Executive Summary / Key Takeaways

• Legacy Education Inc. is demonstrating robust financial and operational growth, fueled by its strategic focus on high-demand allied health education and accretive acquisitions.
• The company achieved a record-breaking Q3 FY2025 with 50.7% revenue growth and a 70.7% surge in new student starts, significantly outpacing many peers in the vocational education sector.
• Strategic program expansion, particularly in Nursing and Imaging, and the successful integration of the Contra Costa Medical Career College acquisition are key drivers of recent performance and future potential.
• Investments in hybrid learning models and simulation technology enhance operational efficiency and student outcomes, contributing to strong placement rates and NCLEX pass rates.
• While navigating the evolving regulatory landscape and potential impacts on Title IV funding, the company's strong financial health and focus on employer-aligned programs position it favorably.

Setting the Scene: A Focused Approach to a Critical Market Need

Legacy Education Inc. operates within the dynamic and essential sector of career-focused post-secondary education, primarily targeting the burgeoning demand for skilled professionals in allied health fields. Through its network of accredited institutions across California, including High Desert Medical College, Central Coast College, Integrity College of Health, and the recently acquired Contra Costa Medical Career College, the company delivers specialized certificate and degree programs designed for real-life application. This strategic focus aligns directly with a critical national need for healthcare workers, a market characterized by robust job growth and persistent shortages.

The company's history reflects a deliberate strategy of expansion, largely driven by targeted acquisitions that have broadened its geographic footprint and diversified its program offerings. From the early days of HDMC and CCC to the more recent additions of Integrity and CCMCC, Legacy Education has built a foundation centered on providing accessible, accredited training in high-demand areas. This approach positions the company as a key player in addressing specific workforce gaps, particularly in California's healthcare ecosystem.

In the competitive landscape, Legacy Education operates alongside larger, more diversified education providers such as Adtalem Global Education (ATGE), Strategic Education (STRA), and Lincoln Educational Services (LINC), as well as other regional and niche vocational schools. While companies like ATGE and STRA leverage significant scale and online platforms, LGCY differentiates itself through a concentrated focus on hands-on, campus-based allied health training, complemented by hybrid learning models. This specialization allows LGCY to cultivate deep relationships with local healthcare employers, directly aligning its curriculum and graduate skills with specific industry needs.

Legacy Education's operational model incorporates technological elements designed to enhance both the learning experience and administrative efficiency. The company utilizes hybrid learning models, combining online theory instruction with hands-on laboratory and simulation training on campus. This approach offers students increased flexibility while allowing the company to optimize facility utilization. Furthermore, investments in advanced simulation technology, particularly in Nursing and Imaging programs, aim to provide realistic practical training environments.

The transition to the Blackboard Learn Ultra learning management system across all campuses is a recent technological initiative. This move is intended to enhance the student learning experience, streamline communication channels, and improve the scalability of educational delivery. While specific quantitative metrics on the performance benefits of these technologies (e.g., percentage improvement in learning speed or cost reduction) are not detailed, management highlights their role in supporting operational efficiencies and contributing to strong student outcomes, such as the 83% NCLEX pass rate for nursing programs and average placement rates of 75-76% through its accreditors. These technological investments, coupled with the hands-on focus, form a core part of LGCY's competitive positioning, aiming to produce job-ready graduates efficiently.

Performance Reflecting Strategic Execution

Legacy Education's recent financial performance underscores the effectiveness of its growth strategy and operational execution. The company has achieved double-digit revenue growth for eleven consecutive quarters, demonstrating consistent momentum. The third quarter of fiscal year 2025 was particularly strong, with revenue soaring 50.7% year-over-year to $18.58 million, driven by a remarkable 70.7% increase in new student starts and a 49.8% growth in ending enrollment, reaching 3,245 students as of March 31, 2025. This performance significantly outpaced the revenue growth rates recently reported by larger, more diversified peers like LINC (15% annual growth) and STRA (9% annual growth).

For the nine months ended March 31, 2025, revenue grew 39% to $46.22 million compared to $33.25 million in the prior year period. This robust top-line expansion translated into strong profitability growth. Net income for the nine-month period increased 51.9% to $6.31 million, up from $4.15 million. Adjusted EBITDA for the same period rose 54.2% to $8.6 million, highlighting the operating leverage in the business model as revenue scales.

The company's focus on high-demand programs, particularly Nursing and Imaging (Cardiac Sonography, MRI), contributed significantly to the recent enrollment surge. Management specifically noted the impact of adding additional classes in these areas during Q3 FY2025. While educational services expenses increased in absolute terms to support higher enrollment ($10.12 million in Q3 FY2025 vs. $6.54 million in Q3 FY2024), reflecting investments in staff, rent, and externship fees, operating efficiencies helped manage costs relative to revenue growth. General and administrative expenses also increased, partly due to higher marketing spend aimed at driving student acquisition, but operational income margins expanded, reaching 19.7% in Q3 FY2025.

The acquisition of Contra Costa Medical Career College on December 18, 2024, played a notable role in the recent performance, contributing 468 students as of March 31, 2025, and adding to revenue, particularly seeing its full impact in Q3 FY2025 results. This acquisition, valued at a total purchase price of $7.53 million, not only expanded LGCY's geographic footprint but also added 14 programs, including several high-demand allied health offerings. The integration is reported to be progressing smoothly, unlocking new market opportunities and demonstrating LGCY's capability in executing accretive M&A.

Financially, Legacy Education maintains a strong balance sheet, providing ample liquidity for continued investment and expansion. As of March 31, 2025, cash and cash equivalents stood at $17.33 million, significantly up from $10.38 million at June 30, 2024. Working capital was a healthy $22 million. The company generated $4.76 million in net cash from operating activities during the nine months ended March 31, 2025. Net cash used in investing activities was $6.88 million, primarily reflecting the cash paid for the CCMCC acquisition ($6.13 million) and capital expenditures ($0.75 million) for campus enhancements and technology upgrades. Net cash provided by financing activities was $9.07 million, largely driven by the net proceeds from the initial public offering (IPO) completed in September 2024, which raised approximately $9.2 million. Total debt remains minimal at $1.02 million as of March 31, 2025, positioning the company favorably for future financing needs compared to peers who may carry higher debt loads (e.g., LINC's Debt/Equity ratio was 1.00 in 2024).

Outlook and Strategic Trajectory

Legacy Education's outlook is characterized by confidence in sustained growth momentum, driven by continued execution of its core strategic priorities. Management anticipates capitalizing on the persistent demand for healthcare professionals to drive further enrollment increases. The company plans to leverage its existing program portfolio by adding high-demand offerings to locations where employer needs are most acute. Furthermore, the launch of new programs, such as Sterile Processing, Surgical Technician, and EMT, is expected to complement the existing portfolio and open new avenues for student acquisition.

Expansion through branching and accretive acquisitions remains a key pillar of the growth strategy. The successful integration of CCMCC provides a template for future deals, and management is actively evaluating additional targets both within and outside California. The M&A pipeline is reported to be strong, with opportunities arising from single-owner institutions seeking to exit the market. Legacy Education's robust cash position provides the financial flexibility to pursue these opportunities decisively.

While the company does not provide explicit quantitative financial guidance, management's commentary points towards continued strong performance. They are "on target to achieve record revenue, starts, student population, and earnings" for fiscal 2025, according to the Q1 FY2025 call. Analyst projections align with this positive outlook, with the Zacks Consensus Estimate forecasting earnings of $0.59 per share for the fiscal year ending June 2025. The company acknowledges typical seasonality, with Q4 generally being weaker than Q1 and Q3, but expects demand to remain robust.

The regulatory environment, particularly concerning Title IV federal financial aid programs, remains a significant factor influencing the sector. Changes at the Department of Education, including potential negotiated rulemaking on Title IV topics and organizational restructuring, introduce uncertainty. The CCMCC acquisition is currently operating under a temporary provisional program participation agreement (TPPPA) while ED reviews the change of ownership, which includes restrictions on growth and requires ongoing reporting. While management expresses confidence in navigating this environment due to the company's focus on high-demand allied health careers, strong placement rates, and compliance, potential delays or adverse outcomes in regulatory approvals for acquisitions or new programs represent a risk.

Other risks include the concentration of revenue from Title IV programs, which are subject to political and budgetary considerations, and the need to maintain compliance with extensive federal and state regulations and accrediting body standards (like the 90/10 Rule, which LGCY institutions currently meet). Operational disruptions, such as the temporary impact from the Los Angeles fires near the Pasadena campus, also highlight potential challenges, although the company demonstrated resilience by quickly transitioning students online.

Conclusion

Legacy Education Inc. is executing a focused growth strategy centered on providing career-aligned education in the high-demand allied health sector. The company's recent financial performance, marked by significant revenue and earnings growth, underscores the effectiveness of this approach and its ability to capture market share. Strategic acquisitions like CCMCC and ongoing program expansions are broadening its reach and enhancing its value proposition to students and employers.

While operating in a regulated industry with inherent risks related to federal funding and compliance, Legacy Education's strong balance sheet, minimal debt, and clear strategic priorities position it for continued momentum. The company's blend of hands-on training, technological integration, and alignment with critical workforce needs provides a solid foundation. Investors looking for exposure to a growing player addressing a vital market need may find Legacy Education's trajectory compelling, particularly as it leverages its recent IPO proceeds and operational strengths to pursue further expansion opportunities.