Legacy Education Inc. — Fiscal 2026 Form 10-K Summary
Business Context and Reporting Period
Legacy Education Inc. is a Nevada-based, NYSE American-listed provider of career-focused postsecondary education, primarily in healthcare and related fields. The filing covers the fiscal year ended June 30, 2026, with comparative results for fiscal 2025. The Company operates High Desert Medical College, Central Coast College, Integrity College of Health, and Contra Costa Medical Career College in California and reports one operating segment.
Period-end enrollment was 3,377 students, up 8.9% from 3,101 at June 30, 2025. Enrollment by institution was 2,097 at HDMC, 576 at CCC, 196 at Integrity, and 508 at CCMCC. The Company had approximately 120 full-time faculty, 180 part-time faculty, and 185 non-faculty employees.
Financial and Operating Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Revenue | $80.1 million | $64.2 million | Up 24.8% |
| Operating income | $11.8 million | $10.0 million | Up 18.3% |
| Operating margin | 14.8% | 15.6% | Down 0.8 percentage points |
| Income before taxes | $12.7 million | $11.0 million | Up 15.1% |
| Net income | $9.1 million | $7.5 million | Up 21.3% |
| Net margin | 11.4% | 11.7% | Down 0.3 percentage points |
| Basic EPS | $0.73 | $0.65 | Up 12.3% |
| Diluted EPS | $0.66 | $0.59 | Up 11.9% |
| Cash flow from operations | $4.0 million | $7.8 million | Down $3.7 million |
| Capital expenditures | $1.3 million | $0.8 million | Up $0.5 million |
Tuition and lab fees represented $70.3 million of fiscal 2026 revenue, while books, registration, and other fees contributed $9.8 million. Educational services expense was $42.9 million, or 53.6% of revenue, and general and administrative expense was $24.2 million, or 30.2% of revenue. Advertising expense increased to $5.9 million from $4.7 million.
Cash and cash equivalents were $22.7 million at June 30, 2026, compared with $20.3 million at June 30, 2025. Total assets were $78.5 million and stockholders’ equity was $52.8 million. The Company stated that liquidity was stable and expected to fund operations, planned capital expenditures, and working capital needs for at least the next 12 months. No revolving credit facility or other debt facility was outstanding.
Debt excluding lease liabilities was approximately $0.1 million at year-end, consisting primarily of a $50,000 related-party note and equipment-loan obligations. Finance-lease liabilities totaled approximately $0.2 million. Operating lease liabilities totaled $15.3 million, including $2.0 million current and $13.3 million non-current.
Material Changes Versus Fiscal 2025
- Revenue increased $15.9 million, driven by higher enrollment, 3,483 new student starts, and the inclusion of a full year of CCMCC revenue versus approximately half a year in fiscal 2025.
- Educational services expense increased 25.3%, reflecting higher staffing, instructional, rent, books, supplies, externship, and non-cash compensation costs.
- General and administrative expense increased 26.7%, primarily due to higher marketing, professional fees, bad debt expense, and costs associated with growth.
- Operating and net margins contracted modestly as costs grew faster than revenue.
- Operating cash flow declined substantially because accounts receivable increased by approximately $9.0 million, partly offset by higher net income and credit-loss provisions.
- Investing cash outflows decreased to $1.3 million from $7.0 million because fiscal 2025 included $6.1 million of cash paid for the CCMCC acquisition.
- Financing cash flow was a $0.3 million use of cash in fiscal 2026 compared with $9.1 million of inflows in fiscal 2025, when the Company completed its initial public offering.
- The Company issued 75,000 common shares to extinguish a $500,000 promissory note, recognizing a non-cash loss on debt settlement of $333,250.
- Share-based compensation increased to $1.2 million from $0.6 million, and diluted weighted-average shares increased to 13.9 million from 12.7 million.
Outlook, Commentary, Risks, and Unusual Items
Management’s growth strategy includes moderate growth in existing programs, new nursing and dental-hygiene programs, online offerings, new campuses, acquisitions outside California, and continued focus on retention, completion, placement, and employer relationships. Average monthly program retention was 98.1%, average placement was 72.7%, NCLEX pass rate was 82.4%, and Veterinary Technician National Exam pass rate was 60.0%.
- CCC entered into a lease for a planned Houston, Texas campus, expected to open in November 2026 subject to regulatory and accreditation approvals. The lease has an initial 130-month term and approximately $6.9 million of base rent.
- CCMCC plans to begin offering approved Cardiac Sonography, Veterinary Assistant, and MRI programs in the second quarter of fiscal 2027.
- HDMC and CCC have applied for ED recertification and remained eligible for Title IV participation while their applications were under review. Integrity operates under a provisional program participation agreement through March 31, 2029. CCMCC continues under a month-to-month temporary provisional agreement pending ED review of its change-of-control application.
- Management expects fiscal 2026 composite financial responsibility scores to exceed 1.5, but the final score had not been completed and remains subject to ED review. The fiscal 2025 calculated score was 3.0.
- Fiscal 2026 90/10 calculations were due December 31, 2026. Management expected each institution to remain below the 90% threshold, but calculations remain subject to ED review and possible recalculation.
- New federal legislation and Department of Education rules effective beginning July 1, 2026 reduce certain student and parent borrowing limits and introduce earnings-based accountability measures. The Company is evaluating the effects on enrollment, program eligibility, and funding.
- Programs that fail the new earnings premium measure could lose access to Direct Loans and potentially other Title IV funds. The first calculations are expected in early 2027, with potential program eligibility consequences beginning no earlier than July 1, 2028 under the stated timetable.
- Since March 2026, ED had sent six borrower-defense applications to CCC, eighteen to HDMC, and four to Integrity. The institutions disputed or were responding to the claims. The filing does not quantify any probable liability.
- Integrity and CCMCC previously provided financial protection of $18,828 and $15,356, respectively, related to late returns of unearned Title IV funds.
- The Company disclosed a material weakness in internal control over financial reporting involving formal documentation of financial-close procedures, journal-entry review, account reconciliations, segregation of duties, and information-technology general controls. Management is implementing a remediation plan.
- The independent auditor issued an unqualified opinion on the financial statements but was not engaged to audit internal control over financial reporting.
- The Company disclosed no known legal proceedings expected to have a material adverse effect, but remains subject to extensive regulatory audits, investigations, litigation, accreditation requirements, cybersecurity risks, seasonality, competition, and dependence on Title IV funding.
Most Important Facts for Investors to Verify
- Whether fiscal 2026 accounts receivable growth converts into cash and whether credit-loss provisions remain near 5% of revenue.
- The final ED composite financial responsibility score for fiscal 2026 and the final 90/10 calculations for each institution.
- The status and conditions of HDMC and CCC recertification, CCMCC’s change-of-control review, and Integrity’s provisional certification.
- The potential effect of new federal borrowing limits and earnings-accountability rules on enrollment, program offerings, and Title IV eligibility.
- The number, resolution, and potential financial exposure of borrower-defense claims.
- Progress, cost, and approvals associated with the planned Houston campus and CCMCC’s new programs.
- Management’s remediation of the material weakness and whether subsequent filings report effective internal control over financial reporting.
- Future operating cash flow, lease commitments, dilution from stock options and other equity awards, and the Company’s stated intention not to pay cash dividends.