Core Insights - The U.S. education market is transitioning from traditional methods to digital and career-focused programs, driven by student demand and government initiatives [2][11] - The Zacks Schools industry shows resilience, with median share prices above the S&P 500 composite, indicating promising mid to long-term prospects despite current stock performance [3] - Five education stocks are identified with expected earnings growth of over 10% year-over-year by 2026, including Chegg, Adtalem Global Education, Grand Canyon Education, Nerdy, and Legacy Education [4] Market Trends - The shift towards hybrid and AI-based learning models is gaining traction, with education companies adapting to meet the demand for flexible learning formats [5][8] - Companies like Chegg and Nerdy are benefiting from the rise of online and hybrid learning, leveraging AI-enhanced tools and subscription-based digital offerings [6][8] - The focus on career-oriented programs is increasing, particularly in high-demand fields like healthcare, aligning with workforce needs and supporting enrollment growth [9][10] Government Support - Federal and state initiatives are promoting EdTech adoption and workforce development, enhancing the prospects for education companies [11] - New interagency agreements aim to streamline program delivery and reduce administrative burdens, while a national policy established in April 2025 focuses on advancing AI education [11][12] Stock Performance - Chegg (CHGG) has a Zacks Rank of 1, with a projected earnings growth of 228.6% for 2026 despite a year-to-date drop of 42.9% [16] - Adtalem (ATGE) holds a Zacks Rank of 2, with a fiscal 2026 EPS estimate of $7.85 and expected growth of 17.7% [17] - Grand Canyon Education (LOPE) has a Zacks Rank of 2, with a projected earnings growth of 11.2% for 2026 [18] - Nerdy (NRDY) carries a Zacks Rank of 2, with an expected growth of 35.9% for 2026 despite a year-to-date decline of 16.7% [19] - Legacy Education (LGCY) also holds a Zacks Rank of 2, with a projected earnings growth of 11.9% for 2026 and a year-to-date gain of 23.8% [20]

Company Overview - Legacy Education Inc. (LGCY) is part of the Consumer Discretionary sector, which includes 265 companies and is currently ranked 12 in the Zacks Sector Rank [2] - The company has a Zacks Rank of 2 (Buy), indicating a favorable outlook based on earnings estimates and revisions [3] Performance Analysis - Over the past three months, the Zacks Consensus Estimate for LGCY's full-year earnings has increased by 5.6%, reflecting improved analyst sentiment [4] - Year-to-date, LGCY has returned approximately 19.7%, significantly outperforming the Consumer Discretionary sector's average return of 0.7% [4] Industry Context - Legacy Education Inc. operates within the Schools industry, which consists of 19 stocks and is currently ranked 66 in the Zacks Industry Rank [6] - The Schools industry has experienced an average decline of 6.7% year-to-date, indicating that LGCY is performing better than its industry peers [6] Comparative Analysis - Another notable stock in the Consumer Discretionary sector is H World Group (HTHT), which has returned 39.9% year-to-date and also holds a Zacks Rank of 2 (Buy) [5] - H World Group is part of the Hotels and Motels industry, which is ranked 188 and has seen a decline of 4.3% year-to-date [6] Investment Outlook - Investors interested in Consumer Discretionary stocks should continue to monitor Legacy Education Inc. and H World Group for their strong performance [7]

Revenue and Growth - Revenue increased by $5.4 million, or 38.5%, to $19.4 million for the first quarter ended September 30, 2025, compared to $14.0 million for the same period in 2024[6] - New student starts rose by 31.6% to 1,117, contributing to a total student population of 3,495, which is 37.7% higher than the first quarter of fiscal 2025[6] - Net income for the quarter was $2.2 million, up 4.6% from $2.1 million in the prior year[6] Financial Performance - Adjusted EBITDA was $3.1 million, reflecting a 9.6% increase year-over-year, with an adjusted EBITDA margin of 15.9%[6] - The company maintained a strong balance sheet with $20.6 million in cash and cash equivalents and minimal debt of approximately $0.7 million[6] - Operating cash flow was positive but decreased year-over-year due to the timing of Title IV disbursements[9] - The effective tax rate was 26.5%, benefiting from stock option exercises[5] Expenses - Educational services expenses increased by approximately $3.1 million, or 43.3%, to $10.3 million, driven by increased staffing and instructional costs[9] - General and administrative expenses rose by approximately $2.1 million, or 54%, to $6.1 million, primarily due to higher marketing costs and professional fees[9] Program Development - The company approved new programs including MRI AAS and Cardiac Sonography AAS at Central Coast College, and Surgical Technology AAS at High Desert Medical College[6]

Core Insights - Legacy Education Inc. reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, but down from $0.21 per share a year ago, indicating an earnings surprise of +6.67% [1] - The company achieved revenues of $19.4 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 5.79% and up from $14.01 million year-over-year [2] - Legacy Education Inc. has outperformed consensus EPS estimates three times over the last four quarters and has topped consensus revenue estimates four times in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $18.05 million, while the estimate for the current fiscal year is $0.64 on revenues of $75.1 million [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Schools industry, to which Legacy Education Inc. belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue increased by 38.5% to $19.4 million, driven by a 31.6% rise in new student starts to 1,117 and a 37.7% increase in ending student population to 3,495, marking an all-time high [6][16] - Adjusted EBITDA rose 9.6% to $3.1 million, with a margin of 15.9%, reflecting strategic investments and non-recurring charges [8][10] - Net income increased by 4.6% to $2.2 million, with diluted EPS at $0.16 compared to $0.21 last year, impacted by an increase in diluted shares from 9.8 million to 13.9 million following the IPO [8][17] Business Line Data and Key Metrics Changes - Educational services expense rose to 53.2% of revenue from 51.4%, reflecting enhancements in programs and new hires [11][17] - General and administrative expenses increased to 31.5% of revenue from 28.3%, primarily due to audit, legal, and compliance costs [11][18] Market Data and Key Metrics Changes - The healthcare sector continues to experience chronic shortages, with over 200,000 nursing openings annually through 2031, indicating strong demand for skilled professionals [13][22] - Graduate placement rates remain above industry standards, with graduates placed within six months, showcasing the effectiveness of the company's programs [15][22] Company Strategy and Development Direction - The company is focused on four strategic priorities: continuing enrollment momentum, curriculum expansion, operational innovation, and compliance as a competitive advantage [20][21] - The company is pursuing both organic growth and potential M&A opportunities, with a strong acquisition pipeline and plans for multi-campus acquisitions [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to thrive despite regulatory challenges, emphasizing the critical need for job-ready graduates in the healthcare sector [22][29] - The company anticipates sequential margin improvement as investments mature and revenue scales, supported by strong policy tailwinds [22][29] Other Important Information - The company recorded a $178,000 reserve for accounts receivable, consistent with expectations, and enhanced its collections process [9][10] - The effective tax rate improved to 26.5% from 28%, benefiting from stock option exercises [10][17] Q&A Session Summary Question: About the four new programs and their capacity - Management indicated that the new programs started in the second quarter, with capacity for 20-24 students per program, but no contributions were realized in Q1 [24] Question: Acquisition pipeline status - The acquisition pipeline remains strong, with several opportunities elevated to the board level, focusing on both in-state and out-of-state acquisitions [25] Question: Capacity constraints and student population handling - Current campuses can handle 700-800 students each, with considerations for lease renewals and expansions based on increasing capacity needs [26] Question: Placement connections with healthcare facilities - The company is actively reaching out to local facilities and has partnerships with hospitals that hire graduates from their programs [27] Question: Placement of students outside the state or U.S. - The company has limited experience placing students outside the U.S., with some crossing into Canada, and primarily places students within California [27]

Enrollment Statistics - As of September 30, 2025, High Desert Medical College had 2,263 students enrolled in its programs[157] - As of September 30, 2025, Central Coast College had 549 students enrolled in its programs[159] - As of September 30, 2025, Integrity College of Health had 220 students enrolled in its programs[160] - As of September 30, 2025, Contra Costa Medical Career College had 463 students enrolled in its programs[161] Regulatory Environment - The company is currently evaluating the impact of new regulations on its business, including those related to Title IV programs[162] - The company expects new regulations from the RISE and AHEAD Committees to impact its operations, effective July 1, 2026[166] - The company is subject to regulatory changes that could materially affect its student population and revenues[166] - The company satisfied the composite score requirement of the financial responsibility test necessary to participate in Title IV Programs[203] Financial Performance - Revenue for the three months ended September 30, 2025, was approximately $19.4 million, an increase of approximately $5.4 million or 38.5% compared to $14.0 million for the same period in 2024, primarily due to increased enrollment[193] - Educational services expense increased to approximately $10.3 million for the three months ended September 30, 2025, up approximately $3.1 million or 43.3% from $7.2 million in the same period in 2024, driven by increased instructional and staffing costs[194] - General and administrative expense rose to approximately $6.1 million for the three months ended September 30, 2025, an increase of approximately $2.1 million or 54% compared to $4.0 million in the same period in 2024, largely due to higher marketing costs and professional fees[195] - Net income for the three months ended September 30, 2025, was approximately $2.2 million, a slight increase of approximately $0.1 million or 0.05% from $2.1 million in the same period in 2024[197] Cash Flow and Capital Expenditures - Cash and cash equivalents were approximately $20.6 million as of September 30, 2025, compared to $21.5 million as of September 30, 2024[198] - Net cash provided by operating activities decreased to approximately $1.1 million for the three months ended September 30, 2025, down from $3.2 million in the same period in 2024, primarily due to increases in accounts receivable and prepaid expenses[204] - Capital expenditures remained constant at approximately $0.2 million for both the three months ended September 30, 2025, and 2024[200] - Net cash used by financing activities was approximately $0.5 million for the three months ended September 30, 2025, compared to net cash provided of approximately $8.2 million in the same period in 2024, mainly due to debt reduction and lease payments[206] Inflation and Growth Status - The company has not experienced a material impact from inflation on its results of operations for the three months ended September 30, 2025, and 2024[208] - The company intends to rely on exemptions provided by the JOBS Act as an "emerging growth company" until it reaches total annual gross revenues of $1.235 billion or more[213] - The company will remain classified as an "emerging growth company" until the earliest of several conditions, including the issuance of more than $1 billion in nonconvertible debt in the previous three years[213] - The company is not required to provide certain market risk disclosures as it qualifies as a "smaller reporting company" under the Exchange Act[214] Acquisitions - The company has acquired multiple institutions, including Contra Costa Medical Career College in December 2024[156] Seasonal Trends - The company experienced seasonal trends, with increased enrollments typically in the first and third quarters of the fiscal year[180]

Core Points - Legacy Education Inc. will host a conference call on November 13, 2025, to discuss its fourth quarter and year-end financial results [1] - A news release detailing the financial results will be issued at 4:05 p.m. Eastern time on the same day [1] Company Overview - Legacy Education Inc. is a nationally accredited, for-profit post-secondary education company founded in 2009, focusing on career education primarily in the healthcare field [3] - The company offers a variety of programs including nursing, sonography, medical technicians, dental assisting, and business administration [3] - Legacy Education aims to provide high-quality, accessible, and affordable education while pursuing organic enrollment growth, new program additions, and accretive acquisitions [3]

Core Insights - The article emphasizes the importance of investing in quality companies at reasonable valuations, inspired by renowned investors like Warren Buffett, Peter Lynch, and Terry Smith [1] Group 1 - The focus is on long-term fundamentals driving share prices, with an emphasis on predicting earnings per share [1]

Financial Data and Key Metrics Changes - In Q4, revenue reached $17.9 million, a 40.8% increase year-over-year, driven by a 15.7% rise in new student starts [6][11] - For the full fiscal year 2025, revenue grew 39.5% to $64.2 million, supported by a 41.8% increase in enrollments to 3,101 students [12][10] - Net income for Q4 was $1.2 million, up 27.6%, while full-year net income increased 47.3% to $7.5 million, or $0.59 per diluted share [9][12] - Adjusted EBITDA rose 31.3% to $11 million for the full year [10][12] Business Line Data and Key Metrics Changes - The integration of Contra Costa Medical Career College added 468 students and diversified offerings [8] - The company achieved an 81.8% NCLEX pass rate in nursing and placement rates averaging 74.3% through AHHS and 74.6% through ABHES [7] Market Data and Key Metrics Changes - The healthcare education sector is projected to have over 1.8 million annual job openings through 2032, indicating strong demand for the company's programs [5] Company Strategy and Development Direction - The company plans to continue enrollment momentum through digital marketing and employer collaborations, focusing on high-potential regions [15] - New degree and certificate programs are set to launch in October, enhancing the curriculum to meet market needs [15][20] - The company is exploring additional branches and acquisitions to expand its educational reach [9][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to benefit from policy support and market demand, particularly in the healthcare education sector [16][17] - The company is committed to transparency and protecting long-term shareholder value, even with increased reserves for accounts receivable [9][10] Other Important Information - The company has a robust balance sheet with $20.3 million in cash and negligible debt, allowing for strategic investments [10][14] - The increase in general and administrative expenses was attributed to marketing investments and professional fees, as well as a conservative approach to accounts receivable reserves [11][12] Q&A Session Summary Question: What was the starts number in the quarter? - The starts number for the quarter was 723 [18][19] Question: When do the new programs start and what revenue might they deliver? - The new programs are anticipated to start in October, but no forward projections on revenue were provided [20][21] Question: What is the outstanding balance related to the $700,000 reserve? - The total outstanding balance for graduate students is approximately $2 to $2.5 million, with a conservative reserve taken for those who are late in payments [26][27] Question: What was the tax rate for the quarter? - The tax rate was approximately 31-32%, influenced by a return to provision adjustment from the previous year [28][29] Question: Are there any capacity constraints at the facilities? - The company has added square footage to existing campuses to accommodate growth and is well-positioned to handle current enrollment levels [33]

Financial Data and Key Metrics Changes - In Q4 2025, revenue reached $17.9 million, a 40.8% increase year-over-year, driven by a 15.7% rise in new student starts [6][11] - For the full fiscal year 2025, revenue grew 39.5% to $64.2 million, supported by a 41.8% increase in enrollments to 3,101 students [7][12] - Net income for Q4 was $1.2 million, up 27.6%, while full-year net income increased 47.3% to $7.5 million, or $0.59 per diluted share [9][12] - Adjusted EBITDA rose 31.3% to $11 million for the full year [10][12] Business Line Data and Key Metrics Changes - The integration of Contra Costa Medical Career College added 468 students and diversified offerings [8] - The company achieved an 81.8% NCLEX pass rate in nursing and placement rates averaging 74.3% through AHHS and 74.6% through ABHES [7] Market Data and Key Metrics Changes - The healthcare education sector is projected to have over 1.8 million annual job openings through 2032, indicating strong demand for the company's programs [5] Company Strategy and Development Direction - The company plans to continue enrollment momentum through digital marketing and employer collaborations, focusing on high-potential regions [14][15] - New degree and certificate programs are set to launch in October, enhancing the nursing education portfolio [14][20] - The company is exploring additional branches and acquisitions to expand its educational reach [9][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to benefit from policy support and market demand, particularly in the healthcare education sector [15][16] - The company is committed to compliance as a competitive advantage, which is crucial amid regulatory shifts [15] Other Important Information - The company increased its accounts receivable reserve by approximately $700,000 due to observed softness in student payments related to graduates [9][12] - The balance sheet shows $20.3 million in cash with negligible debt, allowing for strategic investments [10][13] Q&A Session Summary Question: What was the starts number in the quarter? - The starts number for the quarter was 723 [17][18] Question: When do the new programs start, and what revenue might they deliver? - The new programs are anticipated to start in October, but no forward projections on revenue were provided [20][21] Question: What is the outstanding balance related to the $700,000 reserve? - The total outstanding balance for graduate students is approximately $2 to $2.5 million, with a conservative reserve estimate taken [25][26] Question: What is the reason for the higher tax rate? - The tax rate was around 31-32%, influenced by a return to provision adjustment from the previous year [28][29] Question: Are there any capacity constraints at the facilities? - The company has added square footage to existing campuses to accommodate growth and has sufficient capacity [33]