Executive Summary / Key Takeaways

• Legacy Education Inc. (NYSE:LGCY) has demonstrated exceptional financial momentum, achieving double-digit revenue growth for 11 consecutive quarters, driven by strong student enrollment and strategic program expansion in high-demand healthcare fields.
• The company's strategic focus on career-focused, allied health education directly addresses critical workforce shortages, leading to robust student outcomes with an 83% NCLEX pass rate and average placement rates of 75% (ACCET) and 76% (ABHES).
• LGCY's growth strategy is fueled by accretive acquisitions, such as Contra Costa Medical Career College, and organic expansion through new program offerings and branch campuses, supported by a strong liquidity position with $17.3 million in cash and $22 million in working capital as of March 31, 2025.
• Technological differentiators, including hybrid learning models, Blackboard Ultra, and advanced simulation technology, enhance student flexibility and operational efficiency, strengthening LGCY's competitive moat.
• While operating in a highly regulated environment, LGCY maintains confidence in its ability to comply with evolving federal and state regulations, including the new OBBBA and gainful employment rules, due to its high-demand program offerings and strong student outcomes.

The Critical Role of Career Education in Healthcare

Legacy Education Inc. (LGCY) stands at the forefront of addressing a critical national need: the escalating demand for skilled healthcare professionals. Operating primarily in California, LGCY provides career-focused, post-secondary education through its accredited academic institutions, including High Desert Medical College (HDMC), Central Coast College (CCC), Integrity College of Health (Integrity), and Contra Costa Medical Career College (CCMCC). The U.S. post-secondary education market is large and fragmented, with degree-granting career colleges serving approximately 1.70 million undergraduate students in the 2022-23 school year, representing about 8% of total undergraduates. This sector is poised for growth, with total enrollments in higher education increasing by 2.40% and 3.20% in spring 2024 and 2025, respectively, and proprietary colleges seeing increases of 5.10% and 3.70% in the same periods.

The company's strategic positioning is particularly compelling given the projected 8.40% growth in employment in the healthcare and social assistance industry from 2024 to 2034, expected to create over 1.90 million new jobs. This growth is largely driven by an aging population and the rising prevalence of chronic conditions. LGCY directly addresses this employment need by offering focused, high-quality programs strategically located near hospitals and clinics to facilitate externships and full-time employment opportunities for its graduates. The company targets early to mid-20-year-olds seeking to improve their economic situation through programs with strong job prospects, emphasizing quick training and job placement.

A History of Strategic Growth and Market Capture

Legacy Education's journey began in October 2009 with the founding of Legacy Education, LLC by LeeAnn Rohmann, building on the foundation of High Desert Medical College (HDMC), established in 2002. The acquisition of HDMC in July 2010 marked the company's initial strategic move into post-secondary education. Over the next decade, LGCY systematically expanded its footprint and program offerings. Key acquisitions included Central Coast College (CCC) in January 2019 and Integrity College of Health (Integrity) in September 2020, following an initial ownership interest in December 2019.

A significant corporate restructuring in September 2021 saw Legacy Education, LLC merge into Legacy Education Inc., a Nevada C-Corporation, setting the stage for its Initial Public Offering (IPO) in September 2024. The IPO successfully raised $11.5 million, significantly enhancing the company's financial flexibility for future growth. This was swiftly followed by the acquisition of Contra Costa Medical Career College (CCMCC) in December 2024, which added 14 programs and further solidified LGCY's presence in high-demand healthcare markets. By January 31, 2025, LGCY had surpassed 3,000 enrolled students, a testament to its successful growth strategy and the increasing value of its educational offerings.

Technological Edge: Enhancing Learning and Scalability

Legacy Education differentiates itself through a commitment to modern educational delivery, leveraging technology to enhance student outcomes and operational efficiency. The company has significantly expanded its hybrid learning models, which combine online theory instruction with hands-on laboratory and externship experiences. This approach provides students with greater flexibility, accommodating diverse schedules, particularly for working adults, while ensuring practical skill development.

A core technological advancement is the full implementation of Blackboard Learn Ultra as its learning management system across all five locations and programs. This transition streamlines communication, enhances the student learning experience, and improves scalability for future growth. Furthermore, LGCY integrates advanced simulation technology into its practical training, especially in Nursing and Imaging programs. This technology allows students to practice complex procedures in a controlled environment, improving their readiness for real-world clinical settings. While specific quantifiable performance metrics for these technologies are not publicly detailed, the strategic intent is clear: to deliver a superior, professionally aligned, and real-world education that drives career success and strengthens LGCY's competitive moat by ensuring high-quality, job-ready graduates. These technological investments contribute to LGCY's ability to attract and retain students, enhance its reputation, and potentially improve margins through more efficient program delivery.

Financial Momentum: A Decade of Double-Digit Expansion

Legacy Education has consistently delivered strong financial results, underscoring the effectiveness of its business model and strategic execution. The company reported approximately $64.20 million in revenue for the fiscal year ended June 30, 2025, representing a robust 39.50% increase from fiscal year 2024. This growth was primarily fueled by a significant increase in student enrollment and an increase in pricing for certain programs. Net income for fiscal year 2025 reached approximately $7.50 million, an increase of $2.40 million over the prior year.

Quarterly performance further highlights this momentum. For the third quarter of fiscal 2025 (ended March 31, 2025), revenue soared by 50.7% year-over-year to $18.6 million, driven by a remarkable 70.7% increase in new student starts and a 49.8% growth in ending enrollment, reaching 3,245 students. Net income for the quarter increased 57.1% to $2.8 million, or $0.21 per diluted share. The company's operating income for fiscal year 2025 stood at $9.99 million, up from $6.22 million in fiscal year 2024.

Operational efficiency has also improved, with educational services expense declining as a percentage of revenue from 55.3% to 51.4% in Q1 fiscal 2025, and general and administrative expenses also decreasing as a percentage of revenue from 30.4% to 28.3%.

As of June 30, 2025, LGCY had 3,101 enrolled students, a 42% increase from the previous year. The company maintains a strong liquidity position, with cash and cash equivalents of approximately $20.30 million and $22 million in working capital as of June 30, 2025. This robust financial health, coupled with minimal debt of $1 million as of March 31, 2025, provides ample flexibility for organic growth, new program investments, and strategic acquisitions.

Competitive Arena: Differentiating in a Fragmented Market

Legacy Education operates within a highly competitive and fragmented post-secondary education industry, vying for students with traditional public and private institutions, other for-profit schools, and non-traditional programs. While larger, more established competitors like Adtalem Global Education (ATGE) and Grand Canyon Education (LOPE) benefit from national scale, extensive online offerings, and potentially greater financial resources, LGCY carves out a distinct niche through its regional focus and specialized, hands-on allied health programs.

LGCY's competitive advantage lies in its deep understanding of local workforce needs in California, where its campuses are strategically located near healthcare facilities. This allows for tailored curriculum development and strong employer partnerships, leading to high graduate placement rates—an average of 74.50% across its institutions as of June 30, 2025. For instance, its nursing programs boast an 81.80% NCLEX Pass Rate. This contrasts with competitors like Strayer Education (STRA), which primarily focuses on online delivery, and Universal Technical Institute (UTI), which has a broader trade focus. While these larger entities may exhibit higher revenue growth and profitability margins due to economies of scale and wider reach, LGCY's localized expertise and high-quality, career-specific training provide a compelling value proposition for students seeking direct pathways to employment.

LGCY's hybrid learning model and advanced simulation technology further enhance its offering, providing practical training that may be more difficult for purely online providers to replicate effectively. The company also benefits from regulatory barriers to entry, such as accreditation requirements, which protect its market position against new entrants. However, LGCY's smaller scale and regional concentration present vulnerabilities, potentially leading to higher operational costs and limiting its ability to compete on broad market share. The company's strategic response involves leveraging its strong regional brand and specialized curriculum to drive organic growth and pursuing accretive acquisitions to expand its geographic and programmatic diversity, as demonstrated by the CCMCC acquisition.

Strategic Outlook: Fueling Future Growth

Legacy Education is poised for continued momentum, with a clear strategic roadmap centered on sustained enrollment growth, program diversification, operational excellence, and strategic acquisitions. Management anticipates continued robust demand for healthcare professionals, which will drive enrollment in its high-demand allied health programs. The company plans to enhance its marketing reach and deepen partnerships with healthcare employers to sustain strong student starts, building on the 70.7% increase in Q3 fiscal 2025 starts.

Programmatically, LGCY is focused on adding existing programs to locations with high employer needs and launching new offerings in fields like sterile processing, surgical technician, and Emergency Medical Technician (EMT), which are high-need and face limited competition in current service areas. The EMT program, a 12-week course, has already launched at the Temecula campus and is slated for rollout across other HDMC, Pasadena, and Salinas campuses, pending county approvals. The company also plans to add Associate of Applied Sciences degrees to its shorter programs and introduce new offerings in dental hygiene and surgical technology.

Operationally, LGCY is committed to cost optimization while investing in technology and faculty to enhance the student experience. The hybrid learning model, supported by platforms like Blackboard Ultra, is expected to provide flexibility and scalability, enabling the company to reach more students efficiently. Strategic acquisitions remain a key growth driver, with management actively evaluating additional targets both within and outside California, including programs in business, automotive, and trade, to increase its national footprint. The successful integration of Contra Costa Medical Career College serves as a model for future accretive acquisitions. While the company acknowledges seasonal fluctuations, with Q1 and Q3 typically being stronger quarters, management expects demand to remain robust, supporting its growth projections.

Navigating the Regulatory Labyrinth and Other Risks

Operating in the highly regulated post-secondary education sector presents significant risks for Legacy Education. The company is subject to extensive oversight by federal, state, and accrediting agencies, with continuous changes in laws and regulations from the U.S. Department of Education (ED). A major development is the One Big Beautiful Bill Act (OBBBA), effective July 1, 2026, which introduces new limits on Title IV loans for students and parents, and a new accountability measure for degree programs based on graduate earnings. Under this measure, an associate degree program could lose Title IV loan eligibility if its graduates' median earnings fall below those of working adults with only a high school diploma for two out of three years. The OBBBA also restricts Pell Grant eligibility for certain students, potentially necessitating alternative funding sources.

Furthermore, new financial value transparency and gainful employment regulations, effective July 1, 2024, evaluate programs based on debt-to-earnings rates and an earnings premium measure, with potential loss of Title IV eligibility for programs failing these thresholds. The 90/10 Rule, amended by the American Rescue Plan Act (ARPA) to include all federal educational assistance funds, remains a complex compliance challenge, with potential recalculations by ED leading to a loss of Title IV eligibility if percentages exceed 90%. The temporary suspension of federal student loan repayments during the COVID-19 pandemic may also lead to substantially higher cohort default rates after October 2023, impacting eligibility.

Management acknowledges these regulatory complexities but expresses confidence in LGCY's ability to comply, emphasizing its focus on high-demand allied health programs and rigorous academic delivery. However, delays in ED approvals for acquisitions or new programs due to workforce reductions at ED, or an Executive Order calling for ED's closure, could disrupt operations and the availability of Title IV funds. Other risks include the ability to attract and retain key personnel, potential costs associated with program terminations, and the ongoing threat of cybersecurity incidents. The company's ability to timely identify and report ownership changes to ED, particularly as a publicly traded entity, also poses a compliance challenge.

Conclusion

Legacy Education Inc. presents a compelling investment thesis rooted in its strategic alignment with the burgeoning demand for skilled healthcare professionals. The company's consistent double-digit revenue growth, robust student enrollment, and strong graduate outcomes underscore the effectiveness of its career-focused educational model. By strategically expanding its program offerings, leveraging technological advancements in hybrid learning and simulation, and pursuing accretive acquisitions like Contra Costa Medical Career College, LGCY is solidifying its market position as a vital contributor to the healthcare workforce.

While operating within a dynamic and highly regulated environment, LGCY's proactive approach to compliance and its focus on high-need allied health programs mitigate many of the inherent risks. The company's strong financial liquidity provides the necessary capital to execute its ambitious growth plans, both organically and through M&A. Investors looking for exposure to a resilient sector addressing a fundamental societal need, backed by a track record of operational excellence and strategic expansion, should consider Legacy Education Inc. as a key player in the future of career-focused education.