Legacy Education Inc. 2026 Q4 Earnings Call

Thank you, and hello, everyone. Legacy Education has issued a news release reporting its financial results and corporate developments for the fourth quarter and fiscal year ended June 30th, 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 securities 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 projection 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 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. Thank you, Nicole, and good afternoon, everyone.

Fiscal 2026 was a record year for Legacy Education. It was also a year in which our results, operating execution, and balance sheet gave us greater capacity to pursue the next stage of growth. The central message for today's call is straightforward. Fiscal 2026 demonstrated the strength and scalability of our operating platform. We produced strong organic revenue growth across our preexisting brands, successfully integrated Contra Costa Medical Career College, and finished the year with clear operating leverage. We entered fiscal 2027. We have meaningful growth already embedded in the existing platform, additional capacity and programs coming online, a new geographic market under development, and acquisition opportunities under active evaluation. We crossed $80 million in annual revenue, and revenue from our preexisting brands grew 16.5%.

We ended the year with a larger student population, expanded our program portfolio and campus capacity, advanced Houston, strengthened our operating infrastructure, and finished the year with the financial resources to continue investing in growth. We also finished the year with a strong fourth quarter. Revenue increased 12%, and adjusted EBITDA increased more than 30%. Adjusted EBITDA margin expanded 220 basis points. That combination of growth and margin expansion is an important proof point of the scalability of the platform. I will organize my remarks around four themes: the strength of fiscal 2026, the operating leverage we demonstrated in the fourth quarter, the growth opportunities we see entering fiscal 2027, and the financial strength supporting our plans. For fiscal 2026, revenue increased 24.8% to $80.1 million from $64.2 million. Of the $15.9 million increase in annual revenue, $9.9 million came from Legacy's preexisting brands, which grew 16.5% year-over-year.

Six million reflected the comparison between a full year of Contra Costa Medical Career College in fiscal 2026 and six months in fiscal 2025. Put differently, roughly 62% of the year-over-year revenue increase came from the preexisting platform. That is an important proof point. Fiscal 2026 growth was supported by both successful integration and meaningful organic revenue growth. New student starts increased 9% to 3,483. We ended the year with 3,377 students, an increase of 8.9% from fiscal 2025. Importantly, ending active population across our preexisting brands increased 8.1% to 2,869 students. We view that active population growth, together with the revenue performance of the existing platform, as a stronger indicator of the underlying operating momentum entering fiscal 2027. Earnings increased across the operating income, net income, EBITDA, adjusted EBITDA, and diluted earnings per share.

The breadth of that performance matters because it shows that growth in the platform translated into growth and earnings while we continued investing for the future. Adjusted EBITDA margin was 17%, even as we invested in new programs, expanded facilities, strengthened staffing and infrastructure, and prepared for future growth. That is the operating balance we intend to maintain as Legacy scales. These results reflected broad execution across a larger platform. We integrated a full year of Contra Costa Medical Career College, supported a larger student population, expanded program offerings, and continued building the academic and operating capabilities required of a growing public company. They also reinforce the relevance of our focus. Legacy prepares students for careers in nursing and allied health fields, where employers continue to need skilled job-ready professionals. Our programs are practical, career-focused, and aligned with essential healthcare roles.

That alignment remains a durable source of student interest and employer demand. The fourth quarter provided the clearest evidence of operating leverage while we continued funding growth. Revenue increased 12% to $20.1 million. Pre-existing brands grew 11.3%, and the operating margin expanded 190 basis points. The quarter demonstrated that the core platform continued to grow while producing greater operating leverage. Adjusted EBITDA increased 30.6% to $3.1 million, and adjusted EBITDA margin reached 15.5%. Those results show the earning power of a larger platform as revenue scales across our existing infrastructure. The key point is that the fourth quarter combined double-digit revenue growth with faster growth in earnings and meaningful margin expansion while we continued to invest in future capacity. The quality of the quarter is important. We did not achieve growth by pulling back from the future.

Educational services expense included the faculty and instructional resources, the books, the supplies, externships, facilities, and program support required for a larger platform and for capacity that can generate future revenue. Disciplined spending, marketing efficiency, and active management of the receivables also supported the quarter's operating leverage. The objective is not simply to become larger, it is to become larger while strengthening the economics of the platform. That is the operating model we are pursuing: support students in academic quality, invest deliberately in future capacity, and create greater operating leverage as the platform scales. We entered fiscal 2027 with multiple tangible growth engines already underway. We think about those opportunities in three pillars: expanding the existing platform, adding new capacity and geography, and pursuing strategic expansion supported by our stronger operating infrastructure. Pillar one, expanding the existing platform.

We continue to see meaningful runway in programs and campuses we already operate and understand well. Surgical Technology is currently operating at two of our three High Desert Medical College campuses, with the third campus expected to begin the program by the end of the first quarter of fiscal 2027, subject to final operational readiness. This represents additional growth within an existing program and an existing campus footprint. Sterile Processing Technician program also continues to ramp. This has been an important contributor to our program mix. Continued cohort development and broader use of existing capacity provide additional enrollment and revenue opportunity as the program matures across the platform. In vocational nursing, we advanced the entrance requirements across our campuses with a greater focus on student readiness and fit at the application stage. These changes are designed to strengthen student readiness and support retention, progression, and graduation.

We view that as an important opportunity to improve the quality and durability of enrollment within an established program. Pillar two, add capacity, programs, and geography. We are expanding where Legacy can serve students and where existing demand can support additional scale. After the end of the fiscal year, we executed a lease for 28,000 square feet in Houston, Texas for a planned Central Coast College branch. Central Coast College currently projects to open the Houston branch in November 2026, subject to receipt of the required regulatory and accreditation approvals. This move is intended to establish Legacy's first campus outside of California, and it represents an important step in accelerating our geographic expansion. We also expanded capacity at High Desert Medical College. Lancaster added 6,000 square feet and we're phasing additional capacity in Temecula so that growth can be aligned with program and enrollment demand.

At Contra Costa Medical Career College, we received approvals for three additional programs, Associate of Applied Science in Magnetic Resonance Imaging, an Associate of Applied Science in Cardiac Sonography, and Veterinary Assistant Certificate. These approvals expand the future program pipeline with launch timing based on operational readiness and applicable requirements. Pillar three, strategic expansion and operating infrastructure. We are actively evaluating acquisition opportunities that can expand Legacy's geographic reach, program portfolio, student base, and long-term earnings capacity. We apply clear academic, strategic, regulatory, cultural, and financial criteria to each opportunity. At the same time, we're continuing to build Legacy's business intelligence to give leadership more consistent visibility into enrollment, retention, academic execution, registrar activity, career services, and other key operating measures. As the organization grows, better visibility and accountability to support more consistent execution across the platform. Our growth platform is also supported by strong institutional accreditation.