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LINCOLN EDUCATIONAL SERVICES CORP (LINC)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue grew 13.2% year over year to $116.5M; adjusted EBITDA rose 68% to $10.5M; diluted EPS was $0.05. Sequentially, revenue was modestly lower vs Q1 ($117.5M) while adjusted EBITDA was roughly flat. Management raised full-year guidance across revenue, EBITDA, net income, capex, and student starts .
  • Student demand remained strong: starts up 19.5% (21.8% ex-Transitional) and end-of-period student population up 18.2% (20.6% ex-Transitional), aided by a timing shift of a large start from late June to July 1 for comparability .
  • Campus development outperformed (East Point, Nashville) and Houston received regulatory approval with enrollments underway for early Q4 starts; Levittown relocation completed with program additions in Q3. Management reaffirmed longer-term targets of ~$550M revenue and ~$90M adjusted EBITDA in 2027 and expects to announce another new campus shortly .
  • Full-year 2025 guidance was raised to Revenue $490–$500M, Adjusted EBITDA $60–$65M, Net Income $13–$18M, Capex $75–$80M, Student Starts +12–15%. CFO flagged temporary Title IV verification-driven cash timing shifting disbursements into H2, with total liquidity of $63.7M at quarter-end .
  • Narrative/catalysts: strong demand in skilled trades, improved marketing efficiency, operating leverage from Lincoln 10.0, and a “beat and raise” versus internal forecasts; raised guidance and visible campus pipeline are key stock narrative drivers .

What Went Well and What Went Wrong

What Went Well

  • “Our operating and financial momentum continued to build… nearly 22 percent student start growth… revenues… more than 15 percent from campus operations… increased consolidated adjusted EBITDA by 68%. As a result… we are raising our full-year guidance.” — Scott Shaw, CEO .
  • Marketing efficiency and operational leverage improved: cost per start down ~13–14%, educational services and facilities as % of revenue fell to 40.2% (from 44.3% YoY), and adjusted EBITDA expanded materially .
  • Campus execution exceeded expectations: East Point hit 36-month enrollment targets in ~18 months; Nashville relocation performing well; Houston enrollments underway; Levittown relocation completed with HVAC, electrical, welding to start in Q3 .

What Went Wrong

  • Healthcare and Other Professions starts declined ~8% due to a pause in Paramus nursing enrollment and discontinuation of underperforming programs (culinary, massage therapy); organic growth ex-these factors was slightly positive but segment trails skilled trades .
  • Corporate expense increased (to $16.4M vs $10.7M prior year) including higher medical claims and compensation tied to growth; SG&A rose 15.9% YoY to $67.1M and was 57.6% of revenue in Q2 .
  • Cash receipts timing headwind: Department of Education verification spike delayed Title IV disbursements; combined with academic calendar shifts, cash collections skew to H2 despite liquidity of $63.7M .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$119.374 $117.506 $116.474
Net Income ($USD Millions)$6.834 $1.944 $1.554
Diluted EPS ($USD)$0.22 $0.06 $0.05
Operating Income ($USD Millions)$10.929 $3.413 $2.878
Adjusted EBITDA ($USD Millions)$19.227 $10.636 $10.511

Margins and Expense Mix

MetricQ4 2024Q1 2025Q2 2025
Adjusted EBITDA Margin %16.1% (19.227/119.374) 9.1% (10.636/117.506) 9.0% (10.511/116.474)
Educational Services & Facilities % of Revenue37.8% (45.122/119.374) 40.3% (47.409/117.506) 40.2% (46.791/116.474); press release cites decline from 44.3% YoY
SG&A % of Revenue52.0% (62.105/119.374) 56.9% (66.904/117.506) 57.6% (67.061/116.474)

Segment and Operating Detail

MetricQ4 2024Q1 2025Q2 2025
Campus Operations Revenue ($USD M)$117.666 $117.506 $116.474
Transitional Revenue ($USD M)$1.708 $0.000 $0.000
Campus Ops Operating Income ($USD M)$25.304 $21.671 $19.310
Corporate Operating Expense ($USD M)$(13.771) $(18.258) $(16.432)

KPIs

KPIQ4 2024Q1 2025Q2 2025 (incl Jul 1 timing)
Total Student Starts (students)3,497 4,610 5,921
Average Population (students)15,904 15,469 16,014
End-of-Period Population (students)15,138 15,904 17,120

Program Mix (Q2 2025, Campus Ops, incl timing adjustment)

MetricTransportation & Skilled TradesHealthcare & Other Professions
Starts (students)4,802 1,119
Average Population (students)12,329 3,685
End-of-Period Population (students)13,502 3,618

Guidance Changes

MetricPeriodPrevious Guidance (Q1 update)Current Guidance (Q2 update)Change
Revenue ($USD M)FY 2025$485–$495 $490–$500 Raised
Adjusted EBITDA ($USD M)FY 2025$58–$63 $60–$65 Raised
Net Income ($USD M)FY 2025$10–$15 $13–$18 Raised
Capital Expenditures ($USD M)FY 2025$70–$75 $75–$80 Raised
Student Starts (%)FY 2025+10%–14% +12%–15% Raised

Notes: Guidance excludes stock-based comp, one-time/non-recurring items, and pre-opening and initial operating losses for new/relocated campuses; program replication losses excluded through launch quarter .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Lincoln 10.0 hybrid modelPhase 1 implemented; ~65% of students; drives space/instructional efficiencies Continued leverage and lower educational services %; marketing ROI improving Operating leverage and lower cost per start; continued efficiencies Improving
Campus development pipelineEast Point opened; Levittown/Nashville relocations; Houston/Hicksville in development Nashville relocation completed; Levittown on track; Houston expected by year-end Nashville outperforming; Levittown relocation completed (program adds in Q3); Houston enrollments underway; Hicksville late 2026 Accelerating
Program mix/replicationsExit low-ROI programs; add 12 program replications over 2024–H1’25 Two new programs launched; five additional in pipeline Program replications continuing (Nashville, Levittown); skilled trades strongest Favoring skilled trades
Regulatory/macro (Title IV, “One Big Beautiful Bill”)Expect level playing field; improved Department processing N/AParent PLUS borrowing limits expected immaterial; Title IV verification spike slowed Q2 drawdowns, shifting to H2 Mixed near-term timing, benign impact
Healthcare/NursingParamus nursing paused; NCLEX pass rates improving; degree-granting pursuit N/AHealthcare down ~8% starts due to Paramus pause/discontinuations; restructuring to add shifts under Lincoln 10 for economics; aiming 2026–27 growth Near-term soft, longer-term improving
Corporate partnershipsExpanded/renewed partnerships; example CMC agreement N/AExpanded Johnson Controls relationship to fire detection unit in Denver Broadening
Capex/investment returnsCapex front-loaded; EBITDA margin stair-step to ~16% by 2027 Revolver upsized to $60M; liquidity strong Capex guidance raised; IRR example East Point: ~$17M cash in → $6–7M cash flow ~20 months post opening Large spend now; returns emerging

Management Commentary

  • Scott Shaw, CEO: “Our growth is driven by continued rising demand for high-value career-focused training… successful implementation of our Lincoln 10.0 hybrid teaching model… and ongoing improvements in our marketing efficiency.” .
  • Scott Shaw, CEO: “Campus development remains a key growth driver… East Point… and Nashville campus outperforming our expectations… Hicksville… on track… hope to announce another new campus development shortly.” .
  • Brian Meyers, CFO: “Adjusted EBITDA grew by 56%… reflecting operating leverage… efficiencies from our Lincoln 10.0 education model, a 13% reduction in marketing cost per start, and continuing decline in bad debt expense as a percentage of revenue.” .
  • Brian Meyers, CFO: “We ended the quarter with $63.7M in total liquidity… temporary slowdown in Title IV drawdowns… disbursements pushed to Q3… expect strong cash collections in the second half.” .

Q&A Highlights

  • Starts cadence: Q3 starts expected relatively flat given tough ~20% comp; Q4 starts expected to align with H1 growth (~18–20%) .
  • Policy: Parent PLUS loan limits (“One Big Beautiful Bill”) viewed as immaterial; Workforce Pell not a major initiative near-term .
  • Capex outlook and returns: 2025 capex raised to $75–$80M; 2026 capex expected lower. East Point ~$17M all-in cash investment targeting $6–7M annualized cash flow ~20 months post opening .
  • Revenue per student: Lower YoY due to pro-rata drop policy change (offsets bad debt) and timing of June-to-July start shifting ~$2M revenue out of Q2 .
  • Healthcare trajectory: Segment currently less profitable; leadership changes underway; Paramus nursing expected to regain enrollment after Board approval; restructuring to blended model to improve capacity and economics .
  • Military/veterans: Degree-granting constraints limit blended programs for veterans in certain states; plan to re-engage as degree-granting approvals are obtained (e.g., NJ) .

Estimates Context

  • Q2 2025 Wall Street consensus for EPS and revenue was not available from S&P Global at the time of this analysis; management noted results exceeded internal forecasts .
  • Forward consensus (reference):
MetricQ3 2025Q4 2025Q1 2026Q2 2026
Primary EPS Consensus Mean ($)0.024*0.342*0.060*0.070*
Revenue Consensus Mean ($USD Millions)$129.9*$131.7*$128.5*$129.7*
EBITDA Consensus Mean ($USD Millions)$12.9*$27.6*$11.8*$12.4*
Primary EPS – # of Estimates5*5*4*4*
Revenue – # of Estimates5*5*4*4*
Target Price Consensus Mean ($)26.2*26.2*26.2*26.2*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Demand, operating leverage, and campus outperformance underpin a guidance raise across all major metrics; near-term financial profile remains seasonally skewed to H2 given Title IV timing .
  • Skilled trades remain the growth engine; program replication and new campuses are scaling capacity efficiently under Lincoln 10.0 .
  • Healthcare is in turnaround mode; restructuring nursing to blended format and securing degree-granting status are catalysts for 2026–27 segment profitability and growth .
  • Capex intensity is elevated in 2025, but management showcased strong unit economics (e.g., East Point IRR proxies); 2026 capex expected lower absent additional leases .
  • Marketing and collections efficiency trends are positive (cost per start down ~13–14%; bad debt as % revenue declining), supporting margin trajectory toward the 2027 target ~16% adjusted EBITDA margin .
  • Watch Q3 starts (flat vs tough comp) and Q4 re-acceleration; execution on Houston launch and Levittown’s program adds are near-term operational proof points .
  • Policy/timing risks appear manageable; Parent PLUS changes are immaterial; Title IV verification impacts are temporary with H2 catch-up expected .

Citations: Press release and 8-K financials ; Q2 2025 earnings call transcript ; Prior quarter and prior year materials for trend .