.4M; New student starts +31.6% to 1,117; Student population +37.7% to 3,495 .
  • Management execution and tone: “Q1 results demonstrate the strength of our execution... enrollments, EBITDA, margins, and EPS aligning with expectations...” with confidence in sequential improvements .
  • Non-GAAP profitability: Adjusted EBITDA rose to $3.09M; margin 15.9% despite upfront costs; net income increased to $2.19M .

What Went Wrong

  • Margin compression vs recent quarters: Q1 Adjusted EBITDA margin at 15.9% due to upfront expansion/infrastructure costs (“lighter Q1 margins”) .
  • Operating cash flow down YoY due to timing of Title IV disbursements despite strong collections from enrollment growth .
  • Elevated operating expenses: Educational services +43.3% (to $10.3M) and G&A +54% (to $6.1M), driven by new programs, hiring, rent/externship fees, marketing (+$0.4M YoY), professional fees, bad debt, and D&O insurance .

Financial Results

Consolidated Performance vs prior periods and estimates

MetricQ1 FY2025Q2 FY2025Q3 FY2025Q4 FY2025Q1 FY2026Q1 FY2026 Consensus
Revenue ($USD)$14,005,091 $13,635,134 $18,577,565 $17,950,235 $19,401,023 $17,728,330*
Diluted EPS ($)$0.21 $0.10 $0.21 $0.09 $0.16 $0.15*
Net Income ($USD)$2,090,753 $1,399,046 $2,817,465 $1,226,967 $2,186,960 —
Operating Income ($USD)$2,672,276 $1,657,793 $3,665,997 $1,990,260 $2,698,650 —
Adjusted EBITDA ($USD)$2,820,448 $1,872,789 $3,903,427 $2,384,178 $3,091,723 —
Adjusted EBITDA Margin (%)————15.9% —

Note: *Values retrieved from S&P Global.

KPIs and Balance Sheet

KPI / Balance SheetQ2 FY2025Q3 FY2025Q4 FY2025Q1 FY2026
New Student Starts (#)347 (vs 337 PY) 1,227 +15.7% YoY (number N/A) 1,117
Student Population (#)2,768 3,245 3,101 (FY-end) 3,495
Cash and Equivalents ($)$16,869,726 $17,326,998 $20,316,357 $20,586,086
Working Capital ($)$18,926,980 $21,951,513 —$25,900,000

Segment Breakdown

  • The company does not report segment-level financials; results presented on a consolidated basis .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial guidanceFY2026 / Q2–Q4 FY2026None providedNone provided; management expects sequential margin improvement as expansions ramp Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q1 FY2026)Trend
Enrollment momentumSurpassed 3,000 students; strong demand; new programs approved and rolled out Starts +70.7%; enrollment +49.8%; milestone 3,000+ Starts +31.6% to 1,117; population +37.7% to 3,495 Accelerating
Program expansion (nursing, imaging, sterile processing, surgical tech, EMT)Approvals in Salinas; scaling nursing, imaging; hybrid learning investments Added nursing classes (+~53 students) and imaging cohort (+20); EMT rollout described New approvals at Central Coast (MRI AAS, Cardiac Sonography AAS) and HDMC (Surgical Technology AAS); Sterile Processing approvals Broadening
SeasonalityQ2 seasonality; demand robust into Q3 Seasonality noted; Q3 strength pulled-forward starts; Q4 expected lower vs last year Lighter Q1 margins due to upfront costs; expectation for sequential improvement Neutral
M&A pipelinePipeline building; accretive targets; moving beyond CA Active pipeline; integrations progressing (CCMCC) Pursue accretive opportunities; strong balance sheet to support Constructive
Regulatory environmentMonitoring DOE changes; confidence given program focus and outcomes Confident navigating regulatory dynamics; strong placement rates Not directly updated; continued confidence implied Stable
Technology/Hybrid & outcomesLMS (Blackboard Ultra), simulation; strong placement rates Advanced simulation, hybrid models; outcomes highlighted Continued investments referenced (infrastructure, programs) Ongoing investment

Management Commentary

  • “Our Q1 results demonstrate the strength of our execution... enrollments, EBITDA, margins, and EPS aligning with expectations... Our lighter Q1 margins reflect strategic investments in four new programs and expansion costs, which we believe positions us for sequential improvements throughout the year.” — CEO LeeAnn Rohmann .
  • Balance sheet and liquidity: “With a strong balance sheet, including $20.6 million in cash and cash equivalents and minimal debt, we believe we are well-equipped to sustain enrollment momentum, expand our allied health offerings, and pursue accretive opportunities...” .
  • Strategic approvals in Q1: New MRI AAS, Cardiac Sonography AAS (Central Coast College), Surgical Technology AAS (HDMC), Sterile Processing Technician approvals (Integrity College of Health and HDMC) .

Q&A Highlights

  • Q1 FY2026 earnings call transcript was not available in our document set; highlights below reflect recent Q3 and Q2 calls for context.
  • Enrollment/program drivers: Nursing and imaging drove upside; specifics included two additional nursing classes (~53 enrollments) and an imaging cohort (+20) .
  • Seasonality and cadence: Pull-forward of starts boosted Q3; Q4 expected lower than prior year; seasonality depends on cohort timing .
  • EMT rollout: 12-week weekend program approved at HDMC; initial launch in Temecula; county approvals pace broader rollout .
  • Regulatory backdrop: Management confident funding and regulatory processes will be streamlined; programs remain high-need and outcomes-focused .
  • M&A environment: Accretive pipeline with single-owner institutions; increased willingness to transact post-election; integration of CCMCC progressing .

Estimates Context

  • Revenue beat: $19.4M actual vs $17.7M* consensus; EPS beat: $0.16 actual vs $0.15* consensus; both based on S&P Global consensus for Q1 FY2026.
  • Estimate depth: # of estimates = 3 for Revenue and EPS in Q1 FY2026*.
  • Implications: Revenue outperformance on enrollment and program approvals likely drives upward revisions to FY revenue and enrollment KPIs; margin trajectory dependent on pace of ramp and operating leverage from added programs .

Note: *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Demand remains robust with new student starts and population growth translating into consistent revenue beats; watch sequential margin normalization as expansion costs fade .
  • Near-term trading: Positive setup from top-line/EPS beat; catalysts include program approvals, enrollment momentum, and potential M&A updates .
  • Medium-term thesis: Durable growth in allied health education, expanding program portfolio, and hybrid/simulation tech underpin scalability; margins should improve as cohorts ramp .
  • Balance sheet optionality: ~$20.6M cash and minimal debt support organic growth, branch expansions, and accretive acquisitions .
  • Operational focus: Elevated Educational services and G&A reflect investments (faculty, rent/externships, marketing, compliance); monitor opex efficiency and A/R reserves trend .
  • Regulatory risk appears manageable given program focus and outcomes; continued monitoring warranted amid sector scrutiny .
  • Estimate revisions: Expect modest EPS and revenue raises near term given beats; track Adjusted EBITDA margin trajectory through FY as cohorts mature .