Legacy Education Inc. — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Revenue increased 3.1% year-over-year to $20.0 million for the quarter ended September 30, 2026, compared to $19.4 million in the prior year period.
• Net income was $0.9 million for the quarter, down from $2.2 million in the prior year period.
• Adjusted EBITDA was $2.1 million, compared to $3.1 million in the prior year period.
• Net income margin was 4.3%, EBITDA margin was 5.3%, and Adjusted EBITDA margin was 10.4%.
• Educational services expense increased 13.0% to $11.7 million (58.4% of revenue) from $10.3 million (53.3% of revenue) in the prior year, driven by personnel costs, rent, externship fees, and share-based compensation.
• General and administrative expense increased 18.2% to $7.2 million from $6.1 million in the prior year, primarily due to a $0.7 million estimated legal settlement and higher professional fees.
• Operating cash flow was negative $0.9 million, compared to positive $1.1 million in the prior year, impacted by lower net income, income tax payments, and timing of disbursements.
• Capital expenditures were $0.2 million in the current period, consistent with the prior year.
• Balance sheet included $21.7 million in cash and cash equivalents, $47.8 million in current assets, $86.9 million in total assets, $54.0 million in stockholders' equity, and $0.1 million in minimal debt.

Guidance and Future Outlook:

• Management stated priorities for the remainder of the year include growing new student starts while maintaining admissions standards, launching newly approved programs, filling added capacity, and aligning costs with opportunities.
• The Houston campus is expected to open before December 31, 2026, subject to regulatory and accreditation approvals expected by the end of November 2026.
• Contra Costa Medical Career College plans to launch three newly approved programs (Cardiac Sonography, Veterinary Assistant, and MRI) in the second half of fiscal 2027.

Business Segments and Product Lines:

• Student population reached a record 3,684, representing a 5.4% increase year-over-year and a 9.1% increase from the prior quarter.
• New student starts totaled 1,006 for the quarter.
• The three fastest-growing programs—Ultrasound Technician, Sterile Processing, and Surgical Technology—generated 338 new starts, nearly double the 172 starts recorded a year ago.
• Central Coast College entered a lease for a new campus in Houston, Texas, marking the company's first planned campus outside California.
• Contra Costa Medical Career College received U.S. Department of Education approval for a change in ownership and control, with a provisional program participation agreement expiring September 30, 2029, and no letter of credit or growth restrictions.

Market and Competitive Landscape:

• The company reported serving more students than at any point in its history.
• No specific market share data or direct competitor comparisons were provided in the release.

Risks and Challenges:

• Profitability was lower than the prior year due to investments in faculty, facilities, and new programs ahead of revenue generation.
• The Houston campus opening is contingent upon receiving required regulatory and accreditation approvals.
• Forward-looking statements are subject to risks including market conditions and factors described in the company's Form 10-K.

Management Commentary and Tone:

• CEO LeeAnn Rohmann stated the company is serving more students than ever before and highlighted strong growth in key healthcare programs.
• Management acknowledged lower profitability was expected due to strategic investments in personnel and facilities, specifically the Phase 2 premises of the Wildomar, California lease.
• The tone emphasized a commitment to maintaining admissions standards while expanding capacity and launching new programs.

Other Key Points:

• The company hired a Senior Vice President of Compliance and a Senior Vice President of Career Services and Strategic Partnerships.
• An estimated legal settlement of $0.7 million was accrued in general and administrative expenses for the quarter; the matter was settled in October 2026.
• The company excluded the estimated legal settlement and stock-based compensation from Adjusted EBITDA calculations.
• The U.S. Department of Education issued a fully executed provisional program participation agreement to Contra Costa Medical Career College with no growth restrictions.